What is an ABA Routing Number?

An ABA (American Bankers Association) Routing Number is a 9 digits code used in the US. This number appears in the bottom of a Cheque, which identify the bank associated with the customer’s bank account. To identify the ABA routing number look at the left corner of the negotiable instrument such as Cheques, deposit slip etc.

The ABA routing number is used by the Federal Reserve Bank to transfer funds and by the ACH to process debit or credit payments and for other Automated Clearing House (ACH) transactions. The ABA routing number is administrated under the sponsorship of the American Bankers Association, which was designed in 1910.

The ABA routing number appears twice on a Cheque i.e. in the fraction form and the MICR (Magnetic Ink Character Recognition) form. Both the forms give the same information but there is a slight difference i.e. MICR form is printed in magnetic ink and it’s readable by machines. Whereas the friction forms are used for manual processing.

Generally MICR form is served as a backup in Cheque processing to prevent it from fraud and other precautionary measures.

The 1st two digits of the 9 digits ABA number must be in the range of 00 through 12, 21 through 32, 61 through 72, or 80.

Rest of all digits is associated as follows:

• 00 is used by the Government of The United State.
• 01 through 12 are the "normal" routing numbers, and correspond to the 12 Federal Reserve Banks. For example, 0160-0959-3 is the routing number for Bank of America incoming wires in Boston, with the initial "01" indicating the Federal Reserve Bank of Boston.
• 21 through 32 were assigned only to thrift institutions (e.g. credit unions and savings banks) through 1985, but are no longer assigned .
• 61 through 72 are special purpose routing numbers designated for use by non-bank payment processors and clearinghouses and are termed Electronic Transaction Identifiers (ETIs), and correspond to the normal routing number, plus 60.
• 80 is used for traveler's cheques.

Sample of ABA Routing Number:

ACH Fraud Protection Tips

According to the latest cyber crime ACH fraud or Automated Clearing House fraud has been experienced by many banks. An ACH transaction is a payment processed via the ACH Network to transfer funds electronically between bank a/c’s using a batch file processing system. Generally it is used for direct deposit of payroll, social security payments and corporate use it for tax payments to IRS (Internal Revenue Service). All the Rules and regulations of the ACH transactions are governed by NACHA (National Automated Clearinghouse Association).

How ACH Fraud Occurs?
ACH fraud or Automated Clearing House fraud can occur quite easily. An individual may require few details to commit this type of fraud, i.e. your checking account number and your bank routing number. These details are utilized to initiate the fraud. He may use your bank account and routing numbers to make payments by making a phone call to the vendor or through web transactions.

ACH Fraud Protection
One of the easiest ways to get protect from ACH fraud is to install ACH Blocks or ACH Filters on your bank a/c. This type of service is provided by the Bank to its clients to monitor incoming ACH activity. By using this tool you can scrutinized all the transactions. Suspicious transactions are presented directly to you. You can also set restrictions for ACH payments which will control of what payments get authorized.

What can you do if you Detect an ACH Transaction Fraud?
If any ACH Fraud is detected in your bank a/c, then you need to notify your bank within 60 days whereas corporate a/c needs to notify the fraud within 2 days. If you report the fraud within the time frame, then you will not be responsible for the fraud. According to NACHA rules the originating bank must pay compensation to the victim and then try to recover the loss from it’s customer.

One of the best way to prevent ACH fraud is to review and reconciliate your bank statement regularly, whereas corporate accounts must be reviewed daily to avoid fraud.

ACH Payment Authorization Form

Automated Clearing House(ACH) payments are similar to automated credit card billing payment that is withdrawal directly from the checking customers account. To make an ACH payment you need to authorize the concern management company to debit ONLY the amount mentioned in the singed ACH payment authorization form. This is a cost effective, easy and secured process to ensure that the payments are made on the due date. This process is helpful for you, if you forgot to make a monthly payment on time. On receipt of your ACH authorization form the concern business required minimum of 10 days to activate the ACH debit from your account.

One Time ACH Payment Authorization Form Spec. Copy.

(Click in the Image To Enlarge)

Advantage of Automated Clearing House & ACH Payment

The Automated Clearing House (ACH) is an electronic network system that helps banks and other commercial institutions to clear electronic payments efficiently. The network operated by the rules and regulations developed by the National Automated Clearing House Association (NACHA). Below are few benefits and advantages of ACH processing:

Get Rid of Paper Checks for Routine Payments
An a/c holder of a bank has to clear his debts on monthly basis or on a specific period of time. Previously he had to issue checks for this proposal. This was tough for the customer as well as for the banker. For processing the paper checks it take lot of time. The a/c holder needs to pay some charges if he issue checks after the due date. Even the bank had to spend some money on petty expenses like postal charges, etc. With the invention of Automated Clearing House (ACH) you can make all the transaction online. All you need to do for the whole process is to send an authorization letter to the bank.

Encourages Financial Management and Facilitates Investment
Automated Clearing House (ACH) is one of the easiest ways to maintain proper financial management and control. If an a/c holder is not having the facilities of an Automated Clearing House he may not have any control over his spending. This system transfers your fund automatically on a specific date. As a result reserved funds are kept for your savings and investment.

Minimize Paperless Operations in Banks
Without Automated Clearing House (ACH) private and public sector banks need to maintain ledgers and other books of a/c to enter all the transaction made in the bank. The banks need to maintain many books of a/c and also need to audit them regularly. By the help of Automated Clearing House (ACH) banks are relieved from all these formalities. This ACH process saves time and money but also error free transactions are made.

Is ACH Right for You?
This option can be selected only if you need to keep some fund reserved for saving or investment for any other purpose. If the fund is not available in you’re a/c during the due date the bankers will impose fine as a penalty. Consequently if you are not sure that you can maintain the fund during the due date, in such case you will need to select the traditional payment method to make sure that you are not at a loss.