Britain’s major banks are preparing for discussions with the Post Office in regards to a potential new agreement that would allow millions of customers to withdraw cash at its branches. A group of lenders, including Barclays and HSBC, are currently forming a shared interest group to represent the industry in negotiations with the government-owned company over the next few months.
The talks will focus on a new Banking Framework Agreement, which is set to expire at the end of next year. Currently, approximately 30 banks and building societies participate in this agreement, paying a total of £200 million annually to enable customer access to the Post Office’s 11,500 branches. This service is particularly valuable to those who still rely on physical cash, as nearly 6,000 bank branches have closed across Britain in the past nine years.
Sources within the banking industry anticipate that the Post Office will request an increase in the fee it charges for use of its sites, with some speculating that the amount could reach up to £400 million per year. However, the industry is expected to strongly resist this demand, citing data that shows customers’ usage of the service has remained relatively steady. In 2023, £10 billion in cash was withdrawn over the counter and £29 billion was deposited over the counter, according to the Post Office.
These negotiations come at a crucial time for the Post Office, which has recently faced multiple scandals and controversies. As the network relies on an annual government subsidy, its reputation has been damaged by the Horizon IT scandal and the wrongful conviction of hundreds of sub-postmasters. A spokesperson for the Post Office stated, “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.”
They added, “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.” UK Finance, the banking industry’s lobbying organisation, which is coordinating the formation of the shared interest group, declined to provide a statement.
