Is Armaguard’s fight over the death of cash futile?

Apparently, Fox wasn’t a fan of the ultimatum or its timing. The billionaire also probably didn’t take kindly to the distribution of a letter that revealed Armaguard had held “discussions with RBA where you indicated you may not be able to make payroll payments for your employees beyond 27 March 2024”.

Having sought a resolution through collective negotiation, to ward off the collapse of Armaguard, Fox has for now shifted his position to not allow the business to go broke.

But it’s a position that seems a long way from delivering a long-term resolution given the uncertain future of cash in Australia.

Lust as they may for the days when cash will actually become extinct, the banks and the retailers understand it is a necessary evil – and by evil I mean a cost.

Commonwealth Bank boss Matt Comyn told a parliamentary inquiry late last year that continuing to support cash distribution was costing the bank $400 million a year. But except for pensioners, drug dealers and tax evaders, just about everyone has joined the 21st century by moving to a near cashless economy.

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We know that in 2010 more than 60 per cent of purchases were made by cash. It is now closer to 10 per cent, with forecasts this number will halve by the end of the decade.

Bank ATMs are alarmingly close to extinction as have the number of supermarkets self-checkouts designated for cash payment. The situation in regional Australia is even more dire and in numerous instances Australia Post and the big supermarkets (if they are there) have become de facto ATMs.

Given Armaguard is the only cash transporter left of any size, Fox should be in a decent negotiating position with this group of customers. But the banks and retailers are working on other viable options – one of which is to set up their own shared utility service to replace the need for Armaguard.

It’s a model that has been work-shopped in other countries, but it is a problem that is still a way from a solution.

This week ABA chief executive Anna Bligh told the AFR Banking Summit, “The utilities models that have worked in a couple of European jurisdictions are not challenged to get cash to somewhere like Thursday Island or Broome, or Alice Springs.”

“That’s the challenge for a country like Australia, so I wish I could tell you I’ve found the magic bullet to that, but it’s going to take a lot of hard thinking, and we need to stabilise the cash in transit business while we do that hard thinking.”

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