Under the existing banking framework, customers of the 30 banks and mutuals can access services at the Post Office’s 11,500 branches. Credit: shawnwil23/Shutterstock.

UK banks could be required to pay a higher fee to access the Post Office’s network, reported SkyNews, citing sources.  

The Post Office is proposing a £100m ($125m) increase in fees that banks pay to access its network. The aim is to garner additional financing to enhance postmasters’ pay.  

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This proposal, submitted to over two dozen banks and building societies, suggests the next banking framework could cost between £350m and £400m annually, up from the current £250m annually.  

According to banking sources, the proposal is under consideration by approximately 30 high street lenders, who are expected to respond in early spring.  

A deal, costing banks at least £350m annually, is anticipated to be finalised by autumn.  

The additional proceeds will partly support a new deal for sub-postmasters, announced by Post Office chairman Nigel Railton in November. 

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Under the existing banking framework, customers of the 30 banks and mutuals can access services at the Post Office’s 11,500 branches, including cash deposits and withdrawals.  

This service remains crucial for those reliant on physical cash, especially after the closure of 6,000 bank branches across Britain over the past decade. 

The UK, with a population of 68 million, has a branch density of approximately 5.8 branches per 100,000 people, according to Nationwide in May 2024. This is the second-lowest branch density in Europe, following the Netherlands. 

In 2023, the Post Office reported over £10bn in cash withdrawals and £29bn in cash deposits over the counter.  

A Post Office representative said: “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. We do not comment on ongoing negotiations.” 

The new agreement arrives at a pivotal moment for the Post Office, as its new leadership seeks to establish a sustainable long-term strategy, following reputational damage from the Horizon IT scandal.