Jennifer is a writer at Plaid, covering lending and payroll. She believes in the potential of new financial services to enable greater financial access.
Table of ContentsYou've probably seen the long strings of numbers on the backs of credit cards or at the bottoms of paper checks. It’s clear that these numbers are involved with financial transactions, but what exactly do they signify? Where do they come from, and how are they used?
This article will explore the history and precise meaning of account numbers. It will consider the difference between commonly used numbers like account-, routing-, and credit-card numbers—as well as how to find them. Finally, it will explore how account numbers are slowly giving way to more modern verification and security measures, ones less prone to errors and fraud.
An account number is a unique string of numbers, letters, and other characters that identify a specific financial account. Almost all financial transactions make use of account numbers. Examples of account numbers include routing numbers and credit card numbers.
Bank accounts have existed since ancient Mesopotamia, but the account number is a more recent invention. Financial account numbers as we know them today are thought to have originated when computers began to be used for banking in the late 1960s. Since then, account- and routing numbers have helped to securely identify account holders and financial institutions, respectively.
In the United States, each bank assigns account numbers using its own methodology, kept private for security reasons. Most bank account numbers have between 8 and 12 digits, though they can range from 5 to 17. To protect account numbers from fraud, financial institutions may also use multi-factor identification, two-step verification, and other security measures.
Every financial transaction involves at least two account numbers: one that indicates where the money is coming from, and one that indicates where it is going.
Yes, the account number is like the fingerprint of the financial account. It does identify the account holder, but it's associated with other information as well. For example: physical address, phone number, email address, age of account, account balance.
A person may hold multiple accounts, each with its own unique account number. If a bank merges with or acquires another bank, account numbers may change. Banks must legally notify their account holders of any account changes.
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In the same way that every financial account is assigned a unique account number, every financial institution is assigned a unique routing number. These financial institution routing numbers are known as RTNs (Routing Transit Numbers) or ABA (American Bankers Association) routing numbers.
A routing number is a sequence of 9 digits. Small financial institutions typically have just one routing number, while larger multinational institutions can have several based on location. Routing numbers are issued only to federal- or state-chartered financial institutions eligible to maintain an account at a Federal Reserve Bank. If two banks merge, or one bank acquires another, the applicable routing numbers may change.
The first four digits of a routing number are called the Federal Reserve Processing Symbol.
Digits five through eight comprise a unique identity code assigned to the bank by the American Bankers Association.
The final digit of the routing number is called a “check digit.” Whereas the other digits refer to identifying information about the specific financial institution, the check digit is calculated using the other eight digits as a way to ensure authenticity and prevent fraud. (Thus “check” is used in the sense of “verify” rather than “paper check.”)
Because no two financial institutions share all of the identifying information listed above, every routing number is unique.