We investigated how literacy modifies one of the mechanisms of the visual system that is essential for efficient reading: flexible position coding. To do so, we focused on the abilities of literates and illiterates to compare two-dimensional strings of letters (Experiment 1) and symbols (Experiment 2) in which the positions of characters had been manipulated. Results from two perceptual matching experiments revealed that literates were sensitive to alterations in characters’ within-string position and identity, whereas illiterates are almost blind to these changes. We concluded that letter-position coding is a mechanism that emerges during literacy acquisition and that the recognition of sequences of objects is highly modulated by reading skills. These data offer new insights about the manner in which reading acquisition shapes the visual system by making it highly sensitive to the internal structure of sequences of characters.