Armaguard Funding Panics Banks After Prosegur Merger.
Armaguard Funding Panics Banks – Major Australian banks have filed an application with the Australian Competition and Consumer Commission after Armaguard sought a $A190 million funds injection 5 months after it merged with Prosegur.
The merger was meant to bolster Armaguard’s position in a cash in transit market devastated by the switch to digital payments but banks are now planning a joint response after Armaguard sought $190 million in funding over 3 years to continue its cash carrying operations.
In their ACCC application banks said “any suspension, exit or default by Armaguard in the supply of services could reduce the availability of cash to the major banks at a distribution level, and other participants in the retail cash distribution chain such as other commercial banks, Australia Post, major retailers and ATM services providers”.
The relentless drive of the banks towards a cashless, branchless business model has created a delicate balancing act for the Australian Banking Association, which at the same time its members reap the benefits of massive cost savings from their digital business model finds itself obliged to collectively cry poor on cash in transit.
“Last month, Armaguard advised banks that the challenge of rapidly declining cash use has now put the continued viability of their business at risk,” the ABA said recently.
ABA said the banks wanted to back a “sustainable model” to carry cash, but ABA chief executive Anna Bligh acknowledged that as the use of cash for payments declines, the unit cost of transporting and distributing cash escalates.
“The reason the ABA is seeking authorisation from the ACCC is so banks can be part of the solution to design a sustainable model for people to access cash in the long-term future,” Bligh said.
Armaguard Funding Panics Banks After Merger
A solution might include financial support for Armaguard in the short term and the creation of a public utility to carry cash in the long term, though this second strategy will only shift the burden of carrying cash from specialist private enterprise to the taxpayer.
The unviability of cash carrying as a business model is only going to worsen, given the percentage of payments in cash has fallen from 62 per cent in 2010, to 13 per cent in 2021, on the way to a predicted 4 per cent by 2030.
You can find out more about Armaguard here or read more SEN news here.
“Armaguard Funding Panics Banks After Prosegur Merger.”
