CBA's warning for Aussie cash users over $350 million issue: 'Challenging'

Commonwealth Bank (CBA) has revealed how much it costs them to handle and supply cash. The nation's biggest bank said it sets them back upwards of $350 million per year to provide cash services over the counter in branches and through ATMs.

In its FY24 investor presentation, CBA noted that monthly average ATM withdrawals have plummeted 51 per cent since 2019 while digital payments have skyrocketed 85 per cent. But Cash Welcome founder Jason Bryce told Yahoo Finance the cost per year to provide cash is a drop in the ocean for CBA.

"They sit at the heart of the economy and make staggering profits," he said.

"$350 million is coming out of their what... $9.8 billion profit? It's a cost of doing business. You're a bank, you deal in legal tender."

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CBA warned in the presentation that providing cash services continued to be a "challenging commercial model" of its business.

Not only have monthly ATM cash withdrawals halved in five years, but the bank claimed the cost of providing cash had jumped by 50 per cent.

Bryce is concerned CBA's revelation could mean a much larger move is coming in the not-too-distant future when the banks meet to discuss the future viability of cash in Australia.

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"Commonwealth Bank is softening us up for some kind of argument at the House of Representatives next month about how we're paying too much for cash and something's got to be done now," he warned.

"It's ridiculous. That's your business. It's not all that much when you divide it by the number of places you have."

Commonwealth Bank said late last year that it had more than 700 branches dotted around Australia and more than 1,800 ATMs. But, the bank has closed 354 branches and 2,297 ATMs in the past five years.

If you divide the $350 million cost to provide cash services just by the number of branches still open, it's close to $500,000 per branch.

But a spokesperson for CBA told Yahoo Finance that cash "is and will remain an important part of the economy".

"CBA is committed to making sure cash is available to those who need it, and continues to distribute around $4 billion in cash each month through the largest branch and ATM network in Australia," the spokesperson said.

RBA head on the future of cash in Australia

Reserve Bank of Australia (RBA) governor Michele Bullock said during her speech at the House of Representatives committee meeting that cash remained an important part of society, even though its use has declined in recent years.

Cash transport company Armaguard faced an uncertain future earlier this year before it was saved by a $50 million deal guaranteeing its survival for 12 months.

But it sparked fears about how physical money would be distributed around Australia, particularly in regional and rural communities, if it did collapse.

Bullock said the year-long deal with Armaguard would allow stakeholders like the RBA, the big banks, supermarkets and Australia Post enough time to come up with a plan if the cash transport company can't stay in the black.

“There is a minority, but a significant minority, of people who still rely heavily on cash and want to use cash,” she said.

“The government is committed, and we are committed as well, to trying to maintain access to cash for people who want to use it.”

Cash remains king in some parts of the country

Recently released research from accounting software Xero revealed that cash still has a lot of value in Australia, especially with small businesses.

While 86 per cent of Aussies use a debit or credit card to make in-person and online payments, only 55 per cent of small businesses offer these cards as payment methods.

One in four Aussie consumers specifically seek out businesses that provide a cash payment option

Bank transfer is the most common payment method offered by small businesses at 68 per cent, followed by cash at 59 per cent.

Nearly 80 per cent of businesses believe the move to a cashless society will have an impact on their finances and the way they operate.

"Aussie consumers are increasingly embracing digital payment methods, particularly younger generations. However, small businesses don't seem to be meeting their customers where they are," Xero Australia sales director Theo Konstantas said.

"But there are many benefits to offering more ways for people to pay, such as faster payments and the potential to expand your customer base."

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