Armaguard, Prosegur to ACCC: merger will save cash

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Documents will be lodged this week by the two largest ‘cash-in-transit’ operators, as declining use of cash forces up the unit costs of moving it around.

Linfox Armaguard and Prosegur Australia will lodge final documents for their proposed merger later this week in a bid to convince the competition regulator that it would serve the public interest by ensuring cash can be distributed across the economy profitably as its use for payments continues to decline., would create a single player with about 90 per cent of the market.

Armaguard, via its atmx subsidiary, has been buying out-of-branch ATM fleets from major banks including ANZ and Commonwealth Bank. Prosegur, which operates ATMs under the Precinct brand, has bought offsite Westpac machines. Alternative, but much smaller, players in the CIT sector include Authentic Services, Streamcorp and Brink’s. All up, there are around 200 CIT providers, including many couriers who work for small businesses, picking up and banking small amounts of cash.

The RBA has pointed out cash is used more regularly by elderly people uncomfortable with digital banking. Some bank customers also like it because it protects privacy given transactions can be made anonymously. Cash demand also spikes during natural disasters on concerns electronics payment systems will go out, as they did during the 2019-20 bushfires.

In its annual report, Prosegur said in 2021, “prices have continued a downward trend, and the amounts of cash-in-transit have continued to decrease owing to a lesser use of cash.”The companies are preparing to argue that undertakings are not required, pointing out it will be in the interest of the merged company to ensure cash remains competitive in the marketplace.

In its banknote distribution conclusions paper last month, the RBA said it was mulling other changes to the market. It will establish a working group to consider widening access to wholesale cash via changes to “banknote distribution arrangements”, currently controlled by the major banks.

 

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