ABA Transit Number - Definition
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Back to: BANKING, LENDING, & CREDIT INDUSTRY
ABA Transit Number Definition
ABA Transit Number refers to a 9-digit code number assigned to financial institutions (banks) for the purpose of identification. It is reflected on standard checks.
A Little More on What is ABA Transit Number
ABA Transit Number which is also known as the ABA Routing Number (RTN) was created in 1910 by the American Bankers Association for the purpose of indicating check processing endpoints. The number has, however, expanded to include check clearing between financial institutions, online banking, and Fedwire transfers. The number also applies when doing automated clearing houses. The ABA number can tell someone the branch in which your account is located. There are two forms of ABA routing number. They are as follows: A nine-digit number on the bottom left that is computer-readable. The nine-digit number is usually followed by the checking account number. This form is also known as the Magnetic Ink Character Recognition (MICR). It is used for checks processing using special computerized machines. Since the numbers are written in MICR font, it is easier for the machines to identify the numbers. The nine-digit number on the check signifies the following:
- The first four digits-They are given to a financial institution by the Federal Reserve Routing System to represent the banks physical location. However, due to acquisitions and bank mergers, these numbers do not most of the time match the banks geographical setting.
- The fifth and sixth digits-It shows which Federal Reserve Bank a banking institution will route their electronic and wire transfers.
- The seventh digit-It denotes the initial Federal Reserve check processing center in which a bank institution is assigned.
- The eighth digit-It indicates a banks Federal Reserve district.
- The ninth digit-It gives a checksum. This refers to a mathematical calculation usually done using the first eight digits. In case after the calculation, the outcome does not match the checksum number, flagging of the transaction is done and it is then redirected for manual processing.
It appears as a fraction at the top- Here the same information is reflected in this one though, its format differs from the nine-digit number. It is used as a holdover from the manual processing time. This is still commonly used as a fallback in the event that the machine-readable format becomes unreadable. Note that some of the big banks do have more than one ABA transit number. Large federal banking institutions give different RTNs to their different branches. The number of RTNs to be assigned to a branch is determined by the branchs geographical setting.
ABA Transit Number Eligibility
For a financial institution to be able to qualify for an ABA transit number, it must be entitled to hold an account at a Federal Reserve Bank. It is also important to note that the ABA transit number is currently under the management of Accuity, a London-based RELX Group subsidiary. For employers to be able to find their right RTNs, they are required to contact the branch in which they opened their account.
ABA Transit Number Uses
The following are the uses of ABA transit number:
- Used by an employer to prepare payroll direct deposits. In other words, employers will need their ABA transit number so that they can be able to work on the payroll direct deposits.
- ABA router number can also be used to facilitate checks clearing, and to also transfer money to and from banks. The passed 2004 Check Act enabled electronic check clearing. Initially, the checks had to be flown by air and/or truck for it to get to the banks. That is no longer the case. ABA router number has provided a situation where funds are cleared immediately. Customers can, therefore, get their cash instantly without having to wait for some days as it was the case back then.
- It can be used to tell the exact Federal Reserve Bank which a given financial institution (commercial bank) is associated with.
Reference for ABA Transit Number
- https://www.investopedia.com Insights Politics & Money
- https://www.thebalance.com Personal Finance Banking and Loans Basics
[ht_toggle title="Academic research on ABA Transit Number" id="" class="" style="" ] Developing a common machine language for banking: the ABA technical subcommittee story, McKenney, J. L. (1995). IEEE Annals of the History of Computing, 17(4), 61-75. This article discusses a common machine language can be developed for the purpose of banking. In the mid-1950s, McKenney (1995) recites how a bankers committee managed to develop a check processing standard which changed the banking industry forever. The standard made many machine manufacturers to adopt the new system instead of increasing their market share. As a result, the banking fraternity embraced a new system that enabled economies of scale through the use of electronic technologies. In tracing the developments, the author uses the ABA technical subcommittee story to enable markets shape technology. Quality of the paratransit service (tricycle) and its operation in Aba, Nigeria: An analysis of customers' opinions, Nwaogbe, O. R., Ibe, C. C., & Ukaegbu, S. I. (2012). Journal of Transport and Supply Chain Management, 6(1), 262-276. Through analysis of customers opinion in Nigeria, this study investigates the quality of the paratransit service in Nigeria with the aim of identifying the contributions and challenges to transport in informal settlements and equitable distribution of services among Aba residents. The study used structured questionnaires and past literature and primary data included road networks, number of trips made by operators per day, operating speed, waiting time, tricycle speed, and purpose of travel. The total numbers of questionnaires completed were 100 for operators and 229 for users. The study utilized the random sampling technique from different areas. The authors analyzed the questionnaires using percentage and Chi-square statistical techniques. The study found that 92% of operators reported a high level of road network deterioration and 61% to make between 9 and 12 trips every day. The authors also used the hypothesis test to study the feelings of the subjects about the attributes of the service provided for paratransit users like affordability, comfort, regularity, and safety. ABA PUrposes Legislative Adoption of a Model Procurement Code for State and Local Governmemts, Falvey, P. J., Birnkrant, S. M., & Friedman, A. (1979). Urb. Law., 11, 481. This article discusses the model procurement code (Code) which had been proposed by the House of delegates in 1979 February. Also recommended by the American Bar Association, the Code was intended to serve as a model of legislation codifying and improving the process of procurement at the local and state level. It was, thus, recognized that factors such as differing local needs, existing laws of any jurisdiction, and magnitude of procurement requirement require the code to be translated into legislation. A Guide to Industrial Revenue Bond Financing, Bell, D. A., & Hinkle, W. M. (1969). Washburn LJ, 9, 372. This article describes the Industrial Revenue Bond Financing Act which had been proposed in 1961. The bill, according to the author, was enacted by the Kansas Legislature after an early test case confirmed its constitutionality. For years, municipalities in Kansas have continued to use the Act to promote economic, industrial, and commercial growth and development in their locales. Because of the continuous use of the act, the Kansas attorneys are expected to continue supporting and formulating projects based on the act. These roles also include counsel for the city and for the corporation as well as counsel for a trust company or bank. Identifying term interbank loans from Fedwire payments data, Kuo, D., Skeie, D. R., Vickery, J. I., & Youle, T. (2014). FRB of New York Staff Report, (603). This article explores the concept of interbank markets and investigates the term maturities experienced by banks during the financial period of 2007-2009. The author illustrates how the behavior or one or three-month Libor showcases the role of interbank markets in term maturities. Amidst the widespread interest witnessed in such markets, the author illustrates that little data exist on dollar interbank lending for maturities. As such, a methodology that infers individual term dollar interbank loans is explored through the application of a set of filters to payments settled on the Fedwire Funds Service. The authors introduce several innovations and refinements in line with previous research by Furfine (1999). They suggest diagnostic tests needed for a novel and useful source of information regarding the term interbank market. [/ht_toggle]