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More on ERMA and Stanford Research Institute • ERMA and MICR, the Origin of Electronic Banking • Stanford Research Institute - Timeline of Innovations Related Innovations • The History of Money and Credit Cards • The History of ATMs • Software Innovations

During the 1950s, researchers at the Stanford Research Institute invented "ERMA", the Electronic Recording Method of Accounting computer processing system. ERMA began as a project for the Bank of America in an effort to computerize the banking industry. ERMA computerized the manual processing of checks and account management and automatically updated and posted checking accounts. Stanford Research Institute also invented MICR (magnetic ink character recognition) as part of ERMA. MICR allowed computers to read special numbers at the bottom of checks that allowed computerized tracking and accounting of check transactions. 

ERMA was first demonstrated to the public in 1955 (September), and first tested on real banking accounts in the fall of 1956. Production models (ERMA Mark II) of the ERMA computer were built by General Electric. Thirty-two units were delivered to the Bank of America in 1959 for full-time use as the bank's accounting computer and check handling system. ERMA computers were used into the 1970s.

According to Stanford Research Institute's website:

The forty-year-old project [ERMA], provided a vision of what business could expect from the application of data-processing machines, and illustrates how and why some of the key capabilities were invented, including bookkeeping, checks with pre-printed account numbers, optical character recognition (OCR or scanning), and robotic document sorting (ten checks per second). The automated teller machine (ATM) is the natural descendant of this work, and illustrates the progression away from paper checks toward all electronic banking.

ERMA Mark II was designed around solid-state logic elements (i.e. transistors) and magnetic core memory. Numeric data input was read automatically from the original documents using the MICR method. SRI contributed to General Electric's development effort with consultation on character reading and paper-handling techniques and assistance with the detailed programming of the operational steps to be followed by the new equipment.

The Stanford Research Institute researchers behind ERMA and/or MICR were: Jerre Noe, Byron Bennett, C. Bruce Clark, Bonnar "Bart" Cox, Jack Goldberg, Fred Kamphoefner, Philip E. Merritt and Oliver W. Whitby, and others.

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