Two of Australia’s largest cash-in-transit companies are set to combine, arguing that the lack of cash in circulation makes the merger necessary.

The companies claim cash has gone from being used in 50% of transactions a few years ago to just 20% of transactions today, with that percentage set to fall even further.

Linfox Armaguard and Prosegur Austalia have argued that their merger, which would create a single player with 90% of the market, was necessary because their real competition was burgeoning electronic payment systems.

Paypal managing director Peter Cowan told Sky News at the weekend that 97% of people now shopped online.

He said the pandemic had conditioned people to making online purchases, and that the trend had continued since Covid restrictions were eased.

In addition, the decision by many retailers to refuse cash as a hygiene risk during the pandemic had gotten shoppers used to using cards – and increasingly their smartphone - instead of cash.

Eftpos managing director Matt Barr said: “What Covid did was really accelerate a shift from cash to electronic payments.

There’s been massive shifts in the way Australians have paid.” He said younger people had always preferred electronic payments over cash, but that Covid had “pushed it all the way through” so that older people now viewed it as normal. “Everyone is doing it now,” he said.