EFTPOS
EFTPOS (Electronic Funds Transfer Point of Sale) is a device by which sales transactions can be directly debited to the customer's bank account at the point of sale, through the use of a debit card (generally the same card used with Automatic Teller Machines). Merchants using EFTPOS can also offer cashout facilities to customers, where a customer can withdraw cash along with their purchase. EFTPOS are sometime also called POS Terminal or Payment Terminal and must not be confused with traditional Point of sale.
The customer's card is swiped through a card reader and the merchant usually enters the amount of the transaction before the customer enters their account and PIN. There is usually a short delay while the EFTPOS terminal contacts the server (over a phone line or mobile connection) before a message of Accepted or Declined is returned. Often, at peak shopping times (for example the last shopping day before Christmas), the system can become overloaded and the delay will become extended or even time out.
Ubiquity in some countries
EFTPOS could be seen a major driver of a cashless society in these countries. EFTPOS is so wide-spread and so commonly used that it is necessary to advertise "cash only - no EFTPOS" for events or locations where it is not available. Mobile EFTPOS is now used by certain taxi companies, pizza delivery outlets and stall holders at festivals, allowing EFTPOS transactions to be carried over the mobile network.
EFTPOS in particular countries
In some countries, banks tend to levy a small fee of around 25 to 50 cents per debit card transaction. Although bank accounts without these fees are becoming more common, these charges mean it is wise to limit EFTPOS usage. There are, however, many people in New Zealand and Australia who routinely use EFTPOS for all transactions, no matter how small. In other jurisdictions, EFTPOS transaction fees are charged to the retailer/merchant, rather than the customer. This has resulted in some retailers refusing to accept EFTPOS as payment for small transactions, where paying the transaction fee would absorb the profit margin on the sale, making the transaction uneconomic for the retailer.
UK
In the UK integrated EFTPOS (usually referred to as debit cards) are an established part of the retail market. Cards commonly in circulation include Maestro (previously Switch), Solo, Visa Delta and Visa Electron. Banks do not charge customers for EFTPOS transactions in the UK, but some retailers make small charges, particularly where the transaction amount in question is small. The UK is in the process of converting all debit cards in circulation to Chip and PIN, based on the EMV standard, to increase transaction security. This is expected to be complete by August.
New Zealand
The EFTPOS system is highly popular in New Zealand, virtually all retail outlets have EFTPOS terminals, particularly supermarkets, dairies, service stations, and bars. Increasingly Taxi operators and even businesses operating from stands at events have mobile EFTPOS terminals.
New Zealanders use EFTPOS for both small and large transactions, it would not be unusual for a New Zealander to use an EFTPOS card to pay for an amount as small as $1 NZD. Because EFTPOS is such an integral part of spending in New Zealand that occasional network failures cause tremendous delays, inconvenience and lost income to businesses who resort to swipe machines to process EFTPOS transactions until the network returns to service.
The Bank of New Zealand introduced EFTPOS to New Zealand in 1985 through a pilot scheme with petrol stations. New Zealand now has more EFTPOS terminals per head of population than any other country on earth.
Australia
In Australia, EFTPOS-enabled cards are accepted at almost all swipe terminals able to accept credit cards, regardless of the bank that issued the card, including Maestro cards issued by foreign banks, with most high turnover businesses accepting them, with 144,513 Point Of Sale terminals[1]. EFTPOS cards can also be used to deposit and withdraw cash over the counter at Australia Post outlets participating in giroPost, just as if the transaction was conducted at a bank branch, even if the bank branch is closed. Although EFTPOS terminals are now commonplace, many merchants still retain manual credit card terminals as their sole method of accepting cashless payment.
Canada
Canada has a nation-wide EFTPOS system, called Interac Direct Payment. Since being introduced in 1994, IDP has become the most popular payment method in the country, surpassing even regular cash payments in 2001, and is widely considered to be the most successful electronic payment system in the world. IDP purchases can be made at all retailers participating in the program, regardless of the financial institution issuing the debit card being used, and no fees are charged for using the program (although banks themselves may levy a charge for withdrawing funds from the account used to fund the purchase, these fees are not associated with Interac Direct Payment itself). There are just under 550,000 IDP terminals in use throughout Canada, and 124 billion Canadian dollars worth of transactions took place in 2004.
Interac Direct Payment is a PIN-based system where the information entered on the PIN pad is encrypted and verified at a central server, rather than being stored on the card itself. Because of this, it is significantly more secure than traditional signature or card-based transactions. Despite these security features, there are ongoing fraud concerns, particularly when debit cards are duped or skimmed - a compromised automated teller machine or point-of-sale terminal will record the account information contained in the magnetic strip of the card, allowing for duplicate cards to be created at a later time. The owner of the card is then unknowingly video taped or observed entering their PIN, allowing a criminal to use duplicate cards to make fraudulent purchases.