Post Office seeks funds for branch cash access

The Post Office (PO) is seeking an increase on the £200m annual fee they pay to enable their customers to access cash services from its 11,500 branches, Sky News has reported.

Major banks currently loan the PO with £200m per year to allow customers to access cash from its branches, which falls under a Banking Framework Agreement.

Banks are expecting PO to request an increase of up to £400m-a-year in a new Banking Framework Agreement, sources have alleged, with the current one set to expire next year. The news comes as PO faces financial challenges, particularly from the fallout of the Horizon IT scandal.

Talks are expected between the corporation and major lenders, including Barclays and HSBC, in the coming months regarding customer access to cash.

Banks are reported to be forming a shared interest group of banks to represent the industry.

A Post Office spokesperson said: “Our partnership with 30 banks and building societies ensures that no one who relies on cash is left behind, made possible by our postmasters in almost every community of the country.

“This is all the more important following the introduction of the Access to Cash legislation and further highlights the critical role postmasters play today, and in the future, in supporting customers with accessing their cash.

“We do not comment on ongoing commercial negotiations.”

POs have become a hub for cash access as bank branches have increasingly closed in the past decade – an estimated 6,000 in the last 9 years across Britain.

Industry sources told Sky News that if a demand for £400m does materialise, the industry was expected to resist it vigorously on the basis of data showing that bank customers’ usage of the service has ‘remained broadly flat’.

In the last month, PO saw record values in cash withdrawals and deposits last month, with nearly £300,000 changing hands in the average branch. The figures represent a nearly 25% rise on the same period last year, equivalent to an extra nearly £60,000 in transaction values for each branch. 

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