EFTPOS
Encyclopedia
EFTPOS is the general term used for debit card
based systems used for processing transactions through terminals at points of sale. In Australia
and New Zealand
it is also the brand name of the specific system used for such payments. The Australian and New Zealand
systems are country specific and do not interconnect.
transactions at “points of sale” via an EFTPOS terminal and at ATMs
. Not all merchants provide EFTPOS facilities, but those who wish to accept EFTPOS payments must enter an agreement with one of the seven merchant service providers, which rent an EFTPOS terminal to the merchant. The EFTPOS system in Australia is managed by eftpos Payments Australia Ltd. For credit cards to be accepted by a merchant a separate agreement must be entered into with each credit card company.
Australian banks offer its customers debit cards. A card merely provides the means by which a customer's linked bank accounts can be accessed using an EFTPOS terminal or ATM. Each Australian bank has given a different name to its debit cards, such as:
Australian banks also offer its customers credit cards which are linked to accounts maintained by the credit card company. When issued through a bank, these cards may also act as debit cards by being associated with one or more linked personal accounts. The customer would indicate which account is to be accessed (debited) by pressing one of three account buttons on the EFTPOS terminal or ATM. The buttons are CHQ, SAV or CR. In addition, credit card companies issue prepaid cards which act like generic gift cards, which are anonymous and not linked to any bank accounts. These cards are accepted by merchants who accept credit cards and are processed through the EFTPOS terminal in the same way as credit cards.
Those merchants that enter the EFTPOS payment system must accept debit card
s issued by any Australian bank, and some also accept various credit card
s and other cards. Some merchants set minimum transaction amounts for EFTPOS transactions, which can be different for debit and credit card transactions.
A number of merchants permit customers using a debit card to withdraw cash as part of the EFTPOS transaction. In Australia, this facility is known as "cash out", which in many other countries is called debit card cashback
. For the merchant, cash out is a way of reducing their net cash takings, saving on banking of cash. There is no additional cost to the merchant in providing cash out because banks charge a merchant a debit card transaction fee per EFTPOS transaction, and not on the transaction value. Cash out is a facility provided by the merchant, and not the bank, who can limit or vary how much cash can be withdrawn at a time and to suspend the facility at any time. When available, cash out is convenient for the customer, who can bypass having to visit a bank branch or ATM. Cash out is also cheaper for the customer, since only one bank transaction is involved. For people in some remote areas, cash out may be the only way they can withdraw cash from their personal accounts. However, most merchants who provide the facility set a relatively low limit on cash out, generally $50, and some also charge for the service. Cash out is not available for credit cards because the merchant is charged a percentage commission on credit card transactions based on the value, and also because cash withdrawals on credit cards are treated differently to purchase transactions.
Australian debit cards can only be used outside Australia if they carry the Maestro/Cirrus or Plus logos, indicating that they are linked to their transaction system. Similarly, non-Australian debit and credit cards can be used at EFTPOS terminals or ATMs if they have these logos or the MasterCard or Visa logos. Diners Club and/or American Express credit cards will be accepted only if the merchant has an agreement with those credit card companies. Discover is not accepted in Australia. The EFTPOS system is not available for non-bank or non-credit card based transactions, so that store cards and proprietor cards, such as Fleetcard and Motorcard, cannot be processed using an EFTPOS terminal.
EFTPOS transactions involving a debit, credit or prepaid card can be authenticated by printing and signing a receipt; the merchant verifies the signature on the receipt against the signature on the card. However, financial institutions are in the process of rolling out smart cards with integrated circuit
s ("chips") that will enable verification by entering a personal identification number
(PIN) at the EFTPOS terminal. At ATMs, only PIN verification is available, and all new credit cards are now issued with PINs regardless of whether or not they have a chip. As a further security measure, if a user enters an incorrect PIN three times, the card may be locked out of EFTPOS and require reactivation over the phone or at a branch. In the case of an ATM, the card will not be returned, and the cardholder will need to visit the branch to retrieve the card, or request a new card to be issued.
In 2006 Commonwealth Bank and MasterCard ran a six-month trial of the contactless smart card
system PayPass in Sydney
and Wollongong,
supplementing the traditional EFTPOS swipe or chip system. The system was subsequently rolled out across Australia in 2009.
A similar system is being rolled out by Westpac Bank for its MasterCard PayPass and Visa payWave branded cards. These operate as part of a normal debit card and can be used where the merchant displays the PayPass or payWave logo. These cards contain a special chip and RFID antennae embedded in the plastic. To pay using this system, the customer passes the card within 4 cm of a reader at a merchant checkout. Using this method, the customer does not need to authenticate his or her identity by PIN entry or signature, as on a regular machine. However, these transactions are limited to $100, and some stores have a lower limit. The banks have unilaterally incorporated the MasterCard PayPass and Visa payWave technology into new cards, and it cannot be deactivated by the cardholder. Some merchants do not offer a cardholder the option of signing or entering a PIN when the transaction is below their threshold amount.
and were trade marks from 1986 until 1991.
