What is EFTPOS?
There are plenty of things we use daily that, if we stop and think about it, we might not know too much about how they work. How does your mobile phone store so much data within it? Have you ever wondered about just how exactly your car engine works on your daily commute to work? The 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 for New Zealand business owners so you can know the ins and outs of EFTPOS like the back of your hand, and the 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 does EFTPOS mean?
EFTPOS is the major player in New Zealand’s financial transactions, allowing payments to be electronically transferred from the customer’s bank account into the business’.
Customers swipe, tap or wave 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 unique 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.
EFTPOS is 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 via EFTPOS 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.
In 1989, the system was officially launched and spread rapidly in the 1990s with an increase in both; EFTPOS cards and EFTPOS machines. By 1997 EFTPOS became the most popular form of payment in New Zealand.
Meet Smartpay Holdings Limited (NZX, ASX), your go-to for all things EFTPOS. Founded in 2004 and based in Auckland, we’re the top independent full-service EFTPOS provider in New Zealand and Australia. With over 40,000 merchants and around 56,000 secure, feature-packed terminals, we’ve got you covered!
Who is involved during EFTPOS transactions?
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 financial institution with which the merchant has an account and where the funds from the transaction will be deposited.
- Payment Network: The superhighway that enables the transfer of funds between the customer’s bank and 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 (such as Visa, Mastercard, AMEX): The network that makes sure the money goes where it’s supposed to, handling the rules and smooth operation of EFTPOS payments. This party is involved in the transaction whenever a “scheme” transaction like a contactless or credit payment is made.
- EFTPOS Provider: The business that sells or rents your physical EFTPOS machine.
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: With a quick tap of their card or device, customers can complete contactless payments in seconds. It’s a seamless transaction in the palm of your hand.
Swipe
Swipe the magnetic strip through the terminal and enter their PIN (personal identification number)
Insert
Insert their chip card into the terminal and enter their PIN
Tap or wave (Contactless)
Tap or wave their card (or other contactless payment device) over the terminal and make a contactless payment
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 an exchange that happens lightning fast.
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. Your money usually reaches your account 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.
Supercharge 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.
How Smartpay can help your business
Nearly every business can benefit from accepting EFTPOS and experience smoother payments. Whether you are in Retail, Hospitality or a Beauty Salon, Smartpay has a range of tailored EFTPOS solutions for all businesses – regardless of size and industry.
As EFTPOS payments specialists with over 20 years of experience, we take pride in supporting Kiwi business with tailored payment solutions. We have a range of EFTPOS terminals that are available with POS integrations and payment features which our team develops in-house. Our team can help you customise your payment solution exactly as per your business needs.
Get in touch with us today to discuss how we can help.