For years, paper checks were manually sorted, grouped and sent back to the banks responsible for paying the transactions. To speed up the check payment process, the American Bankers Association proposed assigning a unique number to each bank. As a result, in 1911 every bank was assigned an ABA Routing Number. The number is required to process paper checks, automated clearinghouse transactions and wire transfers in the United States.
One of the fastest and safest ways to send money between banks is via a wire transfer. This is an electronic transfer of funds that's processed between two banks without being sent through the Federal Reserve Bank's automated clearinghouse. The sending bank verifies the account holder's identify and that the account has sufficient funds, while the recipient bank verifies the identify of the recipient account holder. Funds often are available to the recipient the same day they are transferred.
American Bankers Association Routing Number
Since the purpose of the ABA Routing Number is to speed up transactions by getting documentation to the paying bank as quickly as possible, a bank can have up to five routing numbers to assign to different types of transactions, depending on where they are processed. In practice, many banks have even more because of mergers with other banks. Because wire transfers usually are processed separately from other transactions, many banks use a separate ABA Routing Number for these transactions.
ABA Routing Number Design
A wire transfer number is a nine-digit code. The first four digits are assigned by the Federal Reserve Bank. They indicate the Federal Reserve district with jurisdiction for the transaction and contain legacy information about where checks for that district were processed. The next four digits are the bank's ABA identification number within the Federal Reserve district. The last number is a check digit that helps identify invalid routing numbers that might have been mistyped or misread.
ABA Routing Number Registrar
Since 1911, Acuity has been the official registrar of ABA Routing Numbers. Twice a year, the company publishes the ABA Key to Routing Numbers, which contains the official list of valid ABA Routing Numbers in use at the time. As of 2015, there were approximately 28,000 active ABA Routing Numbers.