In April 2009, a company, “EFTPOS Payments Australia Ltd”, was formed to manage and promote the EFTPOS system in Australia. The initial members of EFTPOS Payments Australia Ltd were:
Other organisations may have peering agreements with the one or more of the central peers.
The network uses the AS 2805
protocol.
s.
introduced EFTPOS to New Zealand
in 1985 through a pilot scheme with petrol stations.
In 1989 the system was officially launched and two providers owned by the major banks now run the system. The largest of the two providers, Paymark Limited (formerly Electronic Transaction Services Limited) is owned equally by ASB Bank
, Westpac
, Bank of New Zealand
and ANZ National Bank. The second is operated by EFTPOS NZ which is fully owned by ANZ National Bank.
During July 2006 the five billionth EFTPOS payment flowed across the Paymark EFTPOS network since the electronic form of payment was introduced in New Zealand in 1989.
, and being used for about 60% of all retail transactions. In 2009, there were 200 EFTPOS transactions per person.
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...
based systems used for processing transactions through terminals at points of sale. In Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
and New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
it is also the brand name of the specific system used for such payments. The Australian and New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
systems are country specific and do not interconnect.
Australia
EFTPOS is an Australian system for processing payment cardPayment card
The term payment card covers a range of different cards that can be presented by a cardholder to make a payment.-Types:Typically a payment card is backed by an account holding funds belonging to the cardholder, or offering credit to the cardholder. Payment cards can be classified into types...
transactions at “points of sale” via an EFTPOS terminal and at ATMs
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
. Not all merchants provide EFTPOS facilities, but those who wish to accept EFTPOS payments must enter an agreement with one of the seven merchant service providers, which rent an EFTPOS terminal to the merchant. The EFTPOS system in Australia is managed by eftpos Payments Australia Ltd. For credit cards to be accepted by a merchant a separate agreement must be entered into with each credit card company.
Australian banks offer its customers debit cards. A card merely provides the means by which a customer's linked bank accounts can be accessed using an EFTPOS terminal or ATM. Each Australian bank has given a different name to its debit cards, such as:
- Commonwealth Bank of Australia: Keycard
- Westpac Banking CorporationWestpacWestpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
: Handycard - National Australia BankNational Australia BankNational Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
: FlexiCard - ANZ BankANZ BankThe Australia and New Zealand Banking Group Limited , commonly called ANZ, is the fourth largest bank in Australia, after the Commonwealth Bank, Westpac Banking Corporation and the National Australia Bank. Australian operations make up the largest part of ANZ's business, with commercial and retail...
: Access card - Bendigo BankBendigo BankBendigo Bank is an Australian financial institution, operating primarily in retail banking. The company merged with Adelaide Bank in November 2007, with shareholders voting in March 2008 to change the merged company’s name to Bendigo and Adelaide Bank Limited.Before the merger, Bendigo Bank...
: Cashcard
Australian banks also offer its customers credit cards which are linked to accounts maintained by the credit card company. When issued through a bank, these cards may also act as debit cards by being associated with one or more linked personal accounts. The customer would indicate which account is to be accessed (debited) by pressing one of three account buttons on the EFTPOS terminal or ATM. The buttons are CHQ, SAV or CR. In addition, credit card companies issue prepaid cards which act like generic gift cards, which are anonymous and not linked to any bank accounts. These cards are accepted by merchants who accept credit cards and are processed through the EFTPOS terminal in the same way as credit cards.
Those merchants that enter the EFTPOS payment system must accept debit card
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...
s issued by any Australian bank, and some also accept various credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
s and other cards. Some merchants set minimum transaction amounts for EFTPOS transactions, which can be different for debit and credit card transactions.
A number of merchants permit customers using a debit card to withdraw cash as part of the EFTPOS transaction. In Australia, this facility is known as "cash out", which in many other countries is called debit card cashback
Debit card cashback
Debit card cashback is a service offered to retail customers whereby an amount is added to the total purchase price of a transaction paid by debit card and the customer receives that amount in cash along with the purchase. For example, a customer purchasing $18.99 worth of goods might ask for...
