The Big Four banks and Australia’s leading retailers have collectively granted $25 million to ensure cash transit company Armaguard can continue operations until year-end. This follows a prior $50 million lifeline aimed at sustaining the company as cash transactions declined sharply, which has heightened the delivery costs of cash across the nation.
Commonwealth Bank, Westpac, NAB, ANZ, Coles, Woolworths, Bunnings, and Australia Post have all contributed to the financial backing, confirming the arrangement to the The Australian Financial Review. The announcement of this agreement is anticipated today.
The Australian Banking Association (ABA) indicated that this funding extension would facilitate the ongoing development of an independent pricing model intended to support a viable cash-in-transit service in the long run.
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Deloitte Access Economics has been engaged since May to devise this new pricing structure. Unlike various essential sectors like healthcare and electricity, which have their pricing frameworks established by independent authorities, cash transit services have not yet secured such a model.
In addition, the banks have enlisted Barrenjoey Capital Partners to explore funding options for Armaguard, assessing whether the financial responsibility should lie with the banks and retailers that depend on its cash delivery services.
The Australian Competition and Consumer Commission (ACCC) has greenlighted the collaboration between the ABA and major retailers since June 25, aimed at ensuring the stability of cash-in-transit services.
This authorisation allows continued financial support for Armaguard and the development of a pricing mechanism, although implementation is not included.
Armaguard is responsible for managing 90% of all cash movements in Australia. The sharp decline in cash usage—evident from a drop from 62% of in-person transactions in 2010 to just 13% in 2022—has been attributed to the company’s difficulties. Accenture has projected that cash transactions will comprise only 4% of all transactions in Australia by 2030.
The reduction in cash transactions has escalated delivery costs for Armaguard. Following the initial agreement in mid-2024, the company has taken measures to lessen expenses, including streamlining its delivery routes across the country.
The ABA has spearheaded the industry’s response to the challenges facing Armaguard, which arose after the ACCC approved its acquisition of significant competitor Prosegur in 2023.
