Fed closes more cheque processing centres; cuts 130 jobs
01 June 2006 | 4680 views | 0
The US Federal Reserve of Banks is shutting down three more cheque processing centres, leading to the loss of 130 jobs, despite recording a profit on operations last year.
Cheque processing centres in San Francisco, Kansas City and Helena, Montana will be shut down in late 2007 or the first half of 2008. As a result, San Francisco work will be shifted to Los Angeles, Kansas City to St Louis, and Helena to Denver.
Around 280 jobs will be affected by the move - around eight per cent of the Reserve Banks' current cheque employees. However, the Fed says approximately 150 positions will be added in locations that will be receiving cheque processing and adjustments volume.
Since 2003 the Fed has cut the number of cheque processing centres in the US from 45 to just 18 as more consumers and businesses continue to switch from paper to electronic payments.
The Fed says its most recent study shows that about 37 billion cheques were paid in the US in 2003 - down from 42 billion in 2001 and 50 billion in 1995 - and warns that further restructuring will be necessary as volumes continue to decline and as more depository institutions begin to collect cheques electronically following the introduction of Check 21.
Commmenting on the news, Gary Stern, chairman of the Reserve Banks' financial services policy committee says: "These changes will help the Reserve Banks reduce our cheque service operating costs in line with the continuing shift in consumer and business preferences for electronic payments.
"In addition, these changes support our long-term business strategy to use the authority provided by Check 21 to collect more cheques electronically, reducing the reliance on the physical transportation of cheques."
As a direct result of restructuring efforts and efficiency improvements implemented since 2003, the Fed says its Reserve Banks earned revenues in 2005 that exceeded the costs of providing cheque services to depository institutions, as well as their targeted level of profitability, for the first time in several years.