. For the merchant, cash out is a way of reducing their net cash takings, saving on banking of cash. There is no additional cost to the merchant in providing cash out because banks charge a merchant a debit card transaction fee per EFTPOS transaction, and not on the transaction value. Cash out is a facility provided by the merchant, and not the bank, who can limit or vary how much cash can be withdrawn at a time and to suspend the facility at any time. When available, cash out is convenient for the customer, who can bypass having to visit a bank branch or ATM. Cash out is also cheaper for the customer, since only one bank transaction is involved. For people in some remote areas, cash out may be the only way they can withdraw cash from their personal accounts. However, most merchants who provide the facility set a relatively low limit on cash out, generally $50, and some also charge for the service. Cash out is not available for credit cards because the merchant is charged a percentage commission on credit card transactions based on the value, and also because cash withdrawals on credit cards are treated differently to purchase transactions.
Australian debit cards can only be used outside Australia if they carry the Maestro/Cirrus or Plus logos, indicating that they are linked to their transaction system. Similarly, non-Australian debit and credit cards can be used at EFTPOS terminals or ATMs if they have these logos or the MasterCard or Visa logos. Diners Club and/or American Express credit cards will be accepted only if the merchant has an agreement with those credit card companies. Discover is not accepted in Australia. The EFTPOS system is not available for non-bank or non-credit card based transactions, so that store cards and proprietor cards, such as Fleetcard and Motorcard, cannot be processed using an EFTPOS terminal.
EFTPOS transactions involving a debit, credit or prepaid card can be authenticated by printing and signing a receipt; the merchant verifies the signature on the receipt against the signature on the card. However, financial institutions are in the process of rolling out smart cards with integrated circuit
Integrated circuit
An integrated circuit or monolithic integrated circuit is an electronic circuit manufactured by the patterned diffusion of trace elements into the surface of a thin substrate of semiconductor material...
s ("chips") that will enable verification by entering a personal identification number
Personal identification number
A personal identification number is a secret numeric password shared between a user and a system that can be used to authenticate the user to the system. Typically, the user is required to provide a non-confidential user identifier or token and a confidential PIN to gain access to the system...
(PIN) at the EFTPOS terminal. At ATMs, only PIN verification is available, and all new credit cards are now issued with PINs regardless of whether or not they have a chip. As a further security measure, if a user enters an incorrect PIN three times, the card may be locked out of EFTPOS and require reactivation over the phone or at a branch. In the case of an ATM, the card will not be returned, and the cardholder will need to visit the branch to retrieve the card, or request a new card to be issued.
In 2006 Commonwealth Bank and MasterCard ran a six-month trial of the contactless smart card
Contactless smart card
A contactless smart card is any pocket-sized card with embedded integrated circuits that can process and store data, and communicate with a terminal via radio waves. There are two broad categories of contactless smart cards. Memory cards contain non-volatile memory storage components, and perhaps...
system PayPass in Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
and Wollongong,
supplementing the traditional EFTPOS swipe or chip system. The system was subsequently rolled out across Australia in 2009.
A similar system is being rolled out by Westpac Bank for its MasterCard PayPass and Visa payWave branded cards. These operate as part of a normal debit card and can be used where the merchant displays the PayPass or payWave logo. These cards contain a special chip and RFID antennae embedded in the plastic. To pay using this system, the customer passes the card within 4 cm of a reader at a merchant checkout. Using this method, the customer does not need to authenticate his or her identity by PIN entry or signature, as on a regular machine. However, these transactions are limited to $100, and some stores have a lower limit. The banks have unilaterally incorporated the MasterCard PayPass and Visa payWave technology into new cards, and it cannot be deactivated by the cardholder. Some merchants do not offer a cardholder the option of signing or entering a PIN when the transaction is below their threshold amount.
History
The name and logo for EFTPOS in Australia were originally owned by the National Australia BankNational Australia Bank
National Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
and were trade marks from 1986 until 1991.
In April 2009, a company, “EFTPOS Payments Australia Ltd”, was formed to manage and promote the EFTPOS system in Australia. The initial members of EFTPOS Payments Australia Ltd were:
- Australia and New Zealand Banking Group
- Australian Settlements Limited
- Bank of QueenslandBank of QueenslandBank of Queensland , one of the oldest financial institutions in Queensland, Australia, is a retail bank with a network of almost 270 branches, including 152 in Queensland, 52 in New South Wales, 23 in Victoria and 34 in Western Australia. Following the Home Building Society and Pioneer mergers,...
- Bendigo and Adelaide BankBendigo BankBendigo Bank is an Australian financial institution, operating primarily in retail banking. The company merged with Adelaide Bank in November 2007, with shareholders voting in March 2008 to change the merged company’s name to Bendigo and Adelaide Bank Limited.Before the merger, Bendigo Bank...
- Cashcard
- CitigroupCitigroupCitigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
- Commonwealth Bank of AustraliaCommonwealth Bank of AustraliaThe Commonwealth Bank of Australia is a multinational bank with businesses across New Zealand, Fiji, Asia, USA and the United Kingdom. Commonwealth Bank provides a variety of financial services including retail, business and institutional banking, funds management, superannuation, insurance,...
