A bank transit routing number is a 9-digit number that serves to identify the financial institution responsible for the payment of a negotiable instrument such as a check.
More Info: A bank transit routing number, also known as routing number, RTN, or ABA number, was developed in 1910 and adopted in 1911 by the American Bankers Association as a means to register financial institutions as a means to expedite transactions. The number now serves to accommodate the Federal Reserve System, electronic funds transfer, and the Expedited Funds Availability Act.
For a check to qualify as a cash item, the Federal Reserve requires that along with the routing number, printed in the lower left corner of a check, the name of the paying bank be printed on the face of check along with the city and state’s location of the paying bank.
What Happens If Banks Merge?
When two banks merge, the single entity becomes responsible for all routing numbers assigned to the institutions involved. The single entity must choose one routing number and retire the remaining. If the institution can give good cause why retiring the number would cause a hardship such as increased collection costs or delay collection significantly. In this case the bank will have three years in which to retire all other numbers at which time outstanding checks printed with the retired routing numbers become invalid.
“American Bankers Association Routing Number Administrative Board Routing Number Policy.” American Bankers Association. N.p., n.d. Web. 27 Sept. 2010. www.aba.com/nr/rdonlyres/80466d2c-4225-11d4-aae6-00508b95258d/42901/policy.pdf.
“FDIC: Check Clearing for the 21st Century (Check 21 Act).” FDIC: Federal Deposit Insurance Corporation. N.p., n.d. Web. 28 Sept. 2010. http://www.fdic.gov/consumers/consumer/alerts/check21.html.