12,000 Post Offices across the UK were unable to accept credit or debit card payments or print out electronic stamps for two-30 minute periods due to a computer glitch which affected its services.
Staff were unable to scan parcels, meaning they had to manually work out the cost of sending goods and attach individual stamps, which lead to massive delays.
The problems are particularly embarrassing for the Post Office as Monday was predicted to be the busiest day of the year for the postal service due to the Christmas rush, with 131 million items expected to be sent, twice the usual number.
Individuals said that long queues started forming in branches at lunch time after the computer system crashed for the first time.
Over the period that the computer system was down Post Office account holders were unable to gain access to their savings. Some consumers complained that they were unable to get new tax discs for their vehicles.
Andy Burrows of Consumer Focus said that the watchdog was “extremely concerned” at the fiasco.
He further added: “People rely on the Post Office not just for mail services but also to access cash and much needed pensions and benefits. We will be taking up our concerns with Post Office Limited as a priority.”
Post Office network and sales director, Kevin Gilliland apologised to consumers for the technical hitch.
He said: “We are very spry for the inconvenience this problem has caused customers. We know how important the Post Office is to our customers at all times, but especially this Christmas.”
This is the second IT problem for the Post Office in six months. In July, a computer shutdown blocked access for 3.3 million customers with Post Office card accounts.
Some OAPs have their benefits paid into a Post Office card account.
Post Office has taken on thousands of extra staff to cope with the Christmas rush, caused in part by the increased demand of online shopping.
Royal Mail admitted last Thursday that it had charged some customers twice who tried to use the online postal services.
Some 600 customers had their bank cards debited twice, at an average of £50 each time, meaning that £30,000 had been taken in error. Though it is understood that some consumers have had as much as £200 taken from their accounts twice, after repeating a purchase in the SmartStamp section which the system told them had initially failed.
Royal Mail said that affected customers will be contacted “as a matter of urgency”, and their accounts will be credited in full. Customers who have been charged too much will also be given a further payment of £25 “as a gesture of goodwill”.
Meanwhile two of Royal Mail’s online stamp services, including Price Finder-which allow customers to frank mail from their own offices or homes, have also been down since the company upgraded its computer systems last month.
A spokesman for the Post Office said the issues affecting Royal Mail were separate to the glitches at the Post Office network on Monday.
Prior to the disruption, the Post Office announced that it would extend the opening hours of its outlets to cater for the increased demand over the Christmas period.
The deadline for the Christmas post is 17 December for second-class post and three days later for first-class deliveries.