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$26m lifeline rejected: Cashless society to ‘accelerate’ if Armaguard collapses, expert warns

Armaguard has been struggling to stay afloat due to a decline in cash transactions and today rejected a $26 million financial lifeline.

Australia’s transition to a cashless society will be further accelerated if the country’s major cash distributor goes under, an expert has warned.

RMIT associate professor of finance Dr Angel Zhong told Yahoo Finance there will be significant knock-on effects for all Australians if cash transportation company Armaguard collapses.

Concerns have grown about the cash reserves of Armaguard’s clients being depleted as the company claimed it was teetering on the edge, even prompting Coles to confirm it was restricting the withdrawal of cash.

Armaguard and impact on Australia going cashless
Armaguard collapsing could push Australia closed to a 'cashless society', an expert says. (Source: AAP)

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But it rejected a $26 million lifeline offered by Australian businesses, including the big four banks, Coles, Woolworths, Australia Post and Wesfarmers on Thursday.


Despite merging with main-competitor Prosegur last year, Armaguard has struggled to stay afloat due to a drop in cash transactions.

In 2007, around 70 per cent of consumer payments were made using cash. In 2022, the Reserve Bank found that figure plunged to just 13 per cent.


“This increasing preference to use cashless payments is pushing businesses like Armaguard out,” Zhong told Yahoo Finance.

“It will then further increase the cost of using cash for both business and consumers, and that will further accelerate this transition to a cashless society.”

Armaguard confident cash distribution will continue

In a dramatic about turn, Armaguard said on Thursday additional funding from its parent company Lindsay Fox-owned transport and logistics giant Linfox guaranteed its continued operations.

Armaguard chief executive Mick Cronin said it is working with its customers, including retail customers and banks, and is “confident” it will get the business onto a “long-term sustainable footing”.

The decline in cash use is a reality many businesses are grappling with and Zhong has forecast Australia will become “functionally cashless” by 2030. This means contactless payments are the future.

“It is driven by consumer preference. No one needs to be concerned that the cash in their wallet will lose value or that no one is allowed to use cash. It is still a legal tender in Australia,” Zhong said.

Using cash to become ‘more expensive’

Card surcharges are costing Aussie consumers nearly $1 billion a year, analysis of RBA data found. But Zhong said people often didn’t realise the costs associated with using cash too, including transport and storage costs.

“Currently banks bear these costs and in some cases incorporate these costs into how they charge businesses for using their banking services,” Zhong said.

There’s also the cost on businesses directly, with Zhong citing Square research which found Australian businesses were spending nearly 29 days handling, counting and banking their cash each year.

“I think the cost of using cash will become increasingly more expensive,” Zhong said, noting that this could mean more businesses may decide not to accept cash as a payment method.

Zhong said there is the possibility banks could pass on “explicit charges” for cash costs to businesses or there could be increased bank fees.

RBA governor Michele Bullock was recently asked whether Aussies should pay a fee to use cash, as they do with ATMs.

She noted that cash "really does have a big, community, public service sort of aura attached to it".

"If businesses started charging people to use cash, I suspect there would be a very big backlash,” Bullock said.

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