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How EFTPOS Transactions Work


15.03.2021 Payments Security

How EFTPOS Transactions Work

EFTPOS isn’t usually the first thing that comes to mind when setting up a new business.

Often seen as a highly technical topic, EFTPOS transactions lie outside of most people’s field of expertise. And yet, every successful business owner needs an understanding of how EFTPOS transactions work.

EFTPOS (Electronic Funds Transfer at Point Of Sale) transactions are a vital part of every modern business that serves individual customers. Not to be confused with the privately-run Australian debit card payment system, Eftpos, the abbreviated EFTPOS refers to the way customers pay with credit and debit cards while in your store. 

Let’s take a closer look at how EFTPOS transactions actually work in a way that’s simple to understand and helps you make smarter decisions as a business owner.

What is EFTPOS?

EFTPOS is a payment system used by businesses to quickly and securely accept digital transfers from credit and debit cards. Any time you’ve used a bank card to pay for groceries, petrol or anything else in person, you’ve used EFTPOS to complete the purchase.

Originally developed in the 1980s, the EFTPOS system took a while to grow in popularity as business owners and consumers got used to the idea of digital payments. For context, Australians were still using cash for 90% of all transactions in 1985. It wasn’t until 2002 that the EFTPOS industry saw significant growth. 

How does an EFTPOS machine work?

EFTPOS machines are card-processing terminals designed to connect the relevant networks and exchange information necessary to complete a payment. There are several parties involved, including: the bank where the buyer has an account, your business’s own bank, and the company providing the EFTPOS machine.

EFTPOS transactions involve some back-and-forth talk between the terminal sitting on your business’s counter and the larger network. This ensures the card being used has the necessary funds in its associated account, and also confirms the identity of the cardholder as well as the bank tied to the card. The Acquirer, Card Scheme and Bank all communicate at the same time so, although it looks complicated, the transaction happens very quickly.  


The ultimate result is that funds are transferred from the customer’s account into your business account, via your payments terminal and associated banks.

The original EFTPOS machines themselves were clunky; unlike modern alternatives, they weren’t designed to fit a store’s aesthetic. EFTPOS machines were purely functional pieces of business equipment. Now, business owners have an array of options when it comes to choosing an EFTPOS terminal.

And what is EFTPOS?

Eftpos is an Australian payment processing system for debit cards made up of a number of separate but connected networks. Many of these individual networks are operated by major Australian banks

There are eftpos cards and EFTPOS terminals. It's the most common system in Australia, however there are a number of limitations compared to debit cards like those offered by Visa and Mastercard. 


Eftpos transactions take just a few seconds to complete.

EFTPOS vs. debit card

Both eftpos and debit cards are usually used to make purchases using funds in a linked bank account, without relying on credit. However, debit cards run on the Visa and Mastercard system — while eftpos cards run on the Australian EFTPOS system. 

Here are some key differences to keep in mind. 

  • eftpos cards are mainly used in Australia, whereas Mastercard and Visa debit cards can be used overseas.
  • eftpos cards cannot be used for online purchases. Mastercard and Visa debit cards can be used for online purchases.
  • Some debit cards will enable your customers to select 'credit' during the payment flow, while eftpos limits options to 'debit' and 'cheque'. 
  • Only merchants equipped to accept the eftpos brand can accept eftpos card payments.

Although eftpos remains an important player in payment processing for debit cards, its inherent limitations – such as the lack of a method for processing online payments made with debit cards – and the growing number of alternative payment methods both play a part in eftpos’s dwindling market share. As newer alternative payment methods emerge and grow in popularity, your customers will expect to be able to pay in any number of ways. If your payment terminal provider doesn’t keep with the times and accept these new payment methods, you may lose out on a sale.

As a business owner in Australia, your best bet is to ensure your terminal can accept payments that use eftpos debit cards as well as common international standards, like Visa and Mastercard. To give your business further advantage, look for a progressive payment terminal provider that is committed to developing new solutions to ensure every one of your customers can pay for your products or services, quickly and securely.

How long does an EFTPOS transaction take?

Timing is perhaps the single most important consideration for business owners when it comes to understanding how debit cards and EFTPOS transactions work.

EFTPOS transactions are blazingly fast in person, taking just a few seconds to complete as far as your customers are concerned. That means a faster — and therefore smoother — customer experience and an increased capacity for your store to process even more transactions. While there’s more to do on the back end, customers can tap or dip their cards and, as long as they have the funds available, they are good to go. 

The multi-step process of authentication, verification, and funds transfer means transactions can require some time to fully process, although most EFTPOS transactions are completed in just one day. This is important to understand for tracking cash flow and knowing whether you can expect specific payments to show up in your own account by a given date. 

EFTPOS machines that meet your needs

Understanding how EFTPOS machines and transactions work is an important step towards finding the best terminal and service provider for your unique business needs.

At Zeller, we’re crafting a smarter alternative to business banking that includes not only a dependable, secure terminal with transparent pricing and low fees, but also a business account and Mastercard.

Advances in technology will continue to provide your customers with alternative payment methods.

With Zeller Terminal, it’s easy to accept payments, access the money you’ve earned, oversee and manage your cash flow, and much more.  As more payment methods emerge, we are committed to supporting your business to keep pace with change.

Learn more about what we have to offer by signing up for our Zeller Community. You’ll enjoy early access, ongoing rewards, and exclusive launch offers.