How NFC Mobile Payments Work

Discover how this everyday technology functions and why it’s important to choose the right hardware. You’ve tapped. You’ve swiped. You’ve been approved and declined. Your interactions with EFTPOS have been countless, and yet you may not know what’s behind this ubiquitous technology. While most people can remain happily, cashlessly oblivious, for business owners, it’s very important to know what EFTPOS transactions are, how they work, and how to select the right hardware. Read on for a breakdown of everything you need to know about EFTPOS and some handy advice for choosing a terminal. What is EFTPOS? The name EFTPOS is an acronym for Electronic Funds Transfer at Point Of Sale. Put technically, it is an electronic payment system that allows customers to make transactions by electronically transferring funds from their bank account to a merchant's business bank account . Put simply, it is any machine that accepts debit and credit card payments. In today’s age, having an EFTPOS terminal is a boon for business . It is a convenient and efficient way to accept digital transfers, with the added benefit of quick payment processing, automatic record-keeping, and reduced cash handling. The Rise of EFTPOS Introduced to the Australian market in 1984, the EFTPOS transaction 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. At the time, EFTPOS terminals were all produced by the big 4 Australian banks and had cumbersome designs, made for function, not form. These days, the landscape has changed on both sides of the counter. For customers, the shift towards electronic payments has seen a massive adoption of debit and credit cards, as well as more recently, mobile wallets. For merchants, there has been a dramatic improvement in EFTPOS hardware which now not only comes in a plethora of sleek styles to match the aesthetic of your business, but also offers up new functionality to help businesses manage their bottom line and enhance the customer experience, such as surcharging , tipping, and Pay at Table technology. And if embracing the cashless society wasn’t already tracking steadily, the COVID-19 pandemic massively accelerated the trend. Business owners and customers all over Australia have precipitously sought to reduce cash handling since early 2020 due to health concerns around the physical exchange of money. In 2021, the Reserve Bank of Australia reported that just 27% of in-person payments were made using cash. EFTPOS VS. eftpos To confuse matters, eftpos (lowercase) also refers to a privately-run Australian debit card platform. So, while EFTPOS is the globally accepted term referring to the conduit between a customer’s bank account and your business bank account (or Zeller Transaction Account ), eftpos is also the brand name of such a payment system. The important difference with eftpos is that it only serves debit cards — not credit cards — and works in Australia only. It’s unlikely that you’ve ever noticed this subtle difference because 90% of all debit cards in Australia are co-branded with Visa or Mastercard. This means they can process transactions through Australia’s local debit card network (eftpos) as well as international schemes. When a customer taps, dips or swipes their eftpos card and selects either Cheque or Savings, the transaction goes through the eftpos network. If a customer decides to pay via Credit, the transaction is processed via Visa or Mastercard because a credit payment cannot be processed through eftpos. Without getting into the weeds, it’s just important to be aware of the difference between EFTPOS and eftpos so that you understand what you are looking for when shopping for a card-processing terminal. How do EFTPOS transactions work? EFTPOS transactions start with an EFTPOS machine . These machines are the conduits that allow the relevant networks to connect and exchange information in order to complete a payment. The networks involved include the bank where the buyer has an account, your own business bank account , the company providing the EFTPOS machine, and more recently, your point-of-sale technology. The back-and-forth talk between the terminal sitting on your counter and the larger networks ensures the card being used has the necessary funds in its associated account and confirms the identity of the cardholder as well as the bank tied to the card. If the machine is integrated with your POS software, the machine will also communicate with the system to bring up the relevant transaction amount on the terminal. The image below outlines how this system works, and in what order. The Acquirer refers to the financial institution that processes the payment on behalf of the merchant. Zeller for example. The Card Scheme, also known as a payment network or payment scheme, is the organisation that establishes and maintains the rules and infrastructure for the use of credit and debit cards. Visa, Mastercard, American Express are all examples of card schemes. The Card Issuing Bank is the financial institution that provides a credit or debit card to the customer. How long do EFTPOS transactions take? While the transaction is instantaneous, the multi-step process of authentication, verification, and funds transfer detailed above can require some time to fully process. How quickly your money will “settle” (that is, show up in your bank account) will also vary from one EFTPOS terminal provider to another. This is a very important consideration when choosing your payments platform, because the time it takes to access your funds will greatly affect your business cash flow. For example, Zeller customers who settle to their Zeller Transaction Account will receive their funds nightly. Many other platforms can take up to 72 hours. What to look for in an EFTPOS machine When choosing an EFTPOS terminal for your business there are nine questions you need to be asking . Your selection process will involve a consideration of initial output costs, such as terminal fees and setup fees, functionality, and mobility but to make sure you’re getting the best bang for your buck, your terminal also needs to tick