The Federal Reserve Bank will eliminate 120 check-processing jobs in Baltimore by the end of 2009 as part of a consolidation of 22 regional processing facilities into four.
"There's less paper to process," said David Fettig, spokesman for the Fed's Financial Services Policy Committee.
Increasingly, payments are made with credit and debit cards or online transfers rather than paper checks. And those paper checks are increasingly processed as electronic images, rather than physically shipped around the country.
Almost all of the current Fed processing centers - including Baltimore's - will remain open but with scaled-back operations.
The Baltimore center will still print "substitute checks," or copies of paper checks for banks that can't process the electronic images.
While there were 50 billion checks paid in the United States in 1995, the number dropped to 37 billion by 2003, the most recent year for which data is available, according to the Fed. And more of those checks are being processed as electronic images, particularly since a law called the Check Clearing for the 21st Century Act, or Check 21, went into effect in 2004, making images of checks legal documents.
The changes have made processing quicker and more efficient for consumers, but have reduced the number of people needed to handle paper checks, Fettig said.
The Fed had 45 check processing centers staffed by 4,600 employees in 2003. Now, 3,300 workers operate 22 cen- ters.
By early 2011, there will be full-service centers only in Philadelphia, Cleveland, Atlanta and Dallas, and staffing is projected to be 1,560.
The Fed competes against private companies for the check-processing business, Fettig said, and accounts for about 40 percent of the market.
Fettig said the private processors have been consolidating operations as well as the volume of paper checks continues to decline.
Fettig said some Fed staffers will be offered the opportunity to move to the remaining processing centers. The bank also said it would offer severance packages, extended medical coverage and career counseling for workers who are let go.
The Fed maintains a Baltimore office as a branch of the Federal Reserve Bank of Richmond, Va., one of 12 regional Fed districts.