An Post's new banking joint venture with Fortis is facing uncertainty following a decision by the postmasters' union not to work on the new project.

The Irish Postmasters' Union said it took the decision because agreement could not be found on improved payments for transacting existing An Post business.

In addition, the union said the company's failure to make any long-term commitment about volumes of social welfare and other State business and the payments to IPU members for operating these functions had also contributed to the impasse.

It said it would not undertake any new work for An Post, including the implementation and operation of the new Fortis banking project, until the issue had been resolved.

IPU general secretary John Kane said: "The absence of an adequate reward system is causing a huge turnover of postmasters and it is seriously threatening the future of the whole post office network. Not only can postmasters and postmistresses not make a living but they cannot even cover their costs."

The costs of running the post office network, particularly rent and staff costs, had escalated in recent years, he said.

"At recent talks with the management of An Post, it became apparent that a resolution to the problem was being sandwiched between the company, the Department of Communications and the Department of Finance and none of these parties, either individually or collectively, appear willing or able to move the agenda forward," he said.