The check printing business has gone through hundreds of years of refining. In the 1600’s, England began using checks as a way to eliminate the problem of carrying sacks of money. Checks did not become a popular way of conducting money transactions until the early 1900’s. By 1913, checks were widely used in the United States and by 1915, W.R. Hotchkiss had created Deluxe Check Printers, a leader in the check printing business now called Deluxe Corporation.
As personal checks became more and more popular, an overwhelming problem developed. The process by which the checks were sorted to the correct account number was painstakingly slow and expensive.
By 1952, there were approximately 8 billion checks a year that needed to be processed. On one day alone, there could be 69 million checks requiring sorting.
Dr. Kenneth R. Eldredge of the Stanford Research Institute to the American Banking Association, came up with a solution to the problem. His solution is well known today as MICR technology, which he patented in 1961. The patent number 3,000,000 was given to him. The patent office held this number for someone who would create a significant invention and they felt that this invention was significant.
MICR stands for magnetic ink character recognition. Dr. Eldredge used a special type of ink toner that had iron oxide in it. When the check was passed through a magnetic machine, the iron oxide particles became magnetized. These created patterns which were then recognizable by the magnetic reader. This allowed for matching checks to checking account numbers.
A special font was selected to use with this technology. That font can be seen in the bottom left hand corner of any bank check. The first font was called “E-13B.” The font has ten numbers and four symbols. This has been revised five times so the letter E was used to represent that. The 13 was used to represent .013-inch which was the design of the font. The B represents the second revision to the system.
By 1963, a standard had been set by the banking industry. The American National Standard Institute (ANSI) recognized the MICR technology and the chosen font as the one to be used on all printed checks.
Many revisions have been made over the years, but this original technology paved the way for the check business.
In the 1980’s the check business was predicted to be on the decline because of the use of electronic fund transfers. Thirty years later, the check business is still hanging in there.
Deluxe Corporation, recently acquired Custom Direct checks for $98 million. Deluxe reported sales of $1.34 billion dollars in the past 12 months. They are anticipating the new purchase of Custom Direct will increase their revenues by $60 million. They have successfully positioned their company as a leader in checks sold directly to consumers and not through financial institutions.
Although technology makes electronic funds cheaper than processing printed checks, the check printing business is still thriving in 2010. With fierce competition between VistaPrint, Walmart, Checks In The Mail, Carousel Checks and Harland Clark, it seems that Deluxe Corporation is currently the leader in this industry.
Sherry is a nice writer and an even nicer person to do business with. Highest recommendation!
Interesting and informative article but in the long run, checks are toast.
Sherry Tingley says
They predicted that to happen back in the 80’s. It seems to be going well enough for Deluxe to want to purchase another check company for $98 million. Thanks for your comment!
Sherry Tingley says
Thank you for your comment. It’s always nice to hear those kind of comments.
Thanks for the information!
I wonder if Jeff has a checking account. Likely that he does and also likely that he has a checkbook. One day those checks will run out and he may be able to get “freebies” at his bank. If that happens he is in the minority.
Actually, in 2008, there was an increase in check sales – not a decline. People may use online banking for many payments but checking accounts and checks will be with us for a long, long time. “Custom” personal checks with quality images are more popular than ever.
I know that our sales of both business and personal checks have been increasing greatly. We only began selling checks online back in 2007 and we are quite optimistic about continued growth.
Sherry Tingley says
Thanks for your comments Bill. I totally agree with you!