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United States banking institutions use nine-digit numbers referred to as routing transit numbers. These numbers are used in identifying banking institutions on paper checks and in the processing of electronic transactions. For example, they are often used for the initiation and processing of online bill payments and automatic money transfers. They are used for direct deposits and automated withdrawals as well.
To find his routing transit number, a person can look at his paper check. It is usually listed on the bottom of the check, to the left of the checking account number. An individual may also contact his bank and request its routing transit number if he does not have a paper check handy but needs the number for a transaction.
The American Bankers Association initiated the use of the routing transit number in the early 1900s. This organization is still responsible for issuing these numbers today. It is estimated that there are more than 25,000 routing transit numbers in use in the United States. Interestingly, large banks may have more than one routing transit number. For example, a banking institution may have different routing transit numbers for bank accounts and branches in different regions of the country.
From a consumer’s point of view, the routing transit number is nearly as important as his checking account number. Without it, checking and electronic transactions won’t be processed. When an individual wants to pay by check online or by phone, he has to provide this routing transit number. He’ll also need it when he wants to set up a direct deposit to his account or allow a merchant to withdraw an automated payment from his account. An account holder has to provide this number when he wants to order new checks for his account as well.
Banks use routing transit numbers in completing their customers’ transactions. When a check is used for payment, for example, the recipient of the payment deposits the check into his bank account. The recipient’s bank then presents the check and a payment request to an intermediary bank. The intermediary bank uses the routing transit number on the check to identify the paying banking institution.
After identifying the appropriate banking institution, the intermediary bank presents the check to the paying bank and requests payment. When the paying bank agrees to settle the check, the intermediary bank debits the paying bank and credits the receiving bank. Finally, the payer's bank account is debited for the amount of the check.