When it comes to running a retail business, the vast majority of business owners have caught up with the latest in technology. Whether it improves operational efficiency, product quality, or the customer experience, managerial and transactional software and hardware developments are changing how businesses operate and interact with consumers entirely.
In particular, EFTPOS machines are devices that have transformed the customer experience in almost any given store or business. Knowing what an EFTPOS machine is and how it works is crucial in developing an understanding of how businesses operate and cater to consumer needs in the digital age.
EFTPOS and EFTPOS Machines
EFTPOS stands for electronic funds transfer at point of sale, and refers to a network that facilitates electronic transfer of funds with the use of credit or debit cards, at the point of sale. Essentially, EFTPOS is what allows you to use your card to make payments within a physical store.
More specifically, an EFTPOS machine (aka EFTPOS terminal or card reader) is the physical device that allows a business to accept card payments from customers – this device is what reads debit and credit cards, facilitating transfer of funds. This is just one part of EFTPOS as a whole, and will usually facilitate contactless and mobile payment as well.
The EFTPOS machine (and EFTPOS more broadly) works in conjunction with (or acts as part of) what is called a POS machine. This refers to a system that facilitates payment, but also machines that keep records of transactions and hold cash, and has potential for integration of other tools such as booking systems and reporting software – as a business owner, an understanding of POS machines is crucial in itself – more information can be found here.
How an EFTPOS Machine Works
In understanding how an EFTPOS machine works, it is important to understand the processes that are carried out, and the features that differentiate EFTPOS machines.
Firstly, an EFTPOS machine facilitates a number of processes. Initially, as a customer taps or otherwise uses their card to make a payment, the machine will confirm that the relevant amount is available within their bank account. Following this, it will issue the amount to the authorising bank, before passing the relevant information on to the bank of the merchant. Finally, once the monetary amounts have been approved, the transaction is made, and a receipt is printed.
With no handling of cash, EFTPOS machines facilitate direct transfer of funds, which provides security, efficiency, convenience and transaction records. Given consumer preferences of today, the utilisation of an EFTPOS machine is increasingly becoming a necessity, as opposed to just a benefit.
When it comes to deciding on the appropriate EFTPOS machine for a business, a number of factors should be considered. These include things such as processing fees, the frequency and type of use, and flexibility required – depending on the machine chosen, a business will likely be benefiting from specialised features that surround these factors. Furthermore, it is crucial that your EFTPOS machine can be properly integrated with your point of sale, and can be effectively utilised by employees. Not to mention, a good EFTPOS machine will be sleek and will compliment your point of sale environment, and will support multiple cards in order to maximise sales from all customers.
The History of EFTPOS
EFTPOS technology originated in the US in 1981 – just one year later, the system was rolled out nationwide, with a focus on facilitating communication with banks, rather than businesses. This initial form of EFTPOS was unpopular, slow to be accepted by businesses and consumers, and marketing surrounding the tech was minimal.
Internationally, other countries began to implement EFTPOS technology in a similar way. A particular initial milestone for EFTPOS was in 1984, when Australian bank Westpac implemented an EFTPOS network across petrol stations, on a national scale. Other banks followed suit, with support for access to bank funds using debit and credit cards. In 1985, EFTPOS contributed to the creation of the Australian ATM network.
Mobile EFTPOS began in 1997, with implementation by hotels in Kuala Lumpur – cellular EFTPOS continued to grow from this point onwards, and was standard by 2010. Today, EFTPOS is the standard payment method, overtaking cash and being utilised by the vast majority of businesses internationally.