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Definition: Magnetic Ink Character Recognition - MICR
MICR stands for Magnetic Ink character recognition. MICR is a technology used to check the originality of documents and the authentication purpose. This technology is mainly used by Banks in processing cheques, in which the MICR encoding (9 digit Code) at the bottom of cheque is having the information related to transaction of the bank (branch code, Pin code) which is stored in a device and then decoded into relevant information used for authentication of the document.
In MICR technology, Magnetic ink (Iron Oxide) is used which is passed through magnetic tape reader which reads the code and convert it into useful information. This helps in fast processing of cheque clearance and increases the efficiency of the bank in a secured manner.
Advantages of MICR technology:
• Fast processing speed of cheques
• Increase in efficiency
• More security than OCR (Optical character recognition) technology
Disadvantages or limitation of MICR technology:
• Very limited number of characters can be read using MICR technology
• Use of MICR technology is much more expensive than others manual data entry options available