With Americans writing fewer checks, the Federal Reserve announced yesterday that it will stop processing checks at 13 of its 45 nationwide sites, close five of them and reduce employment by a net of 400 jobs.

The five processing locations to be closed handle only checks. Eight other locations that process checks, including the Federal Reserve Bank of Richmond, will no longer do so. A total of 1,300 employees at the 13 sites will be laid off or reassigned.

Meanwhile, operations at nine other locations, including the Baltimore branch of the Richmond Fed, will be beefed up, with 900 employees added, the Fed announced.

Checks still account for about 60 percent of all non-cash retail payments, but that's down from 85 percent in 1979 as credit cards and other types of electronic payment have become more popular. Last year, about 40 billion checks were written, down from about 50 billion in 1995, according to the Fed.

"Nationwide, consumers and businesses have made a significant shift in how they make payments, substituting electronic payments for checks," said Cathy E. Minehan, president of the Federal Reserve Bank of Boston and head of the Fed's Financial Services Policy Committee. "This development is good news for the nation's payments system, and the Federal Reserve has strongly supported this shift.

"But declining check volumes are requiring the [Federal] Reserve banks to make changes in their check operations to address the challenges posed by the changing market," Minehan said.

The changes will reduce the Fed's cost for check services by about $60 million in 2005 and about $300 million over the next five years, she said.

The 12 reserve banks, along with many private firms and organizations, process checks by moving them from banks in which they are deposited to those with the accounts against which they are written. The net loss of 400 jobs represents about 8 percent of the Fed's check-processing jobs.

In the future, many more jobs are likely to be cut as the Fed begins to concentrate on moving electronic images of checks rather than pieces of paper themselves. Some stores already process a customer's check by making an electronic copy at the point of sale and return the check immediately to the customer.