12 Questions
What percentage of transactions in Australia are still made in cash?
13%
The Riksbank has called for legislation to eliminate cash as a means of payment.
False
What type of people may rely heavily on cash?
people in regional areas with poor connectivity, people without digital skills and those who consider cash more reliable
The central bank of Sweden is called the _______________.
Riksbank
Match the following businesses with their roles:
Armaguard = Cash-in-transit service Large retailers = Use Armaguard's service Australian Competition and Consumer Commission = Approve the Armaguard deal
What percentage of Australia's cash-in-transit market does Armaguard have?
90%
The use of cash has increased during the pandemic.
False
What is the amount of the funding boost that Armaguard will receive beginning July 2024?
$50 million
Armaguard will need to meet certain _______ conditions as part of the deal.
restructuring
Match the following companies with their roles in the cash distribution service deal:
Armaguard = Cash-in-transit service provider Coles = Retailer Woolworths = Retailer Australia Post = Retailer
The banks and other major providers of cash will not be looking at other options besides Armaguard.
False
What is being considered as a longer-term solution for cash distribution in Australia?
A jointly owned cash distribution service
Study Notes
Armaguard's Future Secured
- Armaguard, a cash-in-transit service, has secured a $50 million deal with its main customers, including the big four banks, Coles, Woolworths, Bunnings, and Australia Post, to ensure its future.
- The deal will provide a funding boost starting July 2024, guaranteeing the distribution and collection of cash for the next 12 months.
Challenges Facing Armaguard
- Armaguard has been struggling due to the plummeting use of cash during the pandemic.
- The company has about 90% of Australia's cash-in-transit market, but faces increasing pressure due to fixed costs and declining cash usage.
Restructuring Conditions
- As part of the deal, Armaguard must meet certain restructuring conditions, which may include cutting back on deliveries.
- The company will need to adapt to changing market conditions to ensure its survival.
Alternative Cash Distribution Options
- The banks and other major providers of cash are exploring alternative options, including a jointly owned cash distribution service.
- This service would have no fees for withdrawing cash from either their ATM networks or from non-bank networks, like Australia Post.
International Precedents
- Some countries, such as the United Kingdom, have jointly owned cash distribution services, allowing customers to access cash at no cost across the country.
- Sweden's central bank, the Riksbank, has called for legislation to protect cash as a means of payment, requiring banks to accept cash deposits and have a stash of cash available.
Importance of Cash
- Despite the decline in cash usage, access to cash is still vital for certain groups, including people in regional areas with poor connectivity, those without digital skills, and those who prefer cash as a more reliable option.
- Major businesses, such as large retailers, rely on cash-in-transit services to operate effectively.
Regulatory Approval
- The Armaguard deal is still pending approval from the Australian Competition and Consumer Commission (ACCC).
- The ACCC's approval is needed by July 1, when the new contracts are expected to start.
A deal between Armaguard, banks, and retailers ensures the continuation of cash-in-transit services in Australia, providing relief to those who still use cash.
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