the following boxes: It needs to accept all card types As a business owner in Australia, your best bet is to ensure your terminal can accept eftpos debit cards as well as common international standards, like Visa, Mastercard, and American Express. It needs to accept contactless payments Thanks to the expansion of NFC technology , the “tap-and-go” payment method has gained enormous traction in Australia both with cards and mobile wallets in recent years (four in five customers now pay contactlessly at least once a week). It’s an extremely quick and convenient way for your customers to pay, and will no doubt become the norm over the next few years. Merchant fees need to be low and flat Typically, the EFTPOS transaction fee (charged by the machine provider) will depend on the customer’s choice of payment method — making it very hard for businesses to estimate what their transaction fees will amount to for any given period. Having one low, flat fee for all card types means that you can forecast how much you are likely to pay in processing fees. At Zeller, you will only ever pay 1.4% per transaction. It needs to offer the option of surcharging Also more commonly referred to as zero-cost EFTPOS , surcharging gives you the ability to pass on the aforementioned fee to the customer. Surcharging is becoming more and more common in Australia, and is an important cost-cutting measure for businesses. Read our article on whether surcharging is right for your business. It needs to offer multiple options for connectivity If your WiFi connectivity dips out, it’s integral that you can keep processing payments until it is back up and running. Having a SIM card in your EFTPOS machine means you’ll never have to worry the next time your main connection fails, you’ll simply need to switch to SIM usage and business can continue as usual. For more detail on how terminals work, read our step-by-step guide on how to use an EFTPOS machine. Introducing Zeller At Zeller, we’ve built a smarter EFTPOS payments solution . Zeller Terminal is a dependable, secure EFTPOS terminal boasting mobility, customer convenience, a sleek design and low, transparent fees. With Zeller Terminal, you pay just 1.4% per transaction — no matter whether the customer has tapped, dipped or swiped their payment method of choice. With one low rate for all in-person payments, as well as faster settlements, forecasting your cash flow is simple. With Zeller, you can accept payments, access the money you’ve earned, oversee and manage your cash flow, and much more. And as more payment methods emerge, we are committed to supporting your business to keep pace with change.

Use of alternative payment methods is skyrocketing. In the digital world, change is rapid. Payment options and alternatives are frequently evolving — as are your customers’ expectations. People expect to be able to transact with the businesses they buy from, quickly and conveniently, no matter which payment method they choose. Some may even go as far as to only transact with those businesses that accept a particular method of payment. As consumer preferences continue to evolve, it’s going to become increasingly difficult and time-consuming for businesses to play catch-up. Those that keep themselves informed of these shifts in expectations stand the best chance of winning and retaining customers in the competitive small business world. Welcome to Payments 4. X A new age is dawning within the payments industry. This era, dubbed “Payments 4. X”, will see a focus on personalised customer experience, industry consolidation and new tech industry players — offering business owners and their paying customers alike “ smarter experiences and smarter interactions ”. But what sparked the change? Payments 4. X has been ushered in by an unprecedented push for contactless payment options, faster transaction settlements, and foolproof security. The most straightforward explanation of the shift comes from Capgemini's 2021 Global Payments Report , which provides an in-depth look at how payments have changed over the last year, as well as the various ways in which the COVID-19 pandemic has shaken the industry up and created new opportunities for merchants to improve the way they run their business. Access the entire global report online , or keep reading for the short version: a distillation of 5 payment trends that will likely impact small business owners in Australia as we enter the age of Payments 4. X. 1. Connected systems The success of any business hinges on its people, processes, and systems. As new tools and apps continue to be developed, the success of a business will increasingly depend on its tech stack. The ecosystem of tools you piece together will impact everything from how you communicate with your customers, to the ease of running promotions, to the time it takes to report on business performance. Integrating your EFTPOS terminal with your point-of-sale system, for example, will enable you to select a customer’s item on-screen and have the transaction amount immediately appear on your terminal — ready for the customer to tap, dip, or swipe to pay. An interconnected system will also make real-time data accessible, enabling you to make quick decisions for the betterment of your business. For your customers, connected systems mean a better experience; more personalised, more efficient, more fulfilling. As tech companies continue to develop products built on the software-as-a-service model, businesses of all shapes and sizes will be able to create their own modular value chain of tools. This plug-and-play tech will enable those merchants who spend time comparing and selecting tools that work well together to save time, build better customer relationships, and grow profits. Perhaps most importantly, spending the time to find the right systems will enable you to run your business in your own unique way. 2. A new type of consumer credit Buy Now, Pay Later schemes (BNPL, for short) are exactly what they sound like. A customer can buy a product now, for a small amount of money, and pay the balance later — no need to wait for payday. In removing these hurdles for customers, they’re more likely to spend. An American study found that businesses that offered their customers to option to buy now, pay later experienced a 20 to 30% uplift in conversion rates. 