What Is EFTPOS? Definition, Fees, and How It Works

EFTPOS is the technology that allows customers to make payments by credit or debit card, as well as digital wallets. The most common EFTPOS devices are card readers, though other pieces of hardware can also come with this functionality.

Card usage in Australia is on the rise. In 2022, according to the Reserve Bank of Australia, around 80% of payments over $10 were made via card, a proportion which has grown by 10% within just three years. With this growing ubiquity in mind, using EFTPOS to accept payments is paramount for your business to remain competitive.

In this article, informed by our 15 years’ experience in the payments space, we’ll cover what exactly EFTPOS can do for your venture. We’ll also advise you on what to look for when shopping for the best EFTPOS machines on the market, how much using EFTPOS will cost you, and which steps you’ll need to take to get started.

What is EFTPOS? What does it stand for?

EFTPOS stands for Electronic Funds Transfer at Point of Sale. The technology captures payment information from your customers’ cards, safely transmits an encrypted version of it to their bank, and processes the transaction so the funds reach your business account.

This technology is employed on devices called EFTPOS machines. Also known as card machines, card readers, or terminals, they’re the pieces of equipment used take debit and credit card payments, as well as mobile payments such as Apple Pay, if they come with this capability.

EFTPOS vs eftpos

While EFTPOS is a technology used across debit and credit card payment companies, eftpos (styled in lowercase) is the name of a privately-run, Australian debit card payment system.

For businesses, eftpos provides a payment network with lower merchant rates than Visa or Mastercard, which dominate the international payment network market. For consumers, it’s another convenient way to make payments — and even to make cash withdrawals, since it allows customers to get money from merchants when using an eftpos card.

That established, we note that this article focuses on EFTPOS, not eftpos.

Which EFTPOS providers should I look into?

You should look into EFTPOS providers that offer the hardware that fits your business needs, and charge fees that are aligned with your budget and monthly sales volume.

In our guide to the best EFTPOS machines, we discuss the devices that most impressed us during our extensive research into the Australian EFTPOS market, so you can learn more about them and pick the one most suited to your business. In the meantime, you can check which top providers made our list in the table below:

How to accept EFTPOS payments

To accept EFTPOS payments as a business, you need to make sure you’ve got the right setup in place. We’ve broken down the process of doing that into four simple steps:

Step 1: Set up a merchant account

Firstly, you’ll need to sign up with a merchant account provider. Merchant accounts act as buffer zones where card payments go to be settled, and are essential for you to take EFTPOS payments.

When your customer’s funds reach it, your provider will take a fee, then move the balance to your (separate) business bank account. The best merchant account services and rates are the ones that come with the hardware you need, while tailoring the cost to your business’ needs.

We cover everything you should look for when shopping around in our guide to setting up a merchant account.

Step 2: Set up a payment gateway

Next, you’ll need to set up a payment gateway. Payment gateways are pieces of software that process the customer’s card data and enable a quick, secure transaction to take place.

Some of the best payment gateway providers on the market also provide merchant accounts, so you can actually get both of these services wholesale in a single package. This is worth looking into as it’ll save you having to sign up with two different providers.

Step 3: Get an EFTPOS machine

After sorting out the software, you’ll need to move onto hardware and get an EFTPOS machine, which is the piece of equipment into which cards are inserted, or onto which they’re tapped, for payments to be made.

Many merchant account providers also provide EFTPOS machines as part of a service plan for a certain cost, which can be a monthly fee or a one-off charge.

EFTPOS machines can be mobile, portable, or countertop, and you should make sure the one you choose caters to your specific requirements as a merchant. For instance, what works for a static brick-and-mortar business, such as a coffee shop, won’t necessarily suit a mobile food vendor.

Step 4: Start taking payments

With a merchant account, a payment gateway, and an EFTPOS machine, you’re ready to start taking card payments. Offer it as an option to your customers and you’ll be able to have electronic transactions processed within seconds.

If you run into any problems or if you’re new to card payment-taking, don’t worry: merchant account providers offer support by default (some even 24/7), so you’ll be able to reach out for assistance.

EFTPOS fees: how much does it cost to accept EFTPOS payments?

There’s a whole set of fees and costs you’ll likely incur when accepting EFTPOS payments. They vary in price and frequency, and it’s worth noting that they’re not consistently charged by all the providers. Furthermore, if you also sign up for extra services, such as a virtual terminal — a software that allows customers to pay you through your website, essential for online businesses — you’ll pay for these in addition.

Is it possible to get zero-cost EFTPOS?

It’s possible to start taking EFTPOS payments for free, but you need to hit a minimum monthly turnover and diligently shop around to find it, as it’s not a common offer in this market.

Of all the providers we’ve researched and rated, Smartpay is the only one we’ve found to offer free EFTPOS payment-taking. On its Zero-Cost EFTPOS plan, it waives account fees, transaction fees and EFTPOS machine costs. However, only businesses with a monthly turnover of $10,000 or more are eligible for it, which can exclude many ventures that are just starting out.

When looking for zero-cost EFTPOS for your business, do make sure to watch out for any limitations it might impose on your business, such as restricted scalability or feature mismatch.

As an example, Smartpay doesn’t offer a virtual terminal, which means it’s not suitable for brick-and-mortar business owners who plan on expanding into the online sphere later on. It also doesn’t pack a native point of sale (POS) system. This means that, if you’re keen on getting more in-depth sales insights, stock management software, and other helpful management features, you’ll have to sign up with another provider and integrate that with your Smartpay reader, which will raise costs.

Next steps: choosing an EFTPOS terminal

EFTPOS is a technology that allows businesses to take card payments, giving them a chance to tap into an ever-growing clientele. The rising card usage among Australians makes EFTPOS an incredibly important tool if you’re looking to be — or stay — competitive.

To start the process of choosing your EFTPOS terminal, be sure to check our rundown of the best EFTPOS machines on the market, in which we cover the features and prices of Australia’s top card machines in more detail.

Alternatively, if you’re short on time and want to cut to the chase, give our free quote-comparison tool a try. Answer a few questions about your business and what you need, and we’ll match you with the EFTPOS providers best suited to you. They’ll then reach out to you directly with tailored, no-obligation quotes for you to compare.