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Australia: The Cash Infrastructure Continues to Shrink

Categories : Cash ensures competition among payment instruments, Cash generates security, Cash is a public good
March 27, 2024
Tags : ATMs, Australia, Bank branches, Digital payments, Financial inclusion
Australia’s cash infrastructure has contracted sharply in recent years. Banks and retailers have reduced cash services, even in urban areas.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – Mexico and South America, University of Oxford

This post is also available in: Spanish

Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

A Shrinking Cash Infrastructure with Rising ATM Withdrawals

“We remain focused on access to cash for Australians. Cash is also an important backup method of payment during system outages or natural disasters, when electronic payments might be unavailable.” – Michele Bullock, governor of the Reserve Bank of Australia (RBA).

Australia’s cash infrastructure has contracted sharply in the past five years. According to statistics from the Australian Prudential Regulation Authority (APRA), from the end of June 2017 to the end of June 2023, bank branches declined 37%, going from 5,694 to 3,588, and ATMs declined 59%, going from 13,814 to 5,693 (see Graph 1).

Graph 1. Australia: Cash Infrastructure, June 2017-June 2023

Source: APRA (2023).

According to the Reserve Bank of Australia (RBA)’s 2022 Consumer Payments Survey (CPS), most Australians find access to cash withdrawal services convenient and access to depositing services less convenient (Mulqueeney, Livermore 2023: 34).

According to RBA data, the total number of ATM cash withdrawals in Australia increased by 2.9% over the past year, going from 28.0732 million withdrawals in January 2023 to 28.9119 million in January 2024 (see RBA 2024 ATMs Original Series CACWTAWN). The increase in the total value of cash withdrawals is even more spectacular, at 8.2%, going from $8.1225 billion in January 2023 to $8.786 billion in January 2024 (see RBA 2024, ATMs Original Series CACWTAWV).

Banks and Retailers Reduce In-Person Cash Services

“Banks make their money from taking in money and lending it out, so it is a responsibility they continue to keep cash available to people. Cash is an essential service, as is power and water. To be denied access to cash is akin to them being excluded from participating fully in the Australian economy” – Steve Worthington, professor at Swinburne University of Technology.

ANZ, Commonwealth Bank, NAB, and Macquarie Bank have started removing over-the-counter cash services in several urban branches, forcing customers to withdraw and deposit cash at ATMs.

“I don’t think these banks are living up to their side of the deal. […]. Transfers between banks take a business day to clear. The banks make interest the longer you keep your money with them. You’ve got to wonder whether this is all actually a commercial decision to make more money of us.” – Matthew Canavan, leader of a Senate inquiry into bank closures and cash access in regional Australia.

In 2023, the supermarket chain Woolworths reduced its cash withdrawal limit from $500 to $200 and started requiring a purchase to make cash withdrawals, “due to the lack of cash being used in transactions.” “Since when did Woolworths introduce that you have to buy something in order to just withdraw cash. Only found out that today,” said Darren Morfoot, a former employee of Woolworths in Sydney, about the supermarket’s new cash policy.

Growing Cashless Anxiety

Almost three in four Aussies are worried about the shift to a society without cash. A survey by payments technology company Waave found that 41% are highly concerned about going cashless. Two-thirds say it will exclude people and exacerbate economic inequality, 58% worry about paying more fees, and 42% say they will miss the chance to manage money. Those surveyed tend to spend less when paying in cash.

“People fear losing the sense of control and visibility over what they actually have. It would be a sad moment when a child needs to leave their BSB and account details under their pillow for the tooth fairy.” –  Ben Zyl, Waave CEO.

A petition calling for an Australian Banking and Cash Guarantee that includes reasonable access to cash and the option to pay in cash has gathered over 166,000 signatures as of this writing.

RBA: Cash Distribution in Peril

The decline in cash use has increased financial pressures across the wholesale banknote distribution industry. Last year, the Australian Competition and Consumer Commission (ACCC) approved the merger of Armaguard and Prosegur Australia. Despite having a 90% share of the cash-in-transit (CIT) market, “Linfox Armaguard has indicated that its cash distribution business remains unsustainable,” said Michele Bullock, governor of the RBA:

“The RBA places a high priority on the Australian community having good access to cash withdrawal and deposits. […] I have encouraged the major participants in the cash distribution system to approach [a new model] with a public interest in mind rather than just their own, narrow business interests.”

Surcharges on Cash Payments

Some merchants have added cash surcharges or “handling fees” to cover rising cash management costs, such as Sydney City MG, a car dealership in Sydney, which charged $55 for cash payments. “[It is] just so over the top and a bit ridiculous. [It is] abusing what they can to make some extra money on the side,” told a listener on 2GB.

According to the Australian Consumer and Competition Commission (ACCC), the surcharge is legal if merchants comply with consumer law. Per the RBA, retailers can refuse payment in legal-tender banknotes and coins if they specify other means of payment in advance.

“Aussies are being charged to use our own money and I have a lot of concerns over the precedent that this cash surcharge might set. If the ACCC are green-lighting this, I encourage them to relook at the Payment System Board’s regulations, which clearly expect merchants to provide a fee-free option for consumers.” – Jason Bryce, Cash Welcome advocate.

Cash and Diversity

The RBA announced in early March that the new $5 banknotes will depict a First Nations theme, replacing the portrait of Queen Elizabeth II. The RBA has requested the public for submissions through April 30, engaging with First Nations organizations to promote the initiative.

“We invite all Australians to reimagine the $5 banknote in the search for themes that reflect our nation’s unique and rich First Nations cultures and history. This could be a story passed down for generations, a location, an idea, an instrument or an object that binds a community.” – Michelle McPhee, RBA’s assistant governor of business services.



This post is also available in: Spanish