The Post Office will continue running the account card through which it pays benefits and pensions until at least March 2015.
The Government axed the tendering process before it was completed, and allowed the Post Office to continue running the card account until 2015.
The main competitor in the tendering process was Citibank in conjunction with Paypoint.
By allowing the Post Office to continue running the card account, Labour have averted a serious revolt by avoiding the closure of 3,000 post offices. Ministers were warned by the National Federation of Sub-Postmasters that the loss of the card account by the Post Office would have a catastrophic impact on local communities.
The Government will compensate bidders as a result of the failed tender.