Coles has halved its cash withdrawal limits across its supermarkets and suspended cash deliveries amid mounting concerns over the viability of Australia’s primary physical money transit company, Armaguard.
The action, designed to avoid having cash orders stuck in trucks if Armaguard collapses, comes during a period of tense negotiations, led by the banking sector, to keep physical cash flowing around Australia by offering the Linfox-owned transit company a rescue package.
The concern is that if Armaguard, which has a near monopoly over coin and note distribution in Australia, were to reduce or cease deliveries, there would be a cash shortage affecting banks, post offices, supermarkets and other major retailers.
A Coles spokesperson said cash transactions would still be available in all of its supermarkets and liquor stores over Easter.
“Due to industry-wide challenges with cash movements, we are taking some temporary steps to prepare for disruption to Armaguard services,” the spokesperson said.
Coles has reduced its cash withdrawal limit from $400 to $200, with the changes putting it in line with many other retailers.
A Woolworths spokesperson said there were no immediate changes to its cash limits or operations.
Armaguard warned late last year its business model was unsustainable due to falling demand for physical currency, sparking emergency meetings with Australia’s major banks. The Reserve Bank, which prints and issues currency, is also involved in discussions.
In Australia, cash usage has dropped to just 13% of transactions, according to professional services firm Accenture, down from 27% before the pandemic.
While cash usage is falling, many people still rely on notes and coins, including older Australians, those with limited or no internet access, people on low incomes and those with a disability.
A funding package backed by the major banks and retailers has been put in front of Armaguard to keep it afloat, although a deal has not been finalised.
Linfox was contacted for comment on Thursday.
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Most retailers receive periodic cash deliveries, which means they keep enough money on hand for any short-term disruptions, although there are concerns consumers might rush to withdraw cash if supplies come under threat.
The consumer commission has noted the industry response would need to make sure cash is available in remote and regional areas, where bank branches are limited and people often access money through other sources such as post offices and supermarkets.
The Australian Banking Association, which is leading negotiations on behalf of the banks and retailers, was contacted for comment.
The Transport Workers’ Union has called on the major banks to provide a long-term solution to fund the cash transit industry.
“It’s critical for the safety and wellbeing of these transport workers that this is resolved quickly with a view to the future,” the TWU national secretary, Michael Kaine, said.
“With the public holiday approaching, workers need certainty and peace of mind.”
