What Is an EFTPOS Card and How Does It Work?
Learn about EFTPOS cards, their direct payment processing, and how they differ from standard debit and credit cards.
An EFTPOS card facilitates electronic payments directly from a linked bank account at a merchant’s location. EFTPOS stands for “Electronic Funds Transfer at Point Of Sale,” defining a system where funds move electronically at the moment of purchase. Its primary purpose is to enable secure and immediate transactions between a buyer and a seller through a dedicated terminal.
How EFTPOS Transactions Work
When initiating an EFTPOS transaction, the consumer inserts, swipes, or taps their card on an EFTPOS terminal. For security and authorization, the cardholder is prompted to enter a Personal Identification Number (PIN). This action sends a request from the EFTPOS machine to the customer’s bank, checking for fund availability and card validity.
Upon approval, funds are immediately debited from the customer’s bank account and moved directly to the merchant’s account. The transaction concludes with the terminal providing a confirmation, often in the form of a printed receipt for both the customer and the merchant.
Defining Characteristics and Common Uses
EFTPOS cards primarily operate as a debit-based system, meaning they draw funds directly from a linked bank account rather than offering a line of credit. A transaction is only accepted if there is a sufficient balance in the associated checking or savings account. These cards are widely used for everyday purchases at various retail establishments, including supermarkets and other businesses.
A common feature associated with EFTPOS is the “cash out” facility, which allows users to withdraw cash directly at the point of sale during a purchase. This functionality can reduce the need for merchants to bank excess cash and provides a convenient way for customers to access funds. EFTPOS systems are often country-specific, with notable prevalence in regions like Australia and New Zealand.
Comparing EFTPOS with Other Payment Cards
EFTPOS cards differ significantly from globally branded debit cards and credit cards in their operational networks and functionalities. Pure EFTPOS systems utilize domestic payment networks for direct bank-to-bank transfers within a specific country. In contrast, Visa or Mastercard debit cards process transactions through their extensive international networks, offering broader acceptance. While an EFTPOS card directly debits funds from an account, a credit card provides a line of credit, allowing users to borrow funds up to a pre-approved limit.
Traditional EFTPOS cards often have limitations regarding online transactions and international usage, primarily being designed for in-person, domestic purchases. Globally branded debit and credit cards are generally accepted for online shopping and overseas transactions due to their international network reach. Many modern debit cards are co-branded with both a domestic EFTPOS system and an international network, offering the benefits of both.