What Is EFTPOS & How Does It Work?

Key Takeaways

• EFTPOS (in capitals) is the electronic terminal for card payments
• eftpos (in lowercase) is the Australian debit card payment system
• eftpos payments are secure cash transfers from a customer’s bank to a retailer’s
• EFTPOS can accept a variety of payments like debit cards, contactless and digital wallets
• Pinning down an EFTPOS solution will depend on the transaction fee terms, reliable machine and support from the provider

What Is EFTPOS?

EFTPOS is a payment system in Australia that stands for electronic funds transfer at point of sale. It is essentially a term used to describe the electronic terminal that allows you to make payments on your credit and debit cards, with either a physical or digital card. If you’ve ever tapped your card to pay for goods or services in Australia, you have most likely swiped your way through the EFTPOS system.

When eftpos is in lowercase, the term is used to describe the privately-run Australian debit card payment system created by eftpos Payments Australia Ltd in 1984. The company enabled the first system in the Australian market to allow secure debit card payments at the cash register. The payment system makes cash transfers from the customer’s bank account to the retailer’s bank account.

For this guide, we’ll be settling all your questions about EFTPOS (in capitals).

What Is An EFTPOS Machine?

An EFTPOS machine is the device businesses use to accept payments. These EFTPOS machines can be standalone or integrated with a point-of-sale (POS) system for smooth transactions.

When a merchant takes payment, the machine taps into the eftpos (or card scheme) payment network to authenticate the transaction. 

Who Needs EFTPOS?

Customers prefer the convenience of electronic payments, from the speedy phone tap & go, to swiping their credit and debit cards. EFTPOS machines help a range of businesses charge ahead with satisfied customers, streamlined processes and secure payments.

Retail Businesses

From local clothing shops to supermarkets, EFTPOS can be a one-stop shop for smooth retail transactions. It caters for customers who like to shop till they drop with cashless payments.

Hospitality Industry

Restaurants, cafes, and bars can serve up quick, flexible payments—helping the hospitality industry tackle peak times, reduce wait times, and leave customers tipping with joy.

Trades

EFTPOS for trades makes payments as easy as hammering a nail. Tradies can cut the paperwork and avoid losing customers to a “cash only” or “invoicing” job.

Service Providers

From hair and beauty to medical practices, service providers can tap into reliable payments, freeing time to focus on what matters most—their customers.

Tourism

For tourism, EFTPOS payments can be the ticket to hassle-free transactions on the go. They can give customers the flexibility of cashless payments while streamlining processes for a busy team.

Advantages Of EFTPOS

There are many ways that EFTPOS payments can pay off big time:

• Variety of payment options: Gone are the days when cash withdrawals were needed to go shopping! Customers want the flexibility of multiple payment methods, like their phone, debit and credit cards and even their watch. The easier it is for a customer to shop, the more likely they will want to spend.
• Convenient Tap & Go: With mobile wallets like Google Pay and Apple Pay increasing in popularity, businesses can use contactless payments to speed up the checkout process. For cafes, restaurants and bars, Tap & Go payments can make rush hour periods feel like a breeze.
• Efficiency: EFTPOS can pin down a smooth process from the point of sale to the electronic funds transfer to the retailer’s bank account. At checkout, customers simply tap their card or enter their PIN, completing the transaction in seconds, allowing the next customer to be served without delay. The business can skip the paperwork or avoid cash deposits at the bank and count on the EFTPOS payment system to handle seamless transactions.
• Potential to increase sales: Offering a variety of payment options helps businesses cash in on customers who prefer card payments. Plus, EFTPOS transactions are quicker to process than cash payments. Swipe through happy customers and charge ahead with easy electronic payments.
• Payments on the go: Many EFTPOS terminals are wireless, allowing businesses like transport services or trades to accept payments wherever they go. Don’t coin around with cash. Take a sleek and secure EFTPOS machine and ring up sales with ease.
• Reduced risk of theft: Thieves target businesses with cash on hand. With EFTPOS, payments transfer securely from one account to another, leaving the criminals with nothing to swipe.
• Receive funds quickly: Save time on daily bank deposits and choose an EFTPOS provider with fast electronic transfers.
• Detailed transaction data: Track sales without having to chip away at manual records. EFTPOS payments generate electronic records and receipts, helping businesses to track transaction volume and profits.

What Are The Disadvantages Of Using EFTPOS?

