Australians may have to go back to paying fees again for using rival bank ATMs like they did a decade ago if they want to keep having access to cash, a finance expert says.
The Big Four banks in 2017 agreed to scrap those $2 fees for customers who used the automatic teller machines of a competitor.
While it was regarded as good news, that policy is threatening the future of cash in Australia with very few consumers now using banknotes to pay for everyday goods and services.
Australia’s key cash-in-transit company Armaguard, owned by billionaire transport magnate Lindsay Fox’s family, needs $50million a year in handouts to survive and now federal regulators are proposing Australia have a new minister for cash.
In just seven years, the number of ATMs have more than halved, plunging from 13,814 in June 2017 to just 5,476 in June last year, Australian Prudential Regulation Authority data showed.
The Commonwealth Bank, Westpac, NAB and ANZ used the abolition of rival ATM fees to take away those cash dispensing machines and squeeze Australia’s cash-in-transit companies during contractual negotiations.
This has made distributing cash unprofitable with the Big Four banks, supermarket giant Woolworths and retail group Wesfarmers – the owner of hardware chain Bunnings, Kmart and Officeworks – last week announcing they would provide a $25.5million lifeline to Armaguard from July to December.
‘Major banks and major retailers have reached an agreement with Armaguard to extend their financial contribution for a further six months,’ the Australian Banking Association said.
Australians may have to pay fees for using rival bank ATMs like they did a decade ago if they want to keep having access to cash, a finance expert says (pictured are Commonwealth Bank customers in 2017)
Armaguard needs to be subsidised to the tune of $50million a year despite having a 90 per cent share of Australia’s cash-in-transit market, with the Reserve Bank estimating cash now makes up just 13 per cent of in-person transactions.
Jason Bryce, the founder of Cash Is Welcome, said Armaguard wouldn’t need to be subsidised by the banks and the supermarkets if those old fees for using rival ATMs still existed – and generated $500million a year in revenue.
‘I think it was a bad, short-sighted move – I don’t want to prescribe the answers – but the problems date from that decision,’ he told Daily Mail Australia.
‘There’s no doubt the $2 ATM fee for customers of other banks kept the cash distribution system paid for and viable in Australia – since 2017, since that decision, the cash industry has contracted and been under pressure.
‘There needs to be some kind of structural change to provide support, go forward, to cover the $50million-odd per year that Armaguard is now getting.
‘There should be no need for $50million a year – the problem has been created by the banks and the supermarkets.’
Mr Bryce said the abolition of those rival ATM fees had led to the big banks putting extra pressure cash deliverers, to the point that Spanish group Prosegur in 2023 merged with Armaguard to survive.
‘The two big companies have merged into one and that one company is on the verge of bankruptcy,’ he said.
The Big Four banks in 2017 agreed to scrap those $2 fees for customers who used the automatic teller machines of a competitor
Jason Bryce, the founder of Cash Is Welcome, said Armaguard wouldn’t need to be subsidised by the banks and the supermarkets if those old fees for using rival ATMs still existed
Peter Fox, the executive chairman of Armaguard, told The Australian Financial Review its ‘shortfall in revenue’ was ’caused by the four major banks and two retailers which slashed their margins to Armaguard in a period of cut-throat competition’.
Commonwealth Bank chief executive Matt Comyn last year admitted the banks were ‘very, very aggressive’ towards Armaguard.
‘The banks drove Armaguard to the brink of bankruptcy,’ Mr Bryce said.
‘Matt Comyn says the banks underpaid Armaguard for cash-in-transit.’
‘It’s really up to the banks to pay more.
‘So banks now don’t really have much of a leg to stand on when they complain about handing over $25million for six months.’
The disappearance of major bank ATMs saw the appearance of third-party ATMs that charge $3 fees for use.
‘There’s less bank-owned ATMs and there’s more third-party ATMs that charge $3 or so,’ Mr Bryce said.
The Council of Financial Regulators – which includes the RBA – and the Australian Competition and Consumer Commission is proposing a new federal minister in charge of cash distribution who would have oversight over a registered entity that would ‘provide critical cash services to a significant part of the market’.
‘Despite the rise of digital payments, cash remains vital for many Australians, particularly in regional and remote communities,’ it said in a consultation paper.
‘Cash supports secure, inclusive, and resilient transactions for those who prefer or rely on it.’
The federal government last year announced a cash mandate would be coming into force on January 1, 2026 requiring businesses to offer customers a cash option.
