Benefit payments account for between a quarter and one-third of the pounds 1.1bn turnover of Britain's 20,000 post offices.
But if more and more recipients switch to payment by automatic credit transfer (ACT) into banks and building societies, as the Government appears to want, then more than half of the country's 9,000 village post offices face almost certain closure.
The Post Office's automation scheme is designed to keep this business at the same time as reducing paperwork and social security fraud. Instead of presenting a Giro cheque or pension book at the counter, pensioners and other claimants would be issued with a 'smart card' similar to a credit card and a personal identification number containing details of their entitlement.
The card would then be swiped through a terminal each time they went to the Post Office and their payment handed over accordingly.
Richard Dykes, managing director of Post Office Counters, said yesterday he was very pleased with the reassurance Peter Lilley, Secretary of State for Social Security, had given over benefit payments through post offices. Last week, his department caused a furore after it emerged that it was sending leaflets to pensioners suggesting that payments be made exclusively through ACT.
Mr Dykes is now in discussions with the DSS over the cost and timescale for introducing the new computer technology. He warned, however, that this was unlikely to stop the slow erosion of its rural post office network, which loses about pounds 35m a year.
About 200 were closing a year because they did not have sufficient custom or because the Post Office could not find staff to take franchises on.
In an attempt to revive the rural post office, various initiatives were under examination, including the introduction of mobile post offices in areas such as Scotland, Wales and the West Country, pockets of which were without local post offices.
Another initiative, developed in partnership with the Rural Development Commission, is to merge rural post offices with petrol stations or pubs to create a single viable business.
The Post Office has also bid for the right to sell tickets in the National Lottery and wants the freedom to sell services such as insurance and travel.Reuse content