Retailers running rural post offices fear for their futures following the government’s decision to withdraw funding for post office card accounts.

The accounts, which are used to pay pensions and benefits to up to four million people, will probably disappear by 2010 and customers will be urged to open private bank accounts instead.

However, subpostmasters in rural areas say they could be forced to close as business drops off and shoppers have fewer reasons to visit.

“You can say goodbye to every rural post office,” said Derek Gillpin, of the Post Office and Store in Frizington, Cumbria. “They just wouldn’t be viable as card accounts constitute half our sales. I feel very despondent.”

John Mainwood’s Saddlescombe store in East Sussex is being extended, with an extra post office counter put in. John said: “It’s worrying. We managed to retain a lot of loyal customers who switched to the card accounts but if they go, and there’s no alternative based on them coming here, it would be damaging.”

There are about 14,500 post offices and sub post offices in the UK - about 10,000 of them in c-stores. Association of Convenience Stores public affairs manager James Lowman said that although having a post office wasn’t a big revenue earner, it still generated business. He said: “In future, c-stores might not bother having a post office.”

But the Department for Work and Pensions urged c-store owners not to panic. A spokeswoman said 75% of customers already had their money paid into bank accounts, which can be accessed through post office counters. She said: “We’re quietly confident that the others will also get a private account.”

She said the department would work to ensure business levels remained constant, adding: “There shouldn’t be any change in footfall. People who chose a card account chose it to support the post office.”

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