In June,the Australian Competition and Consumer Commission (ACCC) allowed a merger between the two biggest cash distribution businesses,Linfox Armaguard and Prosegur,even though it would create a near monopoly.
The ACCC said at the time the cash transport industry was in structural decline,and without the merger,one of the businesses could suddenly pull out of the market,leading to “significant disruption” in the supply of cash.
Now,the Australian Banking Association says the merged business Armaguard,which has market share of 90 per cent in the cash-in-transit sector,has advised banks that its viability is being put at risk by the rapid declines in cash use.
The banks say that if Armaguard exits the market,it could reduce the availability of cash to banks and other businesses that help distribute cash to consumers,including big retailers,ATM operators,and post offices. The banks are seeking to work together to work on a sustainable model that will allow people to access cash into the future.
ABA chief executive Anna Bligh said Australians were using much less cash than previously,but she stressed the economy would not be cash-less soon. She said banks were working with the Reserve Bank to understand Armaguard’s problems,but the industry needed ACCC authorisation to hold the joint discussions that would be needed to develop a long-term solution.
“The challenge facing our economy and society is that as the use of cash for payments declines,the unit cost of transporting and distributing it escalates,” Bligh said.