The Coalition Government has taken a decision to move a lucrative contract for processing benefit cheques from the Post Office.
Citibank will provide a new service from 2012 and will use Paypoint outlets, phasing out payment by cheque.
The £20million contract move will affect more than 250,000 people.
Ministers decided to phase out payments by cheque after what they referred to as a ‘dramatic’ fall in their use over the past few years, with less that 2 per cent od welfare payments now made by cheque.
Employment Minister Chris Grayling MP said: “We will make sure that everyone who receives their payments by cheque has all the help they need for the changeover and we can assist in choosing another method of payment that better suits their needs.”
The National Federation of Sub Postmasters (NFSP) said the decision had raised fears among sub postmasters on the future of other benefits payment services such as the Post Office Card Account (POCA), used by almost four million customers every week.
General Secretary George Thomson said: “This is a bitterly disappointing decision from the Government. Benefits cheque customers rely on their local post office to provide this important service, with sub postmasters and trained Post Office staff providing assistance to hundreds of thousands of vulnerable customers each week.
“Many of these customers will be unwilling or unable to travel to a Paypoint outlet such as an off-licence or garage forecourt to claim their weekly pension or benefit allowance.”
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