MICR vs Swift Code
Though there is no connection between MICR and SWIFT codes, many people all over the world are confused between these two terms that signify two latest technologies used by banking institutions to facilitate money transfers. Whereas MICR is the latest technology that has helped immensely in clearing a very high number of cheques daily by a branch, SWIFT code is a unique identification code that helps in identifying the branch and the bank that allows one to transfer funds internationally. The differences between MICR and SWIFT codes will be self evident once both have been highlighted in this article.
What is MICR?
MICR stands for Magnetic Ink Character Recognition and is a foremost technology being employed by nearly all banks and other financial institutions for processing of checks (cheques) these days. Instead of the manual processing of checks (cheques) earlier, which took a lot of time and effort, MICR makes it possible for computers to process the information encoded in checks (cheques) and thus thousands of cheques can be processed in a single day, saving a lot of time and money and allowing very fast and efficient transfer of money across banking institutions. Another factor that goes in favor of MICR is the fact that the code can be easily read by people unlike barcodes that require scanners to be read. So a cheque can be verified manually also with the help of MICR code.
Actually, MICR code is a series of numeric characters that is printed in magnetic ink at the bottom of a check (cheque) and contains the information about the branch and the bank. When this cheque is passed through the head of a machine that reads it, each character produces a waveform read by the machine easily. The machines used for this purpose are highly accurate and there is no mistake even if thousands of checks (cheques) are processed, which is why MICR has become so popular in all parts of the world.
What is a SWIFT Code?
SWIFT stands for Society for Worldwide International Financial Telecommunication and is actually an alphanumeric code that identifies your financial institution. This code makes it faster and simpler to send money electronically from one country to another. In fact, SWIFT codes are used for international money transfer only.
SWIFT codes have been developed by ISO and contain 8-11 characters where first four are the code for the bank, next two are the code for the country, next two being the code for the location of the branch. If the code is of 11 digits or characters, last 3 characters identify the branch.In case of 8 letter code, it is assumed that the code if for primary office only. Though money is transferred very easily using SWIFT codes, banks charge a fee per transaction that can be $25-$35.
Difference Between MICR and Swift Code
• SWIFT codes are codes that help in easier identification of the financial institution thus making international transfer of money almost instant.
• MICR is a technology that uses magnetic ink and makes processing of a large number of checks (cheques) very easy.