Although there are many POS-itive reasons to go with EFTPOS, there are some downsides to be aware of:

• Internet requirements: EFTPOS terminals need a strong connection to chip away at transactions all day. In remote areas with limited broadband, it could be tough to pin down a reliable EFTPOS solution.
  Smartpay Android EFTPOS terminal can stay connected with a free 4G SIM Card, Wi-Fi, Broadband or even a mobile hotspot.
• Merchant service fees: EFTPOS solutions charge merchant service fees on each transaction, with rates varying by payment method. Predicting these fees per month can be tricky and could drain a business’s profit margin.
  With Smartpay fee-free EFTPOS, customers can automatically apply a surcharge to each transaction and wave goodbye to profit-eating merchant service fees.
• Rental costs: Some EFTPOS providers lock businesses into monthly terminal fees for the use of their EFTPOS machines.
  A Smartpay EFTPOS machine costs $0 per month if a business has a monthly turnover of more than $10,000. Terms and conditions apply. 
• Settlement delays: Although the transaction is authorised in seconds, the electronic funds transfer could take 1-3 business days, depending on the EFTPOS provider and bank accounts.
  Businesses can access next business day settlements into a business bank account with a Smartpay EFTPOS solution.

How Does EFTPOS Work? 

We’re charging through the details to simplify how EFTPOS works.

1. Payment

The EFTPOS transaction swipes into action when the purchase is entered into the terminal and the customer taps, swipes or inserts their digital or physical card.

2. Account selection

In Australia, a transaction goes through either:

Cheque (CHQ): Directly debited from a transaction cheque account

Savings (SAV): Directly debited from a transaction savings account

Credit (CR): For credit card payments

3. Authorisation

The EFTPOS terminal connects to the EFTPOS network and checks the customer’s bank account for sufficient funds. All data is securely encrypted to protect transaction data on the move.

4. Settlement

Once the payment is approved in the network, the funds transfer from the customer’s bank account to the provider’s. Smartpay then settles the transaction payments to the merchant within the next working day.

Types Of EFTPOS Solutions for Businesses 

With Smartpay EFTPOS solutions, you can access a flexible, hassle-free option without a lock-in contract. Charge up your sales with a sleek portable EFTPOS machine with a free 4G SIM card and 24/7 AU/NZ support.

Smartpay Zero Cost™ EFTPOS

Surcharge with Smartpay Zero Cost™ EFTPOS for a fee-free EFTPOS solution. Pin down zero fixed monthly costs, even during busy sales periods.

Suitability: Small to medium businesses with a consistently high volume of transactions or a tight profit margin.

Merchant Fees: Zero merchant fees for all card types.

Rental Costs: Score big on zero monthly terminal fees if your business transacts over $10,000 in card payments per month.

Automatic Surcharging: Count on your EFTPOS terminal to do the math – surcharging means you pay nothing.

Simple Flat Rate

Tap into an easy and predictable EFTPOS solution and swipe away any bill surprises with a simple monthly rate.

Suitability: Businesses with seasonal peaks in sales, such as a tour operator with a surge in bookings over the summer.

Merchant Fees: A tailored fixed rate for debit and credit card payments.

Rental Costs: Monthly terminal fee of $34.95+GST.

How To Choose The Right EFTPOS Solution For Your Business

The right EFTPOS solution can boost your business, not drain it. Consider the following questions to find the EFTPOS solution that is worth the investment:

• Do I want to surcharge my customers? Surcharging customers is not for everyone, but you can eliminate your EFTPOS bills. If your profit margins are slim but your sales are high volume, then transaction fees can stack up. Factor in the varying rates per card and those fees can swipe away at your growth. Opting for a zero-fee solution that automatically surcharges customers can help you offset these costs and keep your bottom line charged and stable.
• What EFTPOS machine can I count on? Do you need to stay connected, pay on the go, and integrate with your POS system? Pin down the features you need to bring home the bacon with ease. From long battery life to contactless payments and a built-in receipt printer, a modern EFTPOS terminal can have a POS-itive impact on smooth sales. Learn how to get an EFTPOS terminal that works for you. 
• Can I bank on the EFTPOS provider? Partnering with a supportive EFTPOS provider can pay off big. Consider their support team, training materials, security updates and contract perks, as their interest will add value to your business over time.

Not Sure If EFTPOS Is Right for Your Business? Get In Touch With Smartpay

You can charge ahead with confidence when you find an EFTPOS provider with the time to support your decision-making process. They should work with you to find your business’s payment solution to score big.

At Smartpay, we pride ourselves on making EFTPOS payments simple and stress-free. From our zero-fee or simple flat-rate solutions to our Plug & Play Android terminals with 24/7 support, we prioritise smooth transactions for your business.

Our dedicated payment specialists can withdraw your doubts and balance your trust when they help you choose the right EFTPOS.

“We assess everything. Each customer, their unique situation, one by one. And that’s the beauty of going with a dedicated provider. It’s so simple and easy.”

• Charles Rabbets, Senior Sales Executive

Make the smart choice and talk to us today.