EFTPOS – definition and meaning
Tips / 05.11.2021
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 other parts of the world, especially 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 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 brief, it refers to the process of accepting credit and debit cards on a card payment machine, where cardholder funds are withdrawn from the cardholder and are deposited in the merchant’s account for a product sold or a service rendered.
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 (Visa, Mastercard etc.) 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.
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. And the difference is 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.
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.
Here are a few of the key differences:
- 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.
- Finally, and an 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/financial crimes.
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 debit and credit 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.
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