You may not realize it, but if you carry cash, you’re also carrying around a wallet full of magnets. This is also true if you have a checkbook. Magnetic ink is used in both paper money and checks to keep them secure by deterring things like forgery and counterfeiting. And while magnets are constantly used in the world of innovation and new ideas, magnetized money has remained virtually unchanged since it was first introduced.


There are a few reasons your hard-earned dollars are magnetic. To start with, bills of every denomination are printed with a special ink that contains iron filings--much like ferrofluid. This means that bills are paramagnetic, meaning they’re only magnetic in the presence of another force. You can see that theory tested here.

But why magnetize money in the first place? There are a few reasons. As mentioned earlier, one of the big reasons is to deter counterfeiting. Each bill has it’s own magnetic signature that can be read by ATMs, money counters, and even vending machines.

In the same way that these machines can detect whether or not a paper bill is real, they can also sense what denomination it is. Ever wonder how a vending machine can tell whether you’ve put in a $1 or $5 bill, even though they’re the same size, color, and weight? The answer is the magnetic ink. Sensors in the vending machine, can read different amounts of iron in each bill like a signature and quickly determine how much money you still owe or how much change to give back.

There’s a lot that goes into minting paper money, you can find out more here.


Ever notice that weird font on the bottom of your checks, the one used for your routing and account numbers?  This is actually called the E-13B font and is specially designed to work with magnetic ink. Whenever you deposit a check at an ATM or with a teller, it’s inserted into a special machine called an MICR (magnetic ink character recognition). The MICR determines what account the check is coming from as well as which bank.

As you may have already guessed, the MICR system is also used to prevent fake and forged checks. Not only can banks tell immediately if the check lacks magnetic ink, but it can also use this technology to determine fake accounts and/or routing numbers or if a check with that particular number has already been used.


Finally, the black bar that runs along the back of your credit or debit card? You guessed, it’s magnetic. Much like vending machines with cash, when you slide your card through a POS or SigCap machine, magnetic sensors pick out a signature unique to your account. Unfortunately, this method has demonstrated some serious drawbacks. For one, putting a magnet too close your cards could wipe them of their signature. Another fear is illegal card readers that can steal your account information without even removing the card from your wallet. As a result, credit card companies are moving away from magnets.

If you’ve received a new credit or debit card recently, you may have noticed the new computer chip. If you’ve used a chip reader, you probably also know they take forever. However, these new chips are worth it and prevent your information and money from being stolen.

Whether it’s cash, check, or credit, magnetism plays a role in our daily commercial lives. By embedding magnets or magnetic materials into all forms of our currency, we make sure they remain as safe as possible. If this isn’t the case, we innovate again.

Have any interesting magnetic money stories? Let us know about them!