Card transactions are now the way of the world and it's good to see the Post Office is finally catching up, by virtue of the lifeline it is being thrown by the government. Around 500 sub post offices are closing each year, and at a rate of around two a day in rural areas. This beleaguered sector was also facing the grim prospect of losing their benefits payments business and the prospect of collapse loomed large for many. The government insists that by 2003 all the 20 million or so benefits it pays out must go through bank accounts, which would save the Treasury more than £400m a year. However, half of those receiving benefits currently collect their money from post offices. Many do not have either a bank account or a bank anywhere near their home So the government's solution is to set up a "universal bank" so that benefit claimants can become card-carrying members of the "universal bank" and continue to obtain get their benefits and pensions over-the-counter. The scheme will also restore banks into many communities that lost their branches in the great cull of recent years. The online Universal Banking Services (so called because it has the support of all the major banks which are contributing £180m towards the cost of making their own bank accounts available to the post office-based card account) will be like having an ATM behind the counter. Customers will present their card, key in their PIN and the post office worker will swipe the card to enable the transaction to take place. Rick Rickard, who runs Rowley PO at Cranleigh in Surrey, fully supports the new scheme. "I can understand the government wanting to pay benefits through banks because it cuts down on fraud," he says. It's a subject dear to his heart. Two years ago he had an on-line Giro debit/credit card reader installed in the shop (the mighty Post Office does not have its own debit card facility yet, but presumably this will be part of the banking package). Rickard made the move because Lloyds TSB had bounced a customer's cheque because it was accompanied by the wrong type of card. "Now I can avoid taking cheques almost completely, and certainly from customers I don't know personally. If they have a cheque guarantee card it will almost certainly double as a credit/debit card, so why shouldn't they use the card instead of a cheque, Perhaps their account is empty." He has suffered no further fraud attempts and the basket spend up has risen considerably. "We do reduced-price hard cover books and have an off licence. People will spend up to around £20 on a card, and use it for their lottery tickets." He adds that the extra business it generates more than recovers the £15 monthly fee for the terminal, ­ which is only 50p a day ­ and the phone calls to validate the transactions are free. Free banking is out there On the subject of financial institutions, it can be safely said that few independents rely on getting a square deal on their business accounts. Banks don't like cash ­ an odd quirk given the nature of their business ­ and have always penalised shopkeepers dealing in large volumes of the stuff, often for very little profit. I was interested to see a recent report from the Village Retail Services Association (ViRSA) comparing standard small business tariffs among the four major banks. Barclays, Lloyds TSB, HSBC and NatWest all charge £2.50 a month for account maintenance. They charge between 59p and 67p for each manual transaction and between 35p and 45p an automated transaction. There is nil interest paid on business current accounts and there's no free banking when in credit, despite the fact that these advantages have been available to personal customers for 15 years. So there is little to choose from. As ViRSA has urged its members in the past, look beyond the big guys. There are plenty of small banks around offering free banking for around 150 transactions a quarter if you are in credit and which also pay interest. The calculations show that if you have £20,000 in the bank and do some 300 manual and 300 automated transactions a year, you could be saving yourself up to £1,000. This won't help much if you mainly deal in cash, although I know some retailers who have an arrangement with a local building society to pay the money into their private account, draw out a cheque and then pay this into their business account as a single transaction. {{GROCER CLUB }}

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