In this post, we will guide you through the ins and outs of EFTPOS, explaining its concept, benefits, and how it revolutionised the way we make payments.
What is EFTPOS?
EFTPOS stands for Electronic Funds Transfer at Point of Sale. It is an electronic payment system that allows customers to make purchases and withdraw cash directly from their bank accounts using a debit or credit card, or smart device.EFTPOS facilitates secure and real-time transactions between a merchant and their customer at the point of sale. It eliminates the need for carrying large sums of cash by providing a convenient and secure payment method. EFTPOS transactions are processed through a payment terminal that connects to the customer's bank account for authorisation and funds transfer.
How Does EFTPOS Work?
Here's a step-by-step breakdown of how EFTPOS works:
- Purchase Initiated: The merchant starts a purchase transaction on their terminal
- Card Insertion or Tap: Customers either insert their card into the payment terminal or tap it on a contactless reader.
- Authorisation: The payment terminal communicates with the customer's bank to verify the card's validity and check if sufficient funds are available.
- Transaction Processing: Once authorised, the purchase amount is deducted from the customer's account and transferred to the merchant's acquiring bank. The funds are settled in the merchant's bank account, usually overnight.
Benefits of EFTPOS
EFTPOS offers numerous advantages for both businesses and consumers. Let's explore some of these benefits:
- Efficient and Faster Transactions: EFTPOS minimises the time spent handling cash, allowing businesses to process transactions quickly and efficiently.
- Enhanced Security: With EFTPOS, businesses are less vulnerable to theft and counterfeit currency, promoting a more secure payment environment.
- Improved Cash Flow: Payments processed through EFTPOS are directly deposited into the business's bank account, ensuring more immediate access to funds.
- Convenience: EFTPOS provides a hassle-free and convenient payment method, eliminating the need for carrying cash.
- Budget Control: Customers can more easily track their expenses as EFTPOS transactions are recorded in their bank statements.
- Safety: EFTPOS reduces the risk of loss or theft associated with carrying cash.
EFTPOS has revolutionised the way we make payments, offering a secure, efficient, and convenient alternative to traditional cash transactions. Its seamless integration with modern payment systems has made it an indispensable component of the business landscape.
Learn more about how much it costs to accept EFTPOS in New Zealand in our blog post, Three Costs to EFTPOS