CBA pays up to keep banking services in post offices

Country post offices have been given a lifeline after Commonwealth Bank agreed to pay Australia Post an extra $22 million a year to process transactions for its customers.

The country's largest bank has also agreed to pay higher fees each time its customers make deposits, withdrawals and access other services at post offices, in a move that has increased pressure on Australia's three other major banks to follow suit.

The post office network ran at a $130 million loss last year. Credit:Ryan Stuart

“If CBA hadn’t stepped up and agreed to pay this ... we would have had to consider suspending the service and closing post offices," Australia Post chief executive Christine Holgate said on Monday. "That undoubtedly would have damaged local communities and cut jobs."

Australia Post has been crying foul over the money it loses from its Bank@Post service, as banks close their own branches in regional and rural locations and instead direct their customers to their local post office. There are 1550 communities across Australia without any bank branches and where an Australia Post outlet is the only place to do face-to-face banking.

Meanwhile, Australia Post's network of 4356 post offices, which cost $1.3 billion to operate annually, ran at a $130 million loss last year.

Ms Holgate said the five-year commitment to a $22 million annual "representation" fee and the undisclosed increase to transaction fees would allow Australia Post to pay its post office licencees more, with their minimum payments to increase by 25 per cent and transactions payments to increase by 50 per cent.

"It also ensures the licensed post offices get investment in technology, security, training and marketing," she said.

Australia Post CEO Christine Holgate said higher fees from banks would help secure the future of regional post offices. Credit:Pat Scala

Post offices process about $40 billion of transactions annually for financial institutions, with $35 billion of that on behalf of CBA, ANZ, Westpac and National Australia Bank and the rest for smaller lenders.

“When you consider the amount of money we transact for them, it’s very good value," Ms Holgate, adding that she continued to negotiate with the three other big banks.

Australia Post said that if all four banks agreed to pay the $22 million fee for five years, it could invest up to an extra $500 million in its post offices - the largest amount pumped into the network in its history - which would help secure their future.

Ms Holgate said she intended to get its post office network back to profitability.

Communication Workers Union, which represents postal workers, welcomed CBA's move and called on other banks to follow its lead.

Reporter for The Age

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