Banks seek ACCC approval for cash supply consultation before crunch

The ABA has made an application to the ACCC to organise industry consultation over cash supply, amid fears over the health of Armaguard, which supplies over 90 per cent of ATMs.

Australia’s banking industry has made an urgent application to the competition regulator amid questions around the solvency of Armaguard, one of the industry’s biggest cash suppliers.

The Australian Banking Association (ABA) said it was ­applying to the competition regulator to allow it to undertake industry-wide ­discussions to ensure cash supplies continue.

The ABA said it needed ­approval from the Australian Com­p­etition and Consumer Commission (ACCC) to launch a three-month industry-wide ­consultation, which could see banks step into ensuring cash supplies continue.

“The Proposed Conduct is limited to discussions and in-principle agreement about potential industry responses,” the ABA notes in its submission. “It does not extend to the implementation of any solutions, which would be the subject of a separate ACCC authorisation (if required).”

The ABA said its application would see an external competition lawyer attend each meeting of the industry association and its member banks and report monthly to the ACCC.

The application, which the ABA has made with the backing of Treasury and the Reserve Bank of Australia, comes amid a decline in the use of cash for purchases but an explosion in notes in circulation. The use of cash in purchases has plummeted from 70 per cent of all transactions in 2007, according to the ABA, to just 13 per cent in 2022.

ABA chief executive Anna Bligh said the industry was ­making its application for authorisation from the ACCC “so banks can be part of the solution to design a sustainable model for people to access cash in the long-term future”.

“This changing nature of cash usage is creating strain on the system and banks are taking action to make sure that people who need or want to use cash can still get access to it.

“As Australians, we are using much less cash, but we will not be cashless any time soon.”

An Armaguard truck outside Bourke St Mall, Melbourne Picture: Daniel Bowen

In its submission to the ACCC the ABA said it was recently advised by Armaguard that despite its merger with Prosegur last year the company “continues to be an unsustainable business”.

Prosegur now controls 90 per cent of the cash-in-transit industry, charged with refilling the nation’s ATMs. The ABA said Armaguard told it and major banks CBA, ANZ, Westpac and NAB, along with Treasury and the RBA at the end of October there were concerns about the ongoing viability of its business.

The ABA said Armaguard told it “this needs to be addressed immediately if Armaguard is to supply cash nationally to meet government and RBA commitments”.

Ms Bligh said banks had been working with the RBA to “better understand the problems facing Armaguard”, but she said these efforts were being stymied due to “commercial-in-confidence contracts. The RBA signed off on the merger of Armaguard and Prosegur last year, noting it was “in the national interest that the industry be put on a more sustainable footing”.

Ms Bligh said banks were “determined to do everything they can to ensure that their customers, including large retailers and small businesses can continue to access cash when they need it”.

The recent outage of Optus’ phone networks on November 8 saw tens of thousands of Australian businesses unable to take electronic payments after terminals were disconnected from phone lines.

Many retailers resorted to taking cash for payments.

Ms Bligh said cash was important for times of crisis or natural disasters.

“We are working closely with Australian banks, the RBA and industry to ensure Australians can continue to access cash,” Treasurer Jim Chalmers said.