Cash still king in the country but the money pipeline is drying up

The ongoing closure of bank branches across rural and regional Australia has caused community upset but less well known is the security companies who move the cash into the country are fast losing their own money.

Armaguard told the just completed Senate inquiry into banking services it was "not in the business of providing services to regional and remote Australia as a public service".

The Australian Competition and Consumer Commission stepped in this week to keep the pipeline of cash flowing.

The Reserve Bank sells banknotes and coins to the banks who are responsible for its distribution throughout the country:

The ACCC has authorised the Australian Banking Association, the Customer Owned Banking Association, banks, retailers and other industry participants to continue developing responses to support the distribution of cash across Australia.

This follows concerns expressed by the major supplier of cash-in-transit services in Australia, Armaguard, the industry cannot be sustained in its current form.

Cash-in-transit services involve cash transport, management and processing services that maintain the distribution of cash to banks, retailers and independent ATM operators.

"... it can be particularly difficult to access cash in remote and regional areas where consumers are more likely to be high cash users, bank branches are limited and often the only access is through non-bank sources including Australia Post and retailers," ACCC chair Gina Cass-Gottlieb said.

The Senate inquiry, which handed down its report late last week, was told cash was still king in the country.

The Reserve Bank said cash use had been in decline for many years and had halved over the three years to 2022.

But the use of physical money is "greater in regional areas than in the major cities".

"Despite the decline, there are still consumers considered 'high-cash users' who use cash for more than 80 per cent of transactions. Most of these users are in regional areas," the Senate inquiry found.

At the same time, there has been an almost 90 per cent fall in the use of cheques in the past decade.

The Senate committee reported: "The committee heard throughout the inquiry that access to cash in regional and remote communities needs to be protected.

"Cash is essential to the day-to-day lives of people living in these areas.

"The committee was told by witnesses 'if banks can't or won't provide a mechanism for cash circulation in regional communities, then the government needs to step in and provide a suitable alternative mechanism'."

The committee recommended the government adopt a policy recognising access to financial services as an essential service.

"To this end, it should commit to guaranteeing reasonable access to cash and financial services for all Australians."

The committee was told there are many rural communities where cash remains necessary and is preferred for a variety of reasons.

Many are impacted by digital connectivity issues in the switch to online banking, many lack digital literacy, and also suffer cultural, linguistic or physical barriers to online banking.

As well, community groups, clubs, school canteens, markets and sporting events often rely on cash, including coins.

The committee was also told because of branch closures country people had to travel further to conduct their banking business and often withdrew more cash they would normally.

This increased security risks for businesses and individuals who are keeping larger amounts of cash on hand which could potentially attract thieves.

Community groups also face difficulties in accessing and banking cash used for events such as football matches, agricultural shows, school fetes, and similar community activities which require a cash float.