80% of those that began offering BNPL saw an increase in the amount customers spend in-store. Unsurprisingly, BNPL has exploded in popularity — especially amongst younger generations, where trends come and go quickly. The way they’re using the platforms demonstrates a clear preference to debit over credit; according to Afterpay, 94% of its Gen Z users are opting to buy now, pay later using their own money rather than link their account to a credit card. This is the same generation that commonly reaches for their phone or extends their wrist when it comes time to pay. Anyone with a bank account that meets a set of standard eligibility criteria can sign up for a BNPL scheme to buy whatever they want at stores that accept the payment method. Essentially, that means anyone over the age of 18, with a bank account, who passes a credit risk check can use BNPL. If your business doesn’t already accept BNPL as a method of payment, consider whether 2022 is the year to start. It could be a way to reach a new subset of customers whose spending power is increasing with time, and grow your profits. 3. No more cash The pandemic has hastened the pace of cash’s decline even faster than predicted. In 2020, cash was used for just 20.5% of transactions at a point of sale across the globe. That’s a 32.1% reduction in cash use since 2019. Companies like FIS, for example, previously speculated we would reach these levels in 2023; the pace of decline is three years ahead of schedule. In Australia, we are even further ahead of the pack; cash has been approaching legacy status as a payment method for years. Cash is used for less than 20% of point-of-sale transactions in the Asia-Pacific region, and it’s expected that by 2024 it will account for less than 10% of those transactions. So, how are consumers paying? With their new limb: the mobile phone. Nearly 45% of consumers say they frequently used their mobile wallet to pay for things in 2021 — meaning almost half of consumers reached for the mobile wallet upwards of 20 times. A year prior, just 23% of consumers did the same. This is good news for businesses; the less frequently your customers pay with cash, the less time you’ll spend counting your cash drawer, visiting the bank, and waiting to be able to put those funds to work. Instead, simply accept payment through Zeller Terminal and the funds will be available in your Zeller Transaction Account the very next day. Spend them using your Zeller Mastercard . 4. Innovative forms of payment There’s no question that COVID has accelerated the adoption of digital wallets while speeding up the decline of cash. However, consumer payment preferences are growing increasingly diverse. With Payments 4. X ushering in an accelerated transformation timeline, every business owner needs to take stock. How will your customers expect to be able to pay in 12 months’ time? Credit card use is expected to flatline. There’s an abundance of payment methods available, and more to come. What was once considered an ‘alternative payment method’ — such as a digital wallet attached to a mobile phone or smart ring — is now mainstream. Cash won’t simply be replaced by credit cards and mobile wallets. Remember, the technology powering NFC-reliant digital wallets is still in its infancy. As younger generations embrace these newer payment methods with gusto, the trend accelerates — indicating there’s more change to come. Is your business prepared? Convenience is key; when a new payment trend emerges, you’ll want to ensure your EFTPOS terminal can meet your customers’ needs by accepting whatever form of payment is most convenient. 5. An even faster pace The pace of innovation and competition within the industry has sparked a change in consumer expectations: everything must happen quickly. Near instantaneously. Consumers have gotten used to fast transactions, and are increasingly expecting the process to become faster and faster. In this instance, a ‘consumer’ in a digital transaction refers to both: the customer of the bank (i.e. the business carrying out the transaction and accepting funds) the customer of the business (i.e. the person who is making a purchase). Both expect the transaction to happen swiftly, meaning instant payments and quick transaction settlements are already table stakes. Businesses need the ability to quickly and seamlessly process transactions, so customers can pay and continue with their day without disruption. This includes the ability to quickly identify the reason for a declined transaction , and being enabled with the information to quickly correct the issue and progress the sale. However, increased transactions volumes and instant processing requirements are stretching the banks’ decades-old legacy payments infrastructure. Nimble payments providers will be able to adapt to change and offer their users the most forward-thinking solutions, so that you can offer your own customers a great payment experience. Preparing your business for Payments 4. x The picture the Global Payments Report paints is overwhelmingly positive, despite the obvious challenges. Innovation is opening significant opportunities for payment providers to step up and differentiate themselves as forward-thinking companies that can keep up with the pace of change, and build the functionality that enables businesses to take advantage of those changes. As a merchant, it’s up to you to ensure that every one of your customers has a positive payment experience. Whether you are able to accept a customer’s method of payment, troubleshoot a declined transaction, or even continue operating in a thunderstorm depends on your EFTPOS provider. It's an important choice that will have an impact on the way you run your business for years to come. By sharing your details with us, we may contact you from time to time. We promise we won’t bug you — and you can unsubscribe from communications at any time.

