What is the Fraction Code Found on Checks?
Fraction codes were once used by financial institutions to route checks to the proper bank for payment. In the 1950s the MICR code (magnetic character ink recognition) helped to automate the check routing process. With the MICR line, routing numbers and account numbers were printed on the bottom line using machine-readable magnetic ink.
While the fraction code is rarely used to process checks today, it is still printed on most personal checks and business checks. It can normally be found near the upper right hand corner, although this is not necessarily where the fraction code is always located.
There are three basic parts to a fraction code following the pattern AA-BBBB-FFFF. The AA portion indicates the city or state from which the bank issuing the check is located. Major cities in the United States were given a number from 1 to 49 based on their population size in 1900. For example, New York was given the number 1, and Los Angeles was given the number 16. These numbers have not been changed along with changes in the population of major cities.
If the number is a single digit (1-9) the leading zero is usually not included. Numbers 50 and up are used to indicate specific states or U.S. territories.
The second part of the fraction code (BBBB) is the bank's ABA institution identifier. This designates a certain bank within that city or state. Since the year 1911, the American Bankers Association has given unique numbers to every financial institution. There are currently around 27,000 ABA numbers in existence. This number forms digits 5 through 8 within the 9-digit routing number on the MICR line.
The final part, or denominator of the fraction code (FFFF), was once used to route checks to the proper Federal Reserve Check Processing district and branch so that checks can be cleared. These numbers are the first four digits in the routing number. The final digit on the routing number of your MICR line is calculated mathematically and is used to make sure check processing equipment reads checks properly.
In some cases there is also a fourth element on a fraction code. This is the bank's branch number. This is the only part of the fraction code you won't find on the MICR line. Instead it may be used internally by a bank or credit union to indicate where a signature card is located or to contact the correct location in case of an overdraft.
A fraction number is not needed in order for checks to be processed since it is virtually the same information as the routing number on the MICR line of your business or personal checks. The only time a fraction code may be used is when the MICR line is torn or unreadable for some reason.
When you order checks online, many check printers, including Check Advantage, can determine what your fraction code should be using the digits you entered for your routing number.