Matt Sykes of the CPT Group in Australia, global experts in cash, payments and money systems 1, has written a review about whether cash can deliver on its role providing critical redundancy for national payment systems. They want to start a debate about whether the infrastructure that supports cash distribution deliver on this promise given the acute and growing strain it is under. Does a misalignment between policy assumptions and market realities risk rendering cash ineffective as a payment option in a crisis?
Cash is often cited as a critical redundancy for national payment systems – a failsafe when digital channels are disrupted. But this assumption rests on a fragile foundation. While cash can, in theory, provide resilience, the infrastructure that supports its distribution – particularly the cash-in- transit (CIT) sector – is under acute and growing strain. Without action, this misalignment between policy assumptions and market realities risks rendering cash ineffective as a redundancy – let alone as a primary payment system, precisely when it might be most needed.
In virtually every advanced economy, central banks and financial regulators highlight the importance of maintaining cash infrastructure as a safeguard against cyberattacks, natural disasters, or technological outages. This role – as a form of systemic insurance – is both logical and vital. However, the designation of cash as a ‘redundant’ or ‘fallback’ mechanism often comes without corresponding attention to the viability of the actors that make this redundancy operational.
This creates a paradox: while the cash cycle is deemed essential in times of crisis, the ecosystem that supports it is being allowed to atrophy during normal operations. At the centre of this paradox is the CIT industry – the essential but often invisible plumbing of the cash system.
CIT operators in many countries are private businesses with highly specific characteristics: capital-intensive, labour-heavy, and operating within a shrinking revenue base. They typically serve a narrow band of large customers – major banks and retailers – who are able to exert strong pricing pressure while also actively managing their demand for services through activity and footprint changes. This combination of declining volumes and concentrated customer bases puts extreme pressure on CIT economics.
CIT operators face a squeeze on three fronts:
1.Shrinking demand: driven by digital substitution, declining branch networks, and changing ATM usage. 2
2.Cost rigidities: high fixed costs (armoured fleets, depots, labour) make scaling down expensive and inefficient.
3.Price competition: multiple providers competing over a shrinking pie with a small number of large customers/ contracts making up a large portion of the total commercial opportunity.
This is not a hypothetical issue. Australia provides a live example, where the two major CIT operators were both experiencing significant financial losses, and even after a merger that created a 90% market share, the business continues to experience losses which has created ongoing emergency intervention initiatives by major customers, the central bank, and government.
Similar trends – though less publicised – can be seen in parts of Europe and Southeast Asia.
The cash cycle is more than just CIT. However, CIT sits at a choke point where multiple functions – cash distribution, ATM replenishment, banknote recirculation, and retail servicing – converge. As such, its failure or scaling back can cascade rapidly through the broader system. In markets where only one or two providers remain, there is minimal spare capacity to absorb shocks. If one fails, the other may not be able – or willing – to step in, especially at the same price.
Scenario analysis reveals several plausible failure modes:
All of these undermine cash as a real- world redundancy.
As CIT viability erodes, the policy assumption that cash remains available, accessible, and functional under stress conditions becomes increasingly tenuous. This gap between assumption and reality introduces a new class of systemic risk, one that exists not because cash lacks utility, but because the infrastructure to deliver it has been economically hollowed out.
And unlike many other systemic risks, this one is largely visible in advance.
Australia should be considered a bellwether. With a substantial consolidation of CIT service provision and sustained losses for the major national operator, the country is only now actively confronting the question of whether – and how – to intervene.
But similar stress signals are detectable elsewhere:
These are not outliers. They are early indicators of a deeper structural trend: that the economics of commercial cash distribution are no longer aligning with public policy expectations.
If cash is to play a meaningful role in future payment resilience, regulators and policymakers must shift from a passive to a proactive posture. Examples to consider include:
These actions require courage and coordination, particularly in environments where digital payments dominate political and institutional attention. But they are essential if we are to prevent a system designed for resilience from becoming a source of fragility.
2 - CPT are conscious that cash usage is not shrinking in all economies in an absolute sense, though in most it is either reducing in by absolute measures or at least as a proportion of total payments. Additionally, the increasing intent and sophistication of customers in active management of cash costs results in shrinking CIT demand even if usage is stable