No EFTPOS machine? No problem. All you need is your iPhone and Zeller App. Welcome to the future, where transactions can be made instantly, contactlessly, securely, and now without any additional hardware. Whether you’re a sole trader or a fast-paced business looking for a flexible back-up solution, Tap to Pay on iPhone , which is now enabled in your Zeller App, lets customers pay you easily on your iPhone. To learn more about how to enable Tap to Pay on iPhone click here. Powered by Zeller’s industry-leading smartphone app , this new solution to accept contactless payments includes all the Zeller functionality you know and love, including tipping, surcharging, transaction notes, digital receipts, sales tracking and more. With a straightforward set-up process and one low, flat transaction fee for all cards, Tap to Pay on iPhone and Zeller App does away with complex paperwork, branch visits and fee schedules, instead affording you the ability to take payments quickly and simply. Read on to discover everything you need to know about this cutting-edge tool and how you can get up and running in a matter of minutes. Not an iPhone user? Learn about Tap to Pay on Android here. What is it? Tap to Pay on iPhone is a payments feature, now available on the Zeller App , that lets you accept contactless payments on your iPhone, without the need to invest in an EFTPOS terminal. Customers can simply tap their credit or debit card, Apple Pay, or digital wallet to your iPhone, and/or enter their card PIN number, just like they would do on a regular EFTPOS machine . In this case, the transaction is accepted using EMV Contactless technology. How does it work? Once you’ve signed up online for your free Zeller Account, downloaded the Zeller App to your iPhone, and set up Tap to Pay on your device (see below) accepting contactless payments is a breeze. Simply tap on ‘Tap to Pay’ in the sidebar, key in an amount, present your iPhone to your customer who can pay using a physical card or digital wallet, and wait for the transaction to be approved. It’s as simple as that. Do all iPhones have Tap to Pay? Currently, the feature is available to all users with an iPhone XS or later, using iOS 16.4 or later. It’s important to note that in order to use Tap to Pay on iPhone, users must be signed in to their iPhone with an Apple ID. How much does it cost? Zeller charges one low, flat fee of 1.4% per transaction, for all card types — including American Express. However, businesses have the option of passing on this fee to their customers through surcharging . Businesses can choose to toggle surcharging on or off via the Zeller App or Dashboard. Who is it designed for? Tap to Pay on iPhone and Zeller App is a flexible solution that can be used by all types of businesses, but is especially suited to those whose payment processing requirements don’t justify a full-scale fleet of EFTPOS terminals or advanced features such as Integrated EFTPOS , Pay at Table or printed receipts. What solution you choose will largely depend on your volume of customers and your specific business needs. If you run a busy bar, having a hard-wearing EFTPOS machine on the counter is naturally a better choice. However, for sole traders on the move or smaller businesses such as market stalls, boutiques or clinics with a need for only one or two payment terminals, Tap to Pay on iPhone and Zeller App is an ideal solution. Regardless of your business size, having the Tap to Pay on iPhone feature set up can give you peace of mind, knowing that you’ve got a quick and easy backup option if you ever need one. What about receipts, refunds, and tipping? Tap to Pay on iPhone with Zeller App does not compromise on functionality. Digital receipts can be sent to your customers via text or email; the tipping option can be toggled on, which automatically presents your customers with the option to leave a tip; and users will be able to process refunds directly from Zeller App. What’s more, transactions can be assigned to a contact and notes can be left, making reconciliation a breeze later on. What cards are accepted? Tap to Pay on iPhone and Zeller App accepts contactless payments for all major cards including Mastercard, Visa, American Express, Apple Pay, and a range of other digital wallets including Samsung Pay and Google Pay. Is Tap to Pay safe? Tap to Pay on iPhone uses the built-in features of iPhone to help keep your business and customer data private and secure. When a payment is processed, Apple doesn’t store card numbers on the device or on Apple servers so combined with Zeller’s industry-leading security, you can rest assured knowing your business and customer data is protected. Is Tap to Pay available on Android? Yes it is! Click here to learn how Tap to Pay works on Android . Get started. If you’re not yet using Zeller, you will need to create your free account first . This can be done on a desktop or mobile device in a few minutes. Then, simply download the Zeller App. If you already have a Zeller Account , log in to the Zeller App. Once on the app, follow the prompts to begin your set up and start taking payments in minutes.