The telling sign Australia could go cashless by 2026 as the nation’s biggest cash delivery services Prosegur and Armaguard announce huge change
Australia could go cashless in just three years as the country’s largest banknote delivery company admits its business model is under threat.
Armaguard and Prosegur Australia received regulatory approval to merge this year, giving the new company Linfox Armaguard a 90 per cent share of the Australian collection services market.
This was based on a promise to continue supplying cash until 2026.
Despite being a near-monopoly, Linfox Armaguard Group chief executive Mick Cronin told The Washington News Australia he could not guarantee his company would be able to supply cash in three years.
“As cash usage declines, the cost of moving cash becomes increasingly expensive and the industry needs to develop a long-term, sustainable solution,” he said.
Mr Cronin hinted cash delivery would require government intervention in the future as his company held urgent talks with the Australian Banking Association.
Australia could go cashless in just three years as the country’s largest banknote delivery company admits its business model is under threat (pictured: Sydney consumer paying with smartphone).
Armaguard and Prosegur Australia received regulatory approval to merge this year, giving the new company Linfox Armaguard a 90 per cent share of the Australian cash-in-transit market (pictured is an Armaguard truck at a crime scene on Broadway in Sydney).
“Linfox Armaguard is working with the Treasury, RBA, ABA, major banks and related parties to develop a sustainable industry solution for the ongoing provision of cash in Australia,” he said.
“The Government has a policy position to ensure cash remains accessible to all Australians and Linfox Armaguard will continue to work with the industry to review and implement a sustainable cash distribution model.”
Mr Cronin went public after Reserve Bank of Australia governor Michelle Bullock on Tuesday raised concerns about Linfox Armaguard’s cash collection business model.
“Although the merger has proceeded as proposed, Linfox Armaguard now indicates its collections business remains unsustainable,” she told the Australian Payments Network summit in Sydney.
“The merger was intended to address structural decline and overcapacity in the cash-in-transit industry and to reduce the risk of one or both cash-in-transit companies suddenly exiting the industry, which could disrupt the availability of cash in the economy.”
The Australian Competition and Consumer Commission in June approved the merger on the condition that Linfox Armaguard Group continue to deliver cash to its existing customers until 2026.
This is despite acknowledging that the combined company would “have a national market share… in excess of 90 percent.”
Before the merger, Armaguard had distribution agreements with Commonwealth Bank, ANZ and NAB, while Spanish company Prosegur had a deal with Westpac.
Ms Bullock on Tuesday vowed she would work to ensure cash remained an option for customers, although notes accounted for just 13 per cent of transactions in 2022, down from 70 per cent in 2007.
“We also remain focused on access to cash for Australians,” Ms Bullock said.
“Cash is also an important backup payment method during system outages or natural disasters when electronic payments may not be available.”
Linfox Armaguard delivers cash to its Atmx and Precinct ATMs.
“Armaguard will continue to assess ongoing needs and will strive to ensure that an ATM is always available,” Mr Cronin said.
Linfox Armaguard Group is one of three cash transport companies operating in Australia, along with smaller rivals Streamcorp Armored and Brinks Australia.
Despite Linfox Armaguard Group having a near-monopoly, Linfox Armaguard Group chief executive Mick Cronin told The Washington News Australia he could not guarantee his company would be able to supply cash in three years.
According to the Australian Prudential Regulation Authority, 718 ATMs were removed in the last financial year (pictured is a Commonwealth Bank ATM in Brisbane).
A Reserve Bank report released last month showed that 73 per cent of transactions under $10 in 2022 were made by card, up from just over half in 2019.
During the last financial year According to the Australian Prudential Regulation Authority, 718 ATMs have been removed.
This came as 424 bank branches closed in the year to June.
The number of branches has fallen by more than a third, or 37 percent, since June 2017, but the number of ATMs has fallen 59 percent over six years.
There are still 5,693 ATMs in Australia, less than half the level of 13,814 in June 2017.
The number of bank branches decreased from 5,694 to 3,588.
Despite dwindling cash, Linfox founder and shipping tycoon Lindsay Fox was ranked 23rd on this year’s Australian Financial Review Rich List with an estimated wealth of $4.35 billion.