John Glen, the City minister, is to unveil plans for hubs that will allow people to withdraw and deposit cash as banks close branches around the country.
Details are still being thrashed out but Glen is aiming to unveil a plan on how many hubs there will be at a dinner for the banking industry next month.
The hubs will be joint ventures between banks and the Post Office, following trials at Cambuslang in South Lanarkshire and Rochford in Essex.
The plans are being fiercely fought over as the Post Office wants to announce about 200 hubs, while banks want to limit the number to between 20 and 50, sources said.
The talks are highly charged against a backdrop of the Treasury considering legislation to force banks to maintain access to cash around the country and the Financial Conduct Authority warning that it may prevent banks from closing the last branch in town.
Glen is understood to be keen to make the announcement as the government hopes it will form a major part of the solution to banks closing thousands of branches as usage drops off, while millions of millions of older and more vulnerable people and small businesses still need to be able to use cash.
The government hopes the hubs, which could be expanded over time, will throw a lifeline to the Post Office by providing revenues funded by banks.
Banks have mixed views about the hubs, with executives weighing up the advantage of a deal with the Post Office as they step up branch closures, alongside misgivings about the Post Office’s IT systems and fraud controls. There are also frustrations among banks about the pricing power the Post Office has in the talks and a wish to see more competition introduced to the process.
Several smaller players are interested in providing IT and other systems, including OneBanks, which is trying to establish its own hubs for bank customers, the cash machine maker Glory, and PayPoint, a payments business.
The Treasury did not comment. A Post Office spokesman said: “Cash deposits and withdrawals at two trial Post Office bank hubs are increasing rapidly.
Discussions with the government and the banking industry on further hub deployments continue and we are ready to develop our central role in getting more set up.”
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Post Office to host banking hubs to offset branch closures