At least 3,000 Post Office branches have been saved by a decision by ministers to change their stance and allowing the Post Office to retain its exclusive Card Account contract.
The five year Post Office Card Account contract is worth £900million and operates as a lifeline for many small branches, paying £80million of benefits and pensions
to 4.3 million customers every day.
Previously, there was concern in the Post Office when ministers said that the account was open to bids from competitors when the Post Office comes to the end of its contract in 2010. The bill payment system PayPoint was thought to be a strong contender with tens of thousands of terminals in small shops all over the UK.
After the scrapping of paper payment books five years ago, the Post Office Card Account enables to Government to make electronic transfers to millions of customers who receive pensions or benefits.
Thus far, the Post Office has been given exclusive rights to this contract, but this has recently raised issues concerning competitiveness, to ensure that it is in the best interest of the consumer.
The decision to award the contract to the Post Office again, made by Work and Pensions Secretary James Purnell, will save between 3,000 and 6,000 Post Offices which would have had to cut costs as a result of the loss.
"The Post Office is a trusted brand, and is seen as a safe, secure and reliable provider of services in these turbulent times, Mr Purnell told MPs, according to the Telegraph.
"We recognise the importance of competition in the awarding of public contracts," he continued, "But we have concluded that, in these current circumstances, protecting vulnerable groups by preserving a viable post office network justifies the award of a contract outside the competitive process."
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