- Coles GroupColes GroupColes Group Limited was an Australian public company that operated numerous retail chains. It was Australia's second-largest retailer, behind Woolworths Limited...
(now WesfarmersWesfarmersWesfarmers Limited is one of Australia’s largest public companies and one of Australia's largest retailers. Its headquarters are in Perth, Western Australia....
) - Cuscal
- Indue
- National Australia BankNational Australia BankNational Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
- Suncorp-MetwaySuncorp-MetwaySuncorp Group Limited is an Australian finance, insurance, and banking corporation based in Brisbane, Queensland, Australia. It is one of Australia's largest banks and its largest general insurance group, formed on 1 December 1996 by the merger of Suncorp, Metway Bank and the Queensland Industry...
- Westpac Banking CorporationWestpacWestpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
- Woolworths LimitedWoolworths LimitedWoolworths Limited is a major Australian company with extensive retail interest throughout Australia and New Zealand. It is the:* largest retail company in Australia and New Zealand by market capitalisation and sales...
Usage
As of December 2010, there were over 707,000 EFTPOS terminals in Australia and over 28,000 ATMs. Of the EFTPOS terminals, over 60,000 offered cash withdrawals. In 2010, 183 million transactions, worth A$12 billion, were made using Australian EFTPOS terminals per month.Network
The EFT network in Australia is made up of seven proprietary networks in which peers have interchange agreements, making an effective single network. A merchant who wishes to accept EFTPOS payments must enter an agreement with one of the seven merchant service providers, which rent the terminal to the merchant. All the merchant's EFTPOS transactions are processed through one of these gateways. Some of these peers are:- Australia and New Zealand Banking Group
- Commonwealth Bank of AustraliaCommonwealth Bank of AustraliaThe Commonwealth Bank of Australia is a multinational bank with businesses across New Zealand, Fiji, Asia, USA and the United Kingdom. Commonwealth Bank provides a variety of financial services including retail, business and institutional banking, funds management, superannuation, insurance,...
- Cuscal
- FDI (Cashcard)
- National Australia BankNational Australia BankNational Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
- Westpac Banking CorporationWestpacWestpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
- Other
Other organisations may have peering agreements with the one or more of the central peers.
The network uses the AS 2805
AS 2805
AS 2805 Electronic funds transfer - Requirements for interfaces is the Australian standard for financial messaging. It is near-exclusively used in Australia for the operation of card-based financial transactions among banks, automatic teller machines and EFTPOS devices.It is closely related to ISO...
protocol.
New Zealand
Eftpos is highly popular in New Zealand. The system is operated by two providers, Paymark Limited (formerly Electronic Transaction Services Limited) which processes 75% of all electronic transactions in New Zealand, and EFTPOS NZ. Although the term eftpos is popularly used to describe the system, EFTPOS is a trademark of EFTPOS NZ the smaller of the two providers. Both providers run an interconnected financial network that allows the processing of not only of debit cards at point of sale terminals but also credit cards and charge cardCharge card
A charge card is a card that provides an alternative payment to cash when making purchases in which the issuer and the cardholder enter into an agreement that the debt incurred on the charge account will be paid in full and by due date or be subject to severe late fees and restrictions on card...
s.
History
The Bank of New ZealandBank of New Zealand
Bank of New Zealand is one of New Zealand’s largest banks and has been operating continuously in the country since the first office was opened in Auckland in October 1861 followed shortly after by the first branch in Dunedin in December 1861...
introduced EFTPOS to New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
in 1985 through a pilot scheme with petrol stations.
In 1989 the system was officially launched and two providers owned by the major banks now run the system. The largest of the two providers, Paymark Limited (formerly Electronic Transaction Services Limited) is owned equally by ASB Bank
ASB Bank
ASB is a New Zealand bank owned by the Commonwealth Bank of Australia, which is listed on the Australian Stock Exchange. It is one of the largest New Zealand banks, with branches throughout the country. It operates BankDirect, a branchless banking service that provides service via phone, Internet,...
, Westpac
Westpac
Westpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
, Bank of New Zealand
Bank of New Zealand
Bank of New Zealand is one of New Zealand’s largest banks and has been operating continuously in the country since the first office was opened in Auckland in October 1861 followed shortly after by the first branch in Dunedin in December 1861...
and ANZ National Bank. The second is operated by EFTPOS NZ which is fully owned by ANZ National Bank.
During July 2006 the five billionth EFTPOS payment flowed across the Paymark EFTPOS network since the electronic form of payment was introduced in New Zealand in 1989.
Usage
EFTPOS is highly popular in New ZealandNew Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, and being used for about 60% of all retail transactions. In 2009, there were 200 EFTPOS transactions per person.