The Irish Postmasters’ Union (IPU) says the policy will benefit only private banks, while being disastrous for post offices, which handle almost half the department’s 87m individual payments annually.
Ned O’Hara, IPU general secretary, said: “Once a social protection recipient moves from cash payment to electronic funds transfer [EFT], their custom is lost forever to the post office.
“An Post is 100% State-owned so it makes no sense for the Department of Social Protection to hand its own business over to private banks. This Government needs to back its own post office network.”
The new programme for government acknowledges the importance to the post office network of the contract for cash social welfare payments, which is valued at €54m annually.
In the document the parties state: “We will actively encourage payments at post offices.” They go on to say they will support the introduction and rollout by An Post of an e-payment account during 2016.
Meanwhile, however, the department is continuing to encourage welfare recipients to switch from cash to EFT which currently can only be handled by the banks.
The department has said that cash transactions via post offices cost six times more to process than EFTs.
It has stopped short of making payment conditional on agreeing to EFT — although this idea has been mooted — but new recipients are encouraged to opt for payment through a bank account, and switching from cash to EFT is promoted to existing recipients.
Mr O’Hara called for a freeze on any further switching until An Post is in a position to offer a proper alternative to the banks.
“The new Government has committed to encouraging post office usage,” he said.
“Our message is clear — the single most important step Government can take is to halt migration of welfare payments business to the banks.” He was speaking at the IPU’s annual conference, which called for swift action on the recommendations of the Post Office Business Development Group, which reported in January on ways of keeping post offices financially viable.
Along with the e-payment accounts, the group called for the piloting of ‘service hub’ post offices that would act as one-stop shops for a range of Government services and would also be allowed to process motor tax payments. The programme for government contains commitments to examine the feasibility of both initiatives but the IPU says it wants concrete action within 100 days.