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How is a Check Processed?

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How is a Check Processed

Many people are most familiar with digital payments these days. Finding someone who knows how to fill out a check is rare anymore, and you might not even realize that the information that is being used in the background of your electronic payments is still linked to check information.

For many years, checks were the standard for secure processing of money between people or between accounts inside of the same bank. The basic process of deposits and transfers still applies, even if you are not using checks to create these transactions in most cases.

What is the Check Clearing Process?

Most people are familiar with what a check is, even if they have never filled one out. A check is a written promise to give money to another person. The check has all of the right information needed to move the indicated amount of money from your account to another person’s account.

The check clearing process is a third-party process that is handled by an intermediary bank. This third party holds the check to confirm that the amount of money that is supposed to be transferred is present in the account of the person who wrote the check. The third-party bank converts the value of the check to cash and places that cash into the bank account of the recipient.

What Are the Types of Third-Party or Intermediary Banks?

The Federal Reserve bank is commonly assessed for this process, but there are also correspondent banks that are working in partnership with other banks to process payments. These correspondent banks will care for the processes that are needed to verify check amounts with the Federal Reserve.

Clearinghouse institutions also handle these transactions, and they work as the intermediary for electronic exchanges to make sure that the account that is offering money to another account has the stated funds in it at the time the transfer is requested.

What Information Is Needed to Deposit a Check?

There are some basic items that the bank will need when you are going to deposit money. This information is needed whether you are going to process a virtual transfer, deposit a paper check, or use your routing and account number for an online purchase:

–  Digits in a Routing number

–  Account number

–  Account holder’s name

–  Amount of the transfer

–  Verification of account ownership for internal transfers

You will need to know how to locate your account number and routing number any time that you do not use a plastic card to make a purchase or perform a transfer or deposit in the bank itself or through your banking app.

What is a Bank Routing Number?

You might be aware that you have a unique account number associated with your account, but you probably did not know that banks have routing numbers as well. These numbers were assigned to help eliminate confusion about which bank is which in the US. Many banks have similar names, and the potential confusion related to accessing accounts at each bank by name is removed through the use of a routing number.

A bank’s routing number is included on your checks and is also present in the background of virtual transfer processes as well. Any transaction that is processed through your account has the related bank’s routing number present in the transaction.

Routing numbers are unique and there will never be another bank that has the same routing number as yours. Large entities will have many routing numbers for unique portions of their banking network, but small banks will often just have a single routing number.

Depositing checks is not common anymore, but there might be instances that will come up where knowledge about how checks work is important. You should always have a basic grasp of how checks are processed to make sure that you are aware of the processes that govern your banking activities.


Kossi Adzo is the editor and author of He is software engineer. Innovation, Businesses and companies are his passion. He filled several patents in IT & Communication technologies. He manages the technical operations at

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