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You use EFTPOS every day—but do you know what is EFTPOS and how EFTPOS works? Just like your phone or car, EFTPOS powers your business behind the scenes, processing transactions seamlessly. Let’s break it down and explore the basics of EFTPOS, and how you can ensure you’re getting the best deal for your business. Same goes for EFTPOS—your business may use it every day, but how does it actually work, and how do you know you’re getting the best deal?

We’ve put together this guide so you can know the ins and outs of EFTPOS like the back of your hand. Next time you or a customer taps or swipes, you’ll know what happens behind the scenes so you can take charge of your EFTPOS setup.


What is EFTPOS?

EFTPOS is a payment system available in New Zealand that lets customers transfer money from their bank account to your business electronically, quickly, and securely.

Customers swipe, insert or tap their credit or debit card, smartphone or smartwatch on the EFTPOS machine at the checkout for quick and easy transactions. With EFTPOS, businesses enjoy secure and convenient electronic payments, while customers love the speed and simplicity.

Plus, every transaction is electronically tracked by EFTPOS machines, giving you a handy record for accounting and tax purposes.

Essentially, EFTPOS is there to make payments convenient for businesses and customers (and even more simple with Smartpay as your provider!).


What Does EFTPOS Stand for?

EFTPOS is an acronym for ‘Electronic Funds Transfer at Point of Sale.’ It is a technology that allows for the electronic transfer of funds from customers’ bank accounts to your business account during a transaction, eliminating the need for physical cash or checks. It is also a term used to describe a physical payment terminal that accepts payments from different sources like debit cards, credit cards and smart devices (like mobile wallets on phones and watches).

In New Zealand, EFTPOS is colloquial shorthand for what you’d call ‘paying by card’ or ‘credit card payments’ even though leaps in tech have revolutionised the ways you can pay to include your phone and wearable devices.


When Did EFTPOS Start in NZ?

EFTPOS technology was first introduced to New Zealand by the Bank of New Zealand in 1985 through a pilot program with petrol stations. The system was developed by the Bank of New Zealand (BNZ) and the New Zealand Retailers Association (NZRA) to speed up the checkout process and reduce the need for cash and checks.

Meet Smartpay, your go-to for all things EFTPOS. A Kiwi business from day one, we’re the top independent full-service EFTPOS provider in New Zealand and Australia for over 20 years. With over 40,000 merchants and around 56,000 secure, feature-packed terminals, we’ve got you covered!


Who Do EFTPOS Transactions Involve?

An EFTPOS transaction in New Zealand involves several parties:

  • Customer: The person swiping, tapping or inserting their EFTPOS, debit or credit card to make a purchase.
  • Merchant: The business that accepts the customers’ payment and processes it through their EFTPOS terminal.
  • Merchant Bank: The bank where the merchant’s money lands after you make a purchase.
  • Payment Network: The superhighway that moves data between your bank to the merchant’s bank.
  • Card Issuer: The party that gives customers their trusty debit or credit card.
  • Acquirer: The party that links up with the card-issuing bank and the payment network, and then settles funds into your account. 
  • Scheme (Visa, Mastercard, AMEX etc.): The network that makes sure the money goes where it’s supposed to, handling the rules and smooth operation of EFTPOS payments.
  • EFTPOS Provider: The business that sells or rents your physical EFTPOS machine.

These parties work both behind the scenes and in front of the scenes, partnering with you and your business to process your customers’ payments for the goods and services that you provide. 


How Does EFTPOS Work?

We’re swiping through all of the jargon to explain how EFTPOS payments actually work. Here’s how EFTPOS systems hustle to keep the money flowing into your business:

Step 1: Payment

When you kick-off a transaction by entering the purchase details into the terminal, your customer then uses their card or device to make a payment. This can be done three different ways:

  • Swiping: Customers swipe their card through the terminal and punch in their PIN.
  • Inserting: Swiftly and securely, customers insert their card into the terminal and then enter their PIN. 
  • Contactless (Tap/Hover): Customers can complete contactless payments in seconds with a quick tap of their card or device. It’s a seamless transaction in the palm of their hand.

Step 2: Processing

Once the customer has paid with their card or device, the transaction is approved or declined if they have insufficient funds in their account (oops!). Your payment data is in safe hands with EFTPOS, with all data encrypted in a lightning-fast exchange. 

Step 3: Settlement

For the money to hit your account, your terminal needs to ‘settle.’ This is like cashing up and depositing the earnings at the bank. The acquirer handles this daily ‘settlement tap dance’ for you, moving your funds from the customers’ bank to yours. Depending on the settlement schedule, your money usually reaches your account by the next business day. 


How EFTPOS Helps You Get a Grip on Your Finances

EFTPOS is like a payment superhero, lending a hand to charge up your business’ cash-flow, reporting and the ability to accept payments. Here’s how EFTPOS helps businesses like yours get a grip on their finances.

Tap Into Popular Payment Methods

Unlock payments from all the popular providers and payment methods, including digital and wearable devices using Apple Pay, Google Pay and Samsung Pay. Pin down all kinds of new customers by taking all kinds of payments in the palm of your hand.

Hands-off Transaction Reporting

With automatic transaction reporting, you don’t have to lift a finger to get detailed insights for better record-keeping and valuable data for strategic decision making. 

Super-charge Your Turnover 

Don’t lose customers to an outdated payment method. With EFTPOS you have the means to get money flowing through your terminal like never before and step up your turnover at your fingertips.


Let Smartpay Lend you a Hand with Specialised EFTPOS Solutions

Smartpay provides handy EFTPOS services that focus on keeping things as simple as possible for businesses. So while it’s great to know all the behind-the-scenes stuff, with Smartpay as your provider you won’t have to worry how EFTPOS works.

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