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The SRI ERMA Project
The Infallible Reading of Account Numbers: Magnetic Ink Character Recognition (MICR)
SRI invents the magnetic ink font used worldwide to this day in automatic check processing
A second major innovation in the ERMA project was the preprinting of checks with individual account numbers that could be read automatically as well as by humans with great fidelity. The solution was to create a machine-readable font using magnetic ink.
During the project, the Bank of America considered an optical reading system from a company in Arlington, Virginia, that had one of the first optical character readers. At that time, the check owner's account information was being imprinted on the back of the check in both optical and magnetic bar codes. But optical methods were too susceptible to overwriting by check cancellations or other incidental marks, and bar codes were not readable by humans. An identical problem was under way at SRI, dealing with the automatic sorting of traveler's checks for the Bank.
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To avoid optical problems in both kinds of check, Ken Eldredge, then director of SRI's Control Systems Laboratory, invented a magnetic ink font of numeric and ancillary characters. The account number, now with magnetic-ink font characters that were readable by both humans and machines, was moved to the front of the check. MICR is still used worldwide today for processing checks.
SRI was issued U.S. Patent Number 3,000,000 for its invention, which was assigned to General Electric. It has been said that because of the particular importance of the invention, the Patent Office delayed issuing a patent number for a time so this "landmark" patent number could be applied. Representatives of the Patent Office traveled to SRI's headquarters in Menlo Park, California to present the issued patent in person. |
The Final Hurdles
To complete the development cycle, ERMA had to go to production. According to Jerre Noe, by that point 24 companies had some interest in bidding on the job. SRI had demonstrated a technical approach, and newer technology would make it even better. General Electric won the competition. While GE's Industrial Computer Section pondered the market for ERMA, it simultaneously contracted SRI's business group in mid-1956 to examine the banking and other related industries and estimate the total market for a system such as ERMA. The research was essential since ERMA was GE's first entry into the computer field.
SRI technically supported the ERMA production design at GE until 1957 or 1958. The total cost to the Bank for ERMA was about $10 million. SRI's billing to GE over the transition was less than $1 million and in August 1957, SRI received a contract from GE to dispose of the SRI ERMA prototype at a cost of $5,500.
The first GE-produced ERMA system was installed at the Bank of America in 1959. The units included a sorter/reader, a computer, magnetic tape units and a high-speed printer. During the following two years, an additional 32 systems were installed and by 1966, 12 regional ERMA centers served all but 21 of Bank of America's 900 branches. The centers then handled more than 750 million checks a year, about the number they had predicted to occur by 1970.
Without ERMA, the bank industry would have failed to meet the demand for account updates and account access of a rapidly growing customer base.
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