What is a routing number used for?

• A. It identifies the customer's bank in electronic transactions and checks.
• B. It identifies the branch location of the customer.
• C. It is used to route electronic transactions to the correct bank.
• D. It verifies the identity of the account holder.

Answer: (C)

Routing numbers serve as the address for a bank within the payments system. They identify the financial institution and are used to route electronic payments—like ACH transfers and wires—to the correct bank. Once the funds reach that bank, the account number and other details determine the exact customer account. The routing number isn’t about identifying a branch location, and it doesn’t verify who the account holder is on its own; those things are handled by other data and security checks. So the key function is directing electronic transactions to the right bank.