Australia could go cashless in just three years, with the country's largest banknote delivery company admitting 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 percent share of Australia's cash-in-transit market.
This was based on the promise that it would continue to provide cash until 2026.
Despite having a near-monopoly position, Linfox Armaguard Group CEO Mick Cronin told Ny Breaking Australia he could not guarantee his company would still be able to provide cash in three years' time.
“As the use of cash declines, the cost of moving cash becomes more expensive and the industry needs to develop a sustainable, long-term solution,” he said.
Mr Cronin hinted that future cash supplies would require government intervention as his company held urgent talks with the Australian Banking Association.
Australia could go cashless in just three years, with the country's largest banknote delivery company admitting its business model is under threat (pictured is a Sydney consumer paying with a smartphone)
Armaguard and Prosegur Australia received regulatory approval to merge this year, giving new company Linfox Armaguard a 90 percent share of Australia's cash-in-transit market (pictured is an Armaguard truck at a crime scene in Sydney Broadway)
“Linfox Armaguard is working with the Treasury, the RBA, the ABA, major banks and related parties to devise a sustainable industrial solution for the continued 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 Michele Bullock raised concerns about Linfox Armaguard's cash-in-transit business model on Tuesday.
“Despite the merger having occurred as proposed, Linfox Armaguard now indicates that its CIT business is still unsustainable,” she told an Australian Payments Network Summit in Sydney.
'The merger was intended to address the structural decline and overcapacity in the CIT sector and reduce the risk that one or both CIT companies would suddenly exit the sector, causing a disruption in the availability of cash in the economy.'
The Australian Competition and Consumer Commission approved the merger in June, on the condition that Linfox Armaguard Group would continue to provide cash deliveries to its existing customers until 2026.
This was despite the fact that it was recognized that the merged company would have 'a combined national market share… greater than 90 percent'.
Before the merger, Armaguard had distribution deals with Commonwealth Bank, ANZ and NAB, while Prosegur, a Spanish company, had a deal with Westpac.
Ms Bullock pledged on Tuesday to ensure cash was still an option for customers, even as notes made up just 13 per cent of transactions in 2022, down from 70 per cent in 2007.
“We also continue to focus 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 is committed to ensuring an ATM is always within reach,” Mr Cronin said.
Linfox Armaguard Group is one of only three cash-in-transit companies operating in Australia, along with smaller competitors Streamcorp Armored and Brinks Australia.
Despite having a near-monopoly, Linfox Armaguard Group CEO Mick Cronin told Ny Breaking Australia he could not guarantee his company would still be able to provide cash in three years' time.
During the last financial year, 718 ATMs were removed, according to data from the Australian Prudential Regulation Authority (pictured is a Commonwealth Bank ATM in Brisbane)
A Reserve Bank report released last month found that 73 percent of transactions under $10 in 2022 were made by card, compared to just over half in 2019.
During the past financial year Australian Prudential Regulation Authority data shows 718 ATMs have been removed.
This happened when 424 bank branches were closed in the year to June.
The number of branches has fallen by more than a third, or 37 percent, since June 2017, but in six years the number of ATMs has plummeted by 59 percent.
Australia still has 5,693 ATMs – less than half the level of 13,814 in June 2017.
The number of bank branches has fallen from 5,694 to 3,588.
Despite the decline in cash position, Linfox founder and trucking magnate Lindsay Fox ranked 23rd on this year's Australian Financial Review Rich List, with an estimated worth of $4.35 billion.