Routing numbers are a unique set of numbers assigned to different financial institutions. In the United States, an ABA routing number is usually a nine-digit number printed directly on the back of checks for easy identification of the bank on which it's drawn. This type of routing numbers, also called ABA zone numbers, is used by banks and credit unions everywhere in the country to quickly and easily determine account balances and check balances.
What are they?
The nine digits assigned to your routing number usually consist of the bank name, ABA branch where that bank operates, and the state it's located in. For example, if your bank name is "Bank of New York," then your routing numbers will begin with "BNQ". The "BK" part of the bank name is simply a lowercase letter, such as "BKT". Then, of course, there's the bank name itself and the rest of the numbers, including digits ranging from zero to nine, which represent various financial institution locations. These digits are then printed in block letters, much like you see when you get bank statements. Read on how to find your Routing Numbers
The most common use for ABA routing numbers is when people access online banking. When you go to an online banking website, for instance, all you need to do is punch in your account numbers. Typically, the "checks" displayed come pre-filled, but if you want to enter any other information - including routing numbers - you'll be able to do so after you've typed them in. Once you've submitted your information, you'll be given control over whether or not your changes are applied right away. In this way, it serves two purposes: first, the site keeps track of what bank numbers you have access to; and second, if you want to go ahead and make changes and enter new information, the site keeps track of it for you and won't let you bypass the verification process until you're authorized to do so. (This is often a security measure designed to prevent tampering and theft.)
Another common use for ABA routing numbers is when financial institutions print checks. This is most commonly seen in the United States. In the case of paper checks, the financial institution that issued the check must store the routing number of the payee in its system. If you want to cash the check, simply write the check number on a piece of paper and then wait for the payment to be posted to your account. It may take a while - a few hours perhaps, even up to a full day - for the check to be posted to your account, however, once it is, you can then cash the check and gain immediate access to your funds. (If you need the money right away, however, you'll want to go ahead and cash the check yourself so you can avoid waiting for the check to post to your account.)
In the case of electronic banking, such as at a bank, the system is somewhat different. There are actually two different types of banking in the United States: electronic and traditional. Electronic banks tend to use what are called EAN (Electronic Data Association) cards. These cards come in nine-digit numeric format, just as the ones used in ATMs, but they also have a unique hexadecimal code that denotes which financial institutions issued them. You can think of these banks as being like ATMs, only they don't operate with cash. Instead, you pay through your computer to access your account.
What can you do with it?
If you want to send a sum of money from one part of the world to another part of the world, this is where the routing numbers come into play. To send a currency payment from the United States to Greece, for example, you would need to know the seven-digit routing number of the ATM where you would like to deposit your money. (This is called an International Wire Transfer, or IBT, and is used quite extensively throughout the world.) When you see the number in hexadecimal, it is referred to as a swift code. This means it is impossible for anyone else to figure out what the numbers mean and therefore you can send the payment without delay or hassles.
What are routing codes? In essence, routing numbers are assigned by financial institutions to identify their different branches so that transfers from one financial institution to another can be clearly identified. However, as mentioned above, the meaning of the numbers itself can be highly confusing. The Swift Code is assigned by the IATA (International Air Transport Accreditation Commission) and the CAB (Carrier Association of America). The actual meaning of the term "Routing Number" is "a three-digit number used by air transport operators to identify their branches". It is widely believed that the Routing Numbers came into existence when the US Postal Service began using of street addresses in their deliveries of letters and packages.
However, many people don't realize how important the Routing Number system really is. In fact, not only does it speed up the process of transferring funds, but it also allows for a much more efficient transfer process between financial institutions. Let's say you go to a financial institution where you have applied for a loan and you want to know which branch the check is coming from. Without a routing number, the financial institution may consider you to be a private or an unassigned customer, which would make it more difficult transfer request. However, if you know the routing number, then all you need to do is show them the routing number so that your funds can be transferred into your account without any complications.
