The Big Four banks and the country’s largest retailers have agreed to give $25.5 million to keep cash transit company Armaguard operating until the end of the year. Armaguard was given a $50 million lifeline last year to keep it afloat as cash use plummets, increasing the cost of delivering banknotes across the country.

Commonwealth Bank, Westpac, NAB, ANZ, Coles, Woolworths, Bunnings and Australia Post have extended the Armaguard lifeline, multiple people involved in the negotiations confirmed to The Australian Financial Review. The agreement is expected to be announced today.

The Australian Banking Association said the “funding extension will allow work to continue on the development of an independent pricing mechanism to support a sustainable cash in transit business in the longer term”.

RELATED

• Armaguard move set to protect cash as essential service amid looming deadline

• ATO tax return warning for 2 million Aussies over dangerous act

• Warning for working from home Aussies over common practice

"All parties remain committed to working to achieve a sustainable and more efficient Cash-in-Transit business into the future," it said.

Deloitte Access Economics was called in in May to come up with a new pricing structure. Essential services like healthcare, electricity and disability support have their pricing models established by independent bodies.

The banks have also reportedly commissioned Barrenjoey Capital Partners as they assess options for Armaguard, including whether it would be better funded by the banks and retailers who rely on it to deliver cash to branches and stores across the country.

The Australian Competition and Consumer Commission (ACCC) authorised the Australian Banking Association and major retailers to collaborate on ensuring the continuity of cash-in-transit services on June 25.

The authorisation allows the parties to continue to provide financial support to Armaguard and develop, but not implement, an independent pricing mechanism.

Armaguard handles 90 per cent of all cash movements around Australia. It has blamed the rapidly declining use of cash for its issues, with cash usage dropping from 62 per cent of all in-person transactions in 2010 to just 13 per cent in 2022.

The decline means it is more expensive for Armaguard to deliver banknotes across the country. Consultants at Accenture have forecast cash will account for just 4 per cent of transactions in Australia by 2030.

Since the first deal was inked in the middle of 2024, Armguard has been cutting costs including by simplifying the routes it takes to deliver physical money across Australia.