The number serves the same function in the digital world, where payment is made electronically. It’s telling the institution that processes the payment where it’s coming from. ![]() In this case the routing number is 123456789, and it corresponds to your bank. located on the left-hand side of a physical check It identifies the financial institution associated with the payment. Routing number exampleĪ routing number is the first nine-digit series of numbers. If you are trying to perform an electronic transfer, set up a direct deposit, or set up an automatic bill payment, you will need the routing number. It’s a way for banks to distinguish which financial institution is responsible for payment.īanks first started using these numbers based on a system set up by the American Bankers Association in 1910 (that’s why they are formally called “ABA routing transit numbers”). Source: iStock What is a routing number on a check?Ī routing number is a nine-digit code used to identify your financial institution. For example, they are necessary for direct deposits, an increasingly common way to pay wages, which makes knowing them and understanding how they differ important. You need these numbers for financial functions that involve transfers of money. Think of them as two components of a financial address: the routing number specifies the financial institution, and the account number identifies the specific account at that institution. That’s where routing and account numbers come in. Like a physical address, money needs a set of directions. ![]() When you execute a financial transaction, you are sending money from one financial address to another.
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