What is EFTPOS and How Does it Work?

What does EFTPOS stand for?

The name EFTPOS is an acronym, which stands for Electronic Funds Transfer at Point Of Sale. But what is EFTPOS?

Across the globe, it’s used to refer to any machine that accepts debit and credit card payments. Introduced to the Australian market in 1984, EFTPOS made speedy and secure card payments at the cash register possible for the first time. Suffice to say, this payment method revolutionised the Australian consumer market and set the scene for how businesses accept payment today.

Why is EFTPOS crucial to your business?

These days, the majority of Australian consumers want to pay for goods and services without using cash. 

Paper-based methods of payment (i.e. cash and cheques) were Australians' payment method of choice for over a century — until 2016, when card usage surpassed cash usage for the first time. That year, 52% of payments were made using debit or credit cards. This was when consumers truly embraced the convenient ’tap and go’ payment functionality, accounting for a substantial rise in low-value transactions being made via card.

The COVID-19 pandemic has further accelerated this trend; business owners and customers all over Australia have sought to reduce cash handling on both fronts since early 2020. This is largely due to health concerns around the physical exchange of money, which has led many merchants to encourage contactless payments in-store — via an EFTPOS terminal.

As well as facilitating the transfer of funds between customer and business, EFTPOS also allows for the recording and holding of funds — providing businesses with data that can be analysed and reported on to make operational improvements.

How is EFTPOS different from eftpos?

We’ve established what EFTPOS stands for, and that an EFTPOS terminal is a crucial piece of technology for any brick and mortar business. The system allows businesses to accept payment for goods or services via cashless transactions.  

Eftpos, on the other hand, is the trademarked brand name of an Australian debit card system. The privately-run payments system, eftpos, is made up of seven interlinked proprietary networks operated by the major Australian banks. The system gives customers a quick, easy and secure way to pay. It’s a hugely popular payment method; there are more than 56 million eftpos cards in use, and over 2 billion eftpos transactions are made per year. 

In a nutshell, EFTPOS is a conduit between a customer’s bank account and your business’s account. In Australia (and New Zealand), eftpos is also the brand name of such a payment system. 

What makes eftpos different from other payment methods?

Australian consumers have three options when paying contactlessly: cheque, savings or credit. 

When a customer taps, dips or swipes their eftpos card and selects either Cheque or Savings on your payment terminal, the transaction goes through the eftpos network in real-time and money is withdrawn from the customer’s own bank account.

If a customer decides to pay via Credit, the transaction is processed via Visa or Mastercard. A credit payment cannot be processed through eftpos. 

Typically, the transaction fee paid by the merchant depends on the customer’s choice of payment method — making it hard for businesses to estimate what their transaction fee will be for any given period. When you’ve got customers paying via JCB, Alipay, Zippay and more, the transaction fee breakdown in your merchant statement can become very confusing. 

Accepting eftpos payments at your business

To accept this common payment method at your business, all you need is an EFTPOS payment terminal. No matter the size or annual turnover of your business, there's a suitable EFTPOS solution. However, it’s important to select the right hardware for your business. 

The selection process will likely involve a consideration of initial output costs, such as terminal fees and setup fees, functionality, and mobility. Although it can be difficult to factor in processing fees, this is where costs can really add up — so this factor should not be overlooked. 

Choose an EFTPOS provider with processing fees that fluctuate by card type, and you won’t know what to expect at the end of any given month. You could be left with less takings than expected, as processing fees eat into business profits.

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 fast settlements, forecasting your cash flow is simple.