With Australians increasingly turning to plastic to pay for everything, small businesses have little choice but to equip their shops with EFTPOS terminals. EFTPOS, which stands for Electronic Fund Transfer at Point of Sale, is the most widely used electronic payment system in Australia and New Zealand (although the networks are separate). In 2010, EFTPOS usage averaged $12 billion per month spread over more than 183 million transactions, according to the Australian Payments Clearing Association.
The EFTPOS terminal
A typical EFTPOS machine is a countertop unit resembling a large tape dispenser. Some shops still use old attached models, although new merchants now use wireless units. Inside is a complex program that reads card information, encrypts and transmits data through telephone lines, authorises transfers between banks, and prints out receipts in the span of a few seconds.
The terminal communicates with at least three parties: the customer’s bank, the merchant’s bank, and the authorizing banks. It first checks the customer’s account to see if there are enough funds to cover the sale, then issues the amount to the authorizing bank, which then passes it over to the merchant’s bank. When the amount is accepted, the transaction is approved and a receipt is rolled out.
The EFTPOS network
In Australia, the EFTPOS system is made up of several connected bank networks (including the Big Four: NAB, Commonwealth, ANZ, and Westpac), which form one large network. A business wishing to accept EFTPOS must sign up with one of these networks and rent a terminal from them, although any terminal will accept payments from other networks. This costs $25 to $35 per month, depending on the terminal type and agreement, according to NineMSN. This doesn’t include telephone fees, which can run from $20 to $30 monthly.
There may also be fees for delivery and instalment (around $100), as well as regular maintenance costs. However, much like credit card issuers, rival networks often offer discounts or waive these fees to get more business. So it pays to shop around for the best prices, although acceptance and network reliability should also be taken into account.
Features to look for
The most basic EFTPOS machine will accept debit and credit payments for a single merchant, nothing more. These can be rented for less than $10 per month. Most owners, however, will invest in more features as this opens up business to more clients. You may want to add security features, accept a wider range of cards, process multiple payments, or use a faster connection, for instance.
Each provider offers a range of EFTPOS terminals designed for different kinds of business. For example, a multi-lane supermarket will need several terminals to process payments to one account (integrated EFTPOS), while a medical group may prefer to have one terminal wire payments to several doctor’s offices (multi-merchant EFTPOS). There are also EFTPOS machines for mobile businesses (e.g. travelling shows, convention exhibitors), which often use GPRS connections and may charge a daily instead of monthly rate. Other features include e-pay support, IP connectivity, tips, and cash withdrawals.