The Post Office is proposing a big hike in the fees that banks pay to allow their customers to access its network as it attempts to secure additional funding to boost postmasters’ pay.
Sky News understands that more than two dozen banks and building societies are considering a proposal submitted to them recently by the Post Office that would see the next banking framework costing them between £350m and £400m annually – up from about £250m-a-year under the current deal.
Banking sources said the roughly 30 high street lenders were due to respond to the Post Office’s proposal in the early part of the spring.
A deal costing the banks at least £350m a year is expected to be finalised by the autumn, the sources added.
The additional proceeds from the next agreement, which expires at the end of this year, will be used in part to strengthen the new deal for sub-postmasters unveiled by Post Office chairman Nigel Railton in November.
Under the banking framework agreement, the 30 banks and mutuals’ customers can access the Post Office’s 11,500 branches for a range of services, including depositing and withdrawing cash.
The service is particularly valuable to those who still rely on physical cash after a decade in which 6,000 bank branches have been closed across Britain.
Business, the economy and the pound in your pocket – what to expect from 2025
Business and Trade Committee calls for government to be fined as Post Office victims face ‘second trial’ in struggle for redress
Energy price cap now expected to rise in April as bills increase again in January
Follow our channel and never miss an update
In 2023, more than £10bn worth of cash was withdrawn over the counter and £29bn in cash was deposited over the counter, the Post Office said last year.
A new agreement with the banks will come at a critical time for the Post Office, whose new leadership team is trying to place it on a sustainable long-term footing.
Reliant on an annual government subsidy, the reputation of the network’s previous management team was left in tatters by the Horizon IT scandal and the wrongful conviction of hundreds of sub-postmasters.
Be the first to get Breaking News
Install the Sky News app for free
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.
“We do not comment on ongoing negotiations.”
