The Minister for Social Protection said a creative approach must be taken to ensure the future of the country’s 1,200 post offices, but he admitted some branch closures are inevitable.
Citing the example of the rural GP allowance, Mr Varadkar hinted that extra supports could be given to post offices servicing rural and isolated communities.
His comments come ahead of the publication of a report by the Post Office Hub Working Group, which is due to be presented to the Cabinet next week.
The report, being prepared for Minister of State for Regional Economic Development Michael Ring, outlines a number of proposals to help save the troubled network, including co-locating post offices and mobile post offices.
Speaking in the GPO after signing the social welfare contract with An Post, which will run until 2019, Mr Varadkar said: “One of the things that An Post is working on, and my department is helping them out with the work on it, is the development of a standard bank account.
"There are a lot of people in Ireland, older people, people in receipt of social welfare payments, who don’t have a bank account and are therefore financially excluded.
“We are working with An Post to develop a standard, basic, no-frills bank account, if you like.”
However, he warned that if communities don’t use their post office, they would invariably become unsustainable, adding that it wouldn’t be honest to “pretend” that the entire network can be saved.
Mr Varadkar said: “I do think there are other ways that we can sustain and help to sustain the post office network, particularly in rural areas, in isolated areas, on islands, for example, where perhaps the only service left now is a post office and a shop.
“I think there are things that Government can do to maintain the post office network, which is of enormous value, not just economic value, but social value; it’s important for human interaction, bringing business into a village and Government understands that.
“That doesn’t mean that every post office in Ireland will remain open. I don’t think it would be honest to pretend or claim that that would be possible.”
An Post is seeking to close around 200 offices around the country to tackle growing losses and it has also announced it will be raising the price of a stamp to €1.
An Post chief executive David McRedmond said the price rise was needed, but it was also about setting the right price and it is the “pretty much the average price across Europe”.
Mr McRedmond said there has been a decline of nearly 50% globally in post volumes and that fall is expected to continue by between 5% and 10% a year, which could impact on the entire network.
However, Mr Varadkar said An Post would have to retain a certain number of post offices if it wants to keep the social welfare contract.
“There are about 1,200 post office across the country, we think certainly, when it comes to providing access to social welfare services, like pensions, that we want 95% of the population to be within 15km of a post office. That’s essential for us to continue to provide those services.
“That’s what the contract stipulates and my department’s business is worth €60m per year to the post office and if they were to close down too many post offices, then that contract would come into jeopardy and I doubt they will want to do that.”