The Department of Social Protection has selected An Post as the preferred bidder for a contract to deliver over-the-counter cash payments to people in receipt of benefits.

The current contract for the service, already held by An Post, is to expire at the end of this year and was worth some €58 million to the firm in 2012.

The department said that having selected An Post following a tendering process, discussions on a new agreement would begin shortly.

The new contract is expected to run for a minimum of two years with added options to extend it for 12 month periods up to a maximum aggregate of six years.

More than 43 million payments, about half of the total made by the department, were made through the post office network last year. These payments were issued to some 1 million people and had a total value of about €9.5 billion.

"It is important to stress that the contract remains to be finalised, but if negotiations can be concluded successfully, it will ensure that arrangements currently in place for customers will remain unchanged," Minister for Social Protection Joan Burton said.

As part of the tender competition, An Post had to commit to assist the department in migrating customers towards electronic payments. The department is to advertise for an ePayment provision system later this year.

Ms Burton said the department had noted a shift in consumer preference towards electronic payments and that the possibility of providing better and more secure services in the area was being examined.

She said a payment strategy, which would be brought to Government shortly, envisaged a move to a system where all payments would be delivered to customers electronically.

“However, high-risk customers will not be migrated to an electronic payment until appropriate and robust measures are defined and implemented to mitigate any increased risk of fraud with an electronic payment,” she added.