Armaguard Prosegur merger could ensure future of cash
Respected banking industry newsletter BankingDay.com reported that the two major Cash In Transit operations in Australia – Armaguard and Prosegur will merge. Armaguard confirmed the deal had been agreed between the two companies.
Yes there are a few small operators in the armoured truck and cash delivery marketplace but these two companies are the major dominant players.
One large operator could ensure that the economics of cash distribution in Australia remain viable. However concerns from other players in the industry include the possibility of big price hikes as competition between the two companies disappears.
BankingDay predicted that the Australian banks could oppose the deal.
“A full merger of the businesses will likely stir opposition from Australian banks because it could potentially establish a monopoly in the cash logistics industry,” said BankingDay.
Most Australian banks rely on Prosegur or Armaguard for cash delivery services.
Armaguard said it would seek approval from the Australian Competition and Consumer Commission for the deal.
Armaguard will control 65 per cent of the merged entity which will trade under the Armaguard brand and Prosegur will own 35 per cent reported the Australian Financial Review.
Armaguard and Prosegur have been battling for control of the Australian ATM market since major and regional banks began shedding non-branch machines from their proprietary networks three years ago.
Armaguard now owns and operates ATMs formerly controlled by ANZ, Commonwealth Bank and CUSCAL, while Prosegur bought 20 per cent of Westpac’s fleet of automated tellers in October 2019.
Banking Day reported in March that the two rivals had entered talks regarding a shared ATM utility in Australia.
The Reserve Bank of Australia is conducting a review of banknote distribution arrangements in Australia with the final report expected to be released in the next month.
An issues paper floated by the RBA last year raises industry consolidation as a potential development in cash distribution as unit economics of the market were threatened by the growth of digital and other forms of non-cash payment.