EFTPOS – definition and meaning

In the world of card payments, many acronyms tend to pop up, causing confusion. After all, the simple point-of-sale or POS terminal has many names. It used to be called a PDQ (process data quick) machine, and today it’s simply known by its name – POS.

However, in some other countries, these payment machines are known under a different name. For example, in Australia and in some cases, New Zealand, POS machines are also known as EFTPOS. 

But what is EFTPOS and how does it relate to payment acceptance? Let’s find out.

What Is the Meaning of EFTPOS?

One of the first questions you’re probably asking at this point is “what does EFTPOS stand for?” It’s quite simple really. It stands for Electronic Funds Transfer at Point of Sale. 

All this being said, it’s also good to take a look at a brief EFTPOS definition. 

In a nutshell, it refers to the process of accepting credit and debit cards on a card payment machine, where cardholder funds are withdrawn from the cardholder and are deposited in the merchant’s account for a product sold or a service rendered. 

How Does It Work?

Defining EFTPOS isn’t enough to truly understand this payment system. So, how does EFTPOS work? Electronic Funds Transfer at Point of Sale works via a payment device, also called an EFTPOS machine. This machine is designed to transfer money from a customer to the merchant’s business bank account.

EFTPOS machines normally enable companies to accept different payment types, including VIA, eftpos, Apple Pay, Google Pay, Samsung Pay, Mastercard, American Express, and more. 

In Australia, customers can select from three accounts when making EFTPOS payments:

• Cheque (CHQ);
• Savings (SAV);
• Credit (CR).

When making purchase transactions via the first two (CHQ or SAV), the payments are debited directly from their bank account. In most cases, CHQ is connected to a check account, while SAV is connected to a savings account.

On the other hand, choosing CR means that the payment is routed via a credit card network.

What Are the Requirements for Accepting EFTPOS?

In order to start accepting EFTPOS payments, you’ll need to meet a few basic requirements. For starters, you’ll need to equip yourself with EFTPOS devices that offer connectivity to the EFTPOS network. These devices will enable payments between the business and the customer’s bank. You can choose from countertop terminals to mobile, wireless solutions, depending on the customer experience you want to offer. 

Next, you’ll need a business bank account that’s specifically dedicated to receiving money from EFTPOS transactions. For example, financial institutions such as the Commonwealth Bank provide EFTPOS services that you can rely on.

In addition, you’ll require integrated EFTPOS systems with POS software to streamline operations. This is a must for both card payments and cash withdrawals. 

Don’t forget about setting your transaction policies, including a minimum transaction amount for EFTPOS payments. This will help cover transaction costs, guaranteeing that this payment option is profitable for your company. 

Most importantly, make sure you have a stable internet connection to the debit network to handle payments in real-time. 

How to Start Accepting EFTPOS Cards?

Once you’ve covered the above-mentioned requirements, you’ll be a step closer to accepting EFTPOS cards. To get started, make sure you select a payment provider that specialises in electronic payments. Check the fee structures and make a choice that best fits your needs.

Next, set up your EFTPOS terminals or devices and train your staff to work with EFTPOS systems. Overall, they should be comfortable troubleshooting simple issues, monitoring daily balances, and handling cash withdrawals. 

Why Use EFTPOS?

EFTPOS is extremely popular in Australia. But what makes these payment options so preferable? 

Here are a few reasons why using EFTPOS is a good idea:

• Convenience: EFTPOS makes paying extremely easy and eliminates cash from the equation. Cardholders in Australia nowadays have the expectation that they’ll be able to pay using EFTPOS, meaning that failing to provide this option can lead to lost revenue.

• Speed: in recent years, EFTPOS has evolved to guarantee faster payments than ever before. Today, this option guarantees speed and agility to businesses, especially during busy periods. 

• Minimised risks of theft: relying on EFTPOS rather than cash also reduces dramatically the risks of theft and gives customers peace of mind knowing they’re protected. 

• Business insights: EFTPOS puts valuable consumer insights into the hands of businesses, empowering companies to make strategic choices in the long run. 

These benefits naturally make EFTPOS a common option in some parts of the world. 

What Is the Difference Between Debit and Credit Cards and EFTPOS?

At a glance, EFTPOS, debit cards, and credit cards may all look like the same thing. However, they’re fundamentally different. 

EFTPOS debit cards enable shoppers to pay directly from their bank accounts via the EFTPOS network. The money is sent in real time, enhancing business cash flow. 

On the other hand, debit cards (which are connected to a customer’s bank account) function via a broader debit network. They can be utilised for in-store purchases and online payments alike, delivering more flexibility than EFTPOS when it comes to non-cash payments.

Last but not least, credit cards give consumers the option to borrow money rather than spending directly from their bank account. Credit card payments are processed on a credit network instead of an EFTPOS network and often come with fees or interest rates for the credit card account. 

EFTPOS Machine 

As for the mechanics behind the EFTPOS machine, things get a little more complex. While the communication process involved is between the cardholder’s issuing bank (whether a debit or a credit card), there also needs to be communication with the card schemes (such as Visa or Mastercard) as well as with the merchant’s financial services provider. 

In essence, the payment process takes seconds to complete but it involves several actors without which the transaction would not be possible. 

In any case though, EFTPOS machines can handle both debit and credit card transactions and the process is done with card-present transactions or face-to-face at checkout. Just as with a POS card reader, these machines allow for contactless payments.

eftpos Australia

We’ve been speaking about EFTPOS in capital letters all along until this point and now there’s a new way of writing it – eftpos. Is this a simple spelling error or is there something behind this change? 

As an observant merchant, you’d be right to spot this difference. The difference is, indeed, quite significant. This is because eftpos is a debit card system that only exists in Australia. It’s a trademarked brand and the system is national. 

The company chose to distinguish itself from the internationally-known EFTPOS and hence the lowercase letters. Hopefully, that gives some clarity on this subject. 

eftpos Cards

But we’re not done yet as there’s still something important to mention and that’s the eftpos card. You might be thinking, isn’t it just another type of debit card? And while you’re right to a certain degree, there’s a bit more to it than meets the eye.Why?

Here are a few of the key differences between EFTPOS and regular debit cards:

• Although EFTPOS cards can only be used in card terminals, debit cards can be used in card terminals in addition to making online purchases as well as payments by phone.

• Furthermore, EFTPOS cards give cardholders the opportunity to withdraw cash at retail outlets, whereas debit cards don’t offer this functionality.

• In addition, the EFTPOS system comprises seven banks/networks in Australia, while debit card networks are known for operating internationally.

A final important distinction to make is one related to security. While EFTPOS cards could be vulnerable to fraud, debit cards are generally backed by international brands and are accordingly well-protected against fraud or financial crimes.  

Closing Remarks

Now that you know the EFTPOS meaning, you know that it’s simply an EFTPOS terminal or simply a card machine, which is used to accept payments made by credit and debit cards. 

Meanwhile, EFTPOS is an Australian brand that issues cards and works with EFTPOS machines, with some important differences when compared to the traditional debit card.