The ACCC has granted interim authorisation to the Australian Banking Association, its member banks and industry participants to work together to develop an arrangement that will guarantee the ongoing distribution of cash.
The ACCC said in a statement yesterday that the application followed concerns expressed by Armaguard, the major supplier of cash-in-transit services in Australia, that the industry is not sustainable in its current form.
In June, the ACCC gave Armaguard and its rival in cash handling Prosegur authorisation to merge. At the time, the ACCC accepted that the cash handling industry is in decline due to the long-term fall in the use of cash for payments.
In its statement yesterday, the ACCC said the latest authorisation relates only to discussions and in-principle agreements about an industry response to support ongoing access to cash.
The ABA said that before implementing an agreed industry response, it would seek a further ACCC authorisation “for the proposed way forward”.
The ACCC said maintenance of access to cash in regional and remote areas would be an important consideration in any further authorisation.
According to the ABA application, Armaguard told an industry roundtable convened by the Reserve Bank in October that, as the sole distributor of wholesale cash, it has insufficient self-generating funds to reinvest in the future sustainability of the wholesale cash distribution network.
The ABA said it had a serious concern that any suspension or disruption in the supply of cash-in-transit services could reduce the availability of cash to the major banks at a distribution level and other participants in the retail cash distribution chain, including other banks, Australia Post, retailers and ATM service providers.
It also said cash usage as a payment method is expected to continue to decline. Cash accounted for 66 per cent of consumer payments in 2007 but only 13 per cent in 2022. The ABA cited research that estimated cash usage for consumer payments would fall to 4 per cent by 2030.
The ABA application said: “Given the scale of the challenges facing Australia’s cash services and the timeframes in which solutions must be progressed, the applicant seeks urgent interim and final authorisation to facilitate meaningful and effective discussions regarding banking industry responses to these challenges.
“Member banks have progressed some bilateral discussions with Armaguard to date. However, given the projected structural decline in cash usage as a share of customer payments, immediate steps in the cash-in-transit industry and the interdependence of Armaguard’s business with the Banknote Distribution Agreement participants in particular, it is apparent that steps taken by member banks individually and without regard to the collective effect of those action are unlikely to be successful in securing the viability of wholesale cash distribution.”
The next steps include a meeting of the ABA Council on Friday (December 8), at which cash issues will be discussed, and a meeting of banks and Armaguard on December 14 convened by the Reserve Bank.