Routing numbers are a series of numbers provided to the customers by the bank to ensure the safety of transactions. Transactions are done via checks, withdrawal and deposit slips, net banking, or any online platform. The transactions are given routing numbers to ensure that they transaction is routed properly. These routing numbers are called Routine Transfer Numbers, aka RTN or Bank routing numbers. Both the ABA and ACH routing numbers are a series of nine-digit numbers, therefore, they are confused. However, there is a main key difference.
Key Takeaways
- ABA routing numbers identify the bank in a financial transaction, while ACH routing numbers facilitate electronic transfers.
- ABA routing numbers are nine digits long, while ACH numbers may be the same or slightly different.
- ABA numbers are used for wire transfers, while ACH numbers are used for direct deposits and bill payments.
ABA vs ACH Routing Numbers
The difference between ABA and ACH routing numbers is that ABA routing numbers are used for paper transfers like checks. And the ACH routing numbers are used for electronic transfers. Also, in ABA, the number series’ first two digits start from 00 to 32, while in ACH, the first two digits range from 61-72.
ABA routing numbers were designed in 1910 by the American Bankers Association, and the name is also given in their honor. It is designed to identify the route of the bank, namely the bank it is drawn upon, the city, and the code of the federal reserve bank.
ACH routing numbers are the same as ABA routing numbers as they are also nine-digit numbers used to ensure the proper route of the transaction. Though the difference is that ACH routing numbers are used for electronic transfers only. Indeed, Digital transactions like direct deposit or direct payment.
Comparison Table
| Parameters of Comparison | ABA routing number | ACH routing number |
|---|---|---|
| Full-form | Americans Bankers Association. | Automated Clearing House. |
| What are they? | It is a nine-digit number used to ensure the route of the paper transfers. | It is also a nine-digit number. It is used to ensure the route of the electronic transfers. |
| Used since? | It is in use since 1911. | It arose in the late 1960s. |
| The first two-digit number range | The first two digits range from 00-32. | The first two-digit numbers range from 61-72. |
| Where they are mentioned? | It is mentioned at the left-bottom corner of the check. | It is mentioned next to the account number. |
What is ABA Routing Number?
ABA, the name is given after the Americans Bankers Association as they proposed this system. So their initials are used to name it. The system was developed in 1910, though it has been in use since 1911. The ABA routing numbers are a series of nine-digit numbers. These numbers are code that specifies the details of the bank upon which the check is drawn upon, from where it is transferred, and to where. These numbers are specific to the bank, its branch, and the city.
ABA routing numbers are used to ensure the paper transfer route only, like the checks. The numbers are mentioned at the left-bottom corner of the check. The first two digits of the nine-digit series indicate the financial institution. And these two digits range from 00-32. The US government uses the digits 00, and credit unions mostly use the numbers 21-32.
The 3rd and 4th digit represents the Federal Reserve Bank district branch. The 5th, 6th, 7th, and 8th digit represents the institution where the checking account is held onto. And the last digit is the single check digit.
The routing numbers are used for any paper transaction, like reordering checks, paying bills via checks, and direct deposit with the employer. It makes the sorting, bundling, and delivering easy of the checks.
What is ACH Routing Number?
ACH stands for Automated Clearing House. ACH is a network that processes financial transactions and ensures the correct route. ACH network is used for only electronic transfers. This process arose in the late 1960s. The operators of the ACH are the Reserve banks and the Electronic Payment network. NACHA, the National Automated Clearinghouse Association, established the rules and regulations for the ACH network.
These transactions are processed for federal, state, or local governments, consumers, and businesses. This transaction includes all electronic transactions like tax refunds, DD for payroll, social security, insurance premiums, mortgage, e-commerce payments, etc.
ACH routing number is also a nine-digit number series that identifies the clearinghouse. These numbers are unique and represent banks and their branches. It shows where the payment is taken from and where to send it. The first two digits of the routing number range from 61 to 72.
The routing numbers can be checked on the website of the bank. You can log in to your bank account, the ACH number is mentioned next to the account number in the checkbook. Also, the ACH routing number is on the website under the “electronic” or “direct deposit” option as well.
Main Difference Between ABA vs ACH Routing Numbers
- ABA stands for the Americans Bankers Association. ACH stands for Automated Clearing House.
- ABA routing is used for paper transactions only, while ACH routing numbers are used for electronic transactions.
- The first two digits of the ABA routing number range from 00-32. In contrast, ACH routing numbers have the first two digits ranging from 61-72.
- Not all ABA routing numbers are ACH routing numbers. But some ACH routing numbers are ABA routing numbers.
- The design of ABA was proposed in 1910, and they have been in use since 1911. The ACH routing number system arose in the late 1960s.
- https://www.ingentaconnect.com/content/hsp/jpss/2008/00000002/00000002/art00011
- https://www.ingentaconnect.com/content/hsp/jpss/2019/00000013/00000001/art00006
Last Updated : 13 July, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
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Understanding the key differences between ABA and ACH routing numbers is fundamental in ensuring the correct routing of financial transactions.
Understanding the history and purpose of ABA and ACH routing numbers elucidates their significance in the safe and efficient completion of financial transactions, especially across diverse platforms.
The detailed comparison table and the explanations of ABA and ACH routing numbers offer a clear understanding of their functions and how they differ in their use.
The ABA routing number identifies the bank in a financial transaction, while ACH routing numbers facilitate electronic transfers. ABA routing numbers are nine digits long, while ACH numbers may be the same or slightly different. We should also keep in mind that ABA numbers are used for wire transfers, while ACH numbers are used for direct deposits and bill payments.
Absolutely, it’s very important to know these differences in routing numbers to ensure the security and success of our financial transactions.
The information provided here offers a comprehensive understanding of ABA and ACH routing numbers, shedding light on their purpose and differentiation in financial transactions.
The ABA and ACH routing numbers are crucial in ensuring the proper route of transactions, with ABA routing numbers mainly used in paper transactions, and ACH routing numbers used in electronic transactions.
Yes, understanding this difference is vital, particularly for businesses that handle a large number of transactions through different channels.