The Times Australia
Business and Money
The Times Real Estate

.

Future of cash secured for now as banks and retailers bail out Armaguard

  • Written by Steve Worthington, Adjunct Professor, Swinburne University of Technology

A deal reached between Armaguard[1], the banks, and Australia’s largest retailers securing the cash-in-transit service’s future, is good news, for now, for those Australians who still use cash.

The distribution of bank notes and coins throughout the country faced an uncertain future when an earlier attempt in April to bail out the troubled Armaguard collapsed.

But in weekend talks Armaguard’s main customers including the big four banks, Coles, Woolworths, Bunnings and Australia Post agreed to a $50 million life raft[2] to help the struggling Linfox-owned company.

Armaguard, which has about 90% of Australia’s cash-in-transit market[3], has been under increasing pressure as the use of cash plummeted during the pandemic. As well, like many organisations, its fixed costs have increased.

A fix … for now

Under the new agreement, Armaguard will receive the funding boost beginning July 2024, which will guarantee the distribution and collection of cash, over the next 12 months.

The company will need to meet certain restructuring conditions as part of the deal. This may include cutting back on deliveries.

In the meantime the banks and other major providers of cash to their customers will be looking at other options.

Woman at ATM
Cash is used in 13% of transactions in Australia, dropping from about 70% before the pandemic. Lukas Koch/AAP[4]

This is likely to include a jointly owned cash distribution service, with no fees for withdrawing cash from either their ATM networks or from the non-bank networks, like Australia Post, which can already provide cash.

Such a new ownership structure would be helped if the government declared cash as “an essential service” for its citizens, in much the same way the supply of power and water is already considered.

A longer term solution

Some other countries have already gone down this path, for example in the United Kingdom most ATMs are in the Link network[5], which is jointly owned by the banks who provide deposit and withdrawal outlets for customers.

This allows anybody with an account at almost any bank to access cash at no cost across the United Kingdom.

The Riksbank, the central bank of Sweden – a country which many regard as the best example of a cashless society – has called for legislation to protect both notes and coins[6] as a means of payment for Swedes.

This would require all banks accept cash deposits as well as having a stash of cash, so notes and coins were available to customers who request it.

Cash is still needed

While use of cash is down to about 13% of transactions[7] in Australia, access to it is vital for those who rely on it, including people in regional areas with poor connectivity, people without digital skills and those who consider cash more reliable.

For this reason major businesses, such as the large retailers who use Armaguard’s service, rely on a cash-in-transit service.

The Armaguard deal is yet to be authorised by the Australian Competition and Consumer Commission. Its approval will be needed by July 1, when the new contracts are expected to start.

References

  1. ^ Armaguard (armaguard.com.au)
  2. ^ $50 million life raft (www.ausbanking.org.au)
  3. ^ 90% of Australia’s cash-in-transit market (www.abc.net.au)
  4. ^ Lukas Koch/AAP (photos.aap.com.au)
  5. ^ Link network (www.link.co.uk)
  6. ^ has called for legislation to protect both notes and coins (www.riksbank.se)
  7. ^ 13% of transactions (www.rba.gov.au)

Authors: Steve Worthington, Adjunct Professor, Swinburne University of Technology

Read more https://theconversation.com/future-of-cash-secured-for-now-as-banks-and-retailers-bail-out-armaguard-233087

SME Business News

How Virtual Team Building Is Reshaping Modern Business Dynamics

In the past years, virtual team building has established itself as one of the cornerstones in building modern business strategy. With more organizations now switching to a model of remote or ...

How digital loyalty programs drive engagement in a value-conscious economy

Ongoing economic pressures are driving Australian retail businesses to rethink how they engage with increasingly value-conscious consumers. Rising living costs have shifted spending habits, p...

How Ofload and Logistics Tech Power Australia’s Biggest Shopping Month

Black Friday has evolved from a single day event into "Black November," overtaking December as Australia’s biggest shopping month. This shopping phenomenon, expected to drive $6.7 billion [1...

Kimberly-Clark Australia and Woolworths set to reduce plastic waste

Kimberly-Clark Australia, one of the nation’s leading personal care product manufacturers, has partnered with Woolworths on a packaging trial that’s set to remove tonnes of plastic waste from...

The Times Features

Why Expert Plumbing Services Are a Must for Every Aussie Home

Plumbing problems can throw a spanner in the works, especially when you’ve got plans. That’s where calling in an expert plumber makes all the difference. Picture this. You’re firi...

Fast, Fun, And Fantastic Looking Gel Polish For Your Nails!

Today's women spend a lot of time and money on their beauty and fashion regime because they love looking their very best! Looking good makes you feel good, and let's face it, it...

Energy-Efficient Roof Restoration Trends to Watch in Sydney

As climate consciousness rises and energy costs soar, energy-efficient roof restoration has become a significant focus in Sydney. Whether you're renovating an old roof or enhan...

Brisbane Water Bill Savings: Practical Tips to Reduce Costs

Brisbane residents have been feeling the pinch as water costs continue to climb. With increasing prices, it's no wonder many households are searching for ways to ease the burde...

Exploring Hybrid Heating Systems for Modern Homes

Consequently, energy efficiency as well as sustainability are two major considerations prevalent in the current market for homeowners and businesses alike. Hence, integrated heat...

Are Dental Implants Right for You? Here’s What to Think About

Dental implants are now among the top solutions for those seeking to replace and improve their teeth. But are dental implants suitable for you? Here you will find out more about ...

Business Times

How Virtual Team Building Is Reshaping Modern Business Dynamics

In the past years, virtual team building has established itself as one of the cornerstones in building modern business st...

How digital loyalty programs drive engagement in a value-consciou…

Ongoing economic pressures are driving Australian retail businesses to rethink how they engage with increasingly value-co...

How Ofload and Logistics Tech Power Australia’s Biggest Shopping …

Black Friday has evolved from a single day event into "Black November," overtaking December as Australia’s biggest shoppi...

LayBy Shopping