The Post Office is pushing for a significant increase in the fees that banks pay to allow their customers to use its national branch network, hoping to secure between £350 million and £400 million a year from the next banking framework — up from the current £250 million.
Under the proposal, around 30 banks and building societies are being asked to pay the higher sum to maintain essential services for millions of customers who still depend on physical access to deposit and withdraw cash. A final agreement is expected in the autumn, providing additional funding that will be channelled into higher pay for sub-postmasters, following a pledge made by Post Office chairman Nigel Railton last November.
The rising cost for the banks reflects the continuing importance of the Post Office’s 11,500-strong network, particularly as traditional high street lenders have closed more than 6,000 branches over the past decade. Figures from 2023 show that more than £10 billion was withdrawn and £29 billion was deposited at Post Office counters.
Although the Post Office continues to rely on public subsidies, the organisation’s leadership hopes to use this new deal to underpin its long-term commercial sustainability. The push to secure extra income comes in the wake of the Horizon IT scandal, which saw hundreds of sub-postmasters wrongly convicted due to flawed software. The Post Office has acknowledged that re-establishing trust and financial support for these branch operators remains crucial.
A spokeswoman for the Post Office declined to comment on ongoing negotiations, but confirmed the importance of maintaining access to cash for communities across the UK, describing the service as especially vital for vulnerable or less digitally connected customers.
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Post Office eyes extra £100m from new bank deal to boost postmasters’ pay