Post Office holds on to card account

The Post Office has beaten off competition from a private firm to continue to run its benefit card account.

The Government has renewed the Post Office's contract to run the card, which is used to receive benefit, state pensions and tax credit payments over the counter. The new contract will run from April 2010 for five years.

Over four million people currently use the card and it is estimated that it earns the Post Office £200 million a year.

Work and pensions secretary James Purnell announced the deal two weeks earlier than expected and said that the card was "central to the viability of the [Post Office] network". He also said that Paypoint, the private firm looking to take over the contract, would be "compensated their reasonable costs".

The Federation of Small Businesses (FSB) said the renewed contract would "help save a further 3,000 Post Offices from closure."

The Federation said that some subpostmasters earn 20% of their income from the Post Office Card Account (POCA) scheme, and that it plays a crucial role in the local community.

"Many convenience stores in towns and villages operate alongside a Post Office," said Clive Davenport, FSB trade and industry chairman. "Around £27 billion is paid out each year to POCA customers and, of that, £2 billion is spent in these businesses.

"The Post Office has an unrivalled geographical spread, particularly in rural areas, and awarding the contract to the Post Office will help save thousands of Post Offices, businesses and jobs."