Post Office is prepared for the counter attack

The Post Office's new TV ad shows Who Wants To Be A Millionaire'sChris Tarrant running out of cash to buy bait while out on a fishingtrip and making a dash for the local Post Office. where he cashes acheque. The ad is designed to persuade us that, if we should happento find ourselves in some remote rural location, we no longer haveto make the 20 mile journey to the nearest town to visit a bank. Wecan simply go to the Post Office instead.

It is one of the planks of the Post Office's universal bankingstrategy which this week reached another milestone when it announcedthat the LINK network will provide the back-up electronic servicewhich will allow customers to access one of the new basic bankaccounts at the Post Office.

The universal bank is the Post Office's response to thegovernment's intention to start paying benefits directly in to bankaccounts from April 2003. Here we give you the low-down on the newworld of universal banking.

QWhen the Post Office talks about the universal bank, what doesit mean?

AThe universal bank is not in itself a bank. It is more a rangeof services aimed at supporting the Post Office network. There arethree strands to the universal bank. The first is to promote thegrowing number of banks which allow customers to access theirexisting bank current accounts at the Post Office. At the momentanyone in Scotland with an account with the Alliance and Leicester,the Co-operative Bank, Lloyds TSB, First Direct and internet bankssmile and cahoot can pay in and withdraw money over most Post Officecounters.

The second and third developments have come about as a result ofthe government's intention to start paying benefits by credittransfer from April 2003. At some point after that date, allbenefits will be paid in to a bank account, which means that peoplewho don't at the moment have a bank account will have to open one.Between two and three million people don't have a bank account andthey will have two choices if they now collect benefits in cash.

Either they must open one of the basic bank accounts beingoffered by most of the high street banks, or they can opt for asimple cash card account operated by the Post Office.

QWho is offering these basic bank accounts and how do they work?

A Basic bank accounts are offered by Barclays, Lloyds TSB, RoyalBank of Scotland (which includes NatWest) HSBC, Abbey National,HBOS, Alliance & Leicester, National Australia Group (which includesthe Clydesdale and the Yorkshire Bank), the Co-op- erative Bank andthe Nationwide Building Society.

Examples of these accounts include the Royal Bank of Scotland'sKey Account, the Bank of Scotland's Easycash Account, and theClydesdale's Cashmaster Account. These basic bank accounts vary intheir detail, but they do not offer an overdraft, although standingorders and direct debits are normally allowed. Many are operatedthrough a cash card which is used to withdraw cash either over thecounter or through an ATM. Once benefits start to be paid throughthese accounts, cash will also be available at the Post Officecounter, where the card will be run through a swipe machine, and thecustomer will then key in their PIN at a PIN pad.

However, to open one of these accounts you must visit the bank inquestion; it will not be possible to open an account at the PostOffice.

QWhat about the government's promise to allow people to continueto collect their benefits in cash at the Post Office?

AThis is a bit of a fudge because benefit books will disappearonce payments are made by credit transfer. When the government sayspeople will still be allowed to get their benefits in cash at thePost Office it is referring to the Post Office's own cash cardaccount. This is a very simple bank account which can only beoperated with a cash card at the Post Office.

A recent survey by the National Federation of Sub-Postmastersrevealed that 95% of people who now collect their benefits in cashat the Post Office want to continue to do so.

Q How will the Post Office cash card account work?

ABenefits will be paid directly in to the cash card account andthe card will be swiped at the Post Office counter, but there willbe no facility to set up standing orders or direct debits.