EFTPOS vs Credit Cards: Which Payment Method Is Best for Your Australian F&B Business?

What is EFTPOS?

EFTPOS, short for Electronic Funds Transfer at Point of Sale, is a widely used electronic payment system that enables consumers to make secure and real-time transactions using debit or credit cards at retail locations. In Australia, the term ‘eftpos’ (commonly styled in lowercase) specifically refers to the domestic debit card network, designed to facilitate direct payments from a customer's bank account to the merchant.

This real-time transaction capability not only enhances payment efficiency but also provides customers with greater control over their spending, as funds are instantly debited upon purchase — eliminating the delay commonly associated with other payment methods.

One standout feature of the EFTPOS ecosystem is the Bank@Post service, offered through participating Australia Post outlets. This service allows customers to perform everyday banking tasks — such as deposits and withdrawals — using their EFTPOS cards, effectively turning post offices into convenient banking access points.

EFTPOS is therefore more than just a point-of-sale payment tool; it’s a versatile financial service platform that bridges retail transactions with everyday banking, offering enhanced convenience for both consumers and businesses alike.

How Does EFTPOS Work?

EFTPOS (Electronic Funds Transfer at Point of Sale) operates as a real-time payment system that enables seamless transactions using a debit or credit card. When a customer is ready to make a purchase, they can simply swipe, insert, or tap their EFTPOS-enabled card on a terminal at the point of sale. Once the card is presented, the EFTPOS terminal securely communicates with the customer’s bank to verify the availability of funds. If approved, the transaction is processed instantly — transferring the payment directly from the customer’s bank account to the merchant’s.

Security is a cornerstone of the EFTPOS network. All transactions are encrypted to protect sensitive data, and users are typically required to enter a Personal Identification Number (PIN) to authenticate payments. This added layer of protection helps reduce the risk of fraud and unauthorized use. Because EFTPOS transactions are processed in real time, both businesses and consumers benefit from immediate confirmation and fund settlement — streamlining the payment experience.

From a business perspective, accepting EFTPOS payments is often more cost-effective than processing credit card transactions. According to data from the Reserve Bank of Australia, in the 2020/21 financial year, the average cost for merchants to accept an EFTPOS payment was approximately 0.3% of the transaction value. In comparison, accepting debit card payments via Visa or Mastercard averaged over 0.5%.

While EFTPOS usage typically does not incur additional fees for customers, some financial institutions may apply charges depending on the account type or associated banking services. Businesses and consumers alike are encouraged to check with their bank or payment provider for specific fee structures.

What About Credit Card Payments?

Credit card payments function quite differently from debit-based systems like EFTPOS. When you use a credit card, you're essentially borrowing funds from a financial institution up to a pre-approved credit limit to complete your purchase. Rather than drawing directly from your bank account, credit card transactions provide users with short-term access to credit, allowing for more flexible spending — especially for larger or unexpected purchases.

Global payment networks such as Visa, Mastercard, and American Express play a critical role in the credit card ecosystem. These companies operate the infrastructure that facilitates secure and reliable communication between the merchant's acquiring bank and the cardholder’s issuing bank. This ensures that each transaction is verified, authorized, and processed efficiently.

Each credit card is tied to a credit limit, which represents the maximum amount you’re allowed to borrow. While this provides financial flexibility, it’s important to manage your balance responsibly. If the full amount isn't repaid by the statement due date, interest will accrue on the remaining balance, often at relatively high annual percentage rates (APRs). Over time, unpaid balances can lead to significant interest costs and potential debt accumulation.

Read more:5 Best iPad POS System for Small Australian Cafes

Key Differences Between EFTPOS and Credit Card Payments

Understanding the distinctions between EFTPOS and credit card payments is essential for both consumers and businesses. While both methods enable electronic transactions, they differ significantly in terms of funding sources, processing methods, costs, and user benefits.

1. Funding Source

The primary difference lies in where the money comes from.

• EFTPOS (Electronic Funds Transfer at Point of Sale) is debit-based, meaning payments are drawn directly from the cardholder’s bank account at the time of purchase.

• Credit card transactions, on the other hand, rely on borrowed funds from the issuing bank, up to the user’s approved credit limit. This enables purchases even if sufficient funds are not immediately available in the user’s account.

2. Transaction Processing

• EFTPOS transactions are processed in real time — funds are immediately debited from the customer’s account and transferred to the merchant.

• Credit card transactions involve a delayed settlement. The credit card network authorizes the payment to the merchant upfront, while the cardholder is billed later, typically on a monthly statement cycle.

3. Merchant Fees

For businesses, the cost of accepting payments can vary notably. According to the Reserve Bank of Australia, during the 2020/21 financial year:

• EFTPOS transactions averaged a processing cost of around 0.3% of the transaction value.

• In contrast, Visa and Mastercard debit card transactions averaged over 0.5%, making EFTPOS a more cost-effective option for many merchants.

4. Customer Benefits and Drawbacks

• EFTPOS encourages budget-conscious spending, as transactions are limited to available funds. However, it typically does not contribute to building credit history or offer rewards programs.

• Credit cards often come with benefits such as reward points, travel perks, and fraud protection. That said, failure to pay off the balance in full may result in high-interest charges, which can accumulate quickly and lead to debt.

5. Chargebacks and Dispute Resolution

• Credit card networks generally offer robust chargeback mechanisms, giving cardholders the ability to dispute unauthorized or faulty transactions and seek refunds.

• In contrast, EFTPOS transactions may have limited dispute resolution options, depending on the policies of the issuing bank. As such, consumers may face more challenges when resolving disputes.

Which Payment Method is Right for Your Business?

Now, if you’re a savvy restaurant or F&B business owner in Australia weighing your options between EFTPOS and credit card payments, there are a few things to consider:

• Transaction Volume and Average Transaction Value: If you see high transaction volumes with lower average values, you might want to lean towards EFTPOS for those lower fees.

• Customer Preferences: Knowing your audience is key. Some folks might lean towards the benefits and rewards of credit card payments, while others might appreciate the straightforward nature of EFTPOS.

• Associated Costs: Take a good look at the fees tied to each payment method. While EFTPOS usually has lower transaction fees, credit cards might come with benefits that could justify the extra cost.

Offering both EFTPOS and credit card options is a smart move. It caters to varied customer preferences, enhances satisfaction, and might even boost your sales by accommodating a wider range of payment styles.

At the end of the day, choosing between EFTPOS and credit card payments should sync well with your business model, the people you serve, and your financial landscape. With a bit of thoughtfulness in evaluating these factors, you can set up a payment system that aligns with your goals and amps up the customer experience.

Read more:How to Choose the Best Restaurant Payment System: Key Features, Pricing & Security

Unlock Seamless Payment Processing with Eats365

Choosing the right payment system is crucial for your restaurant's success. While both EFTPOS and credit card payments have their merits, a comprehensive POS system like Eats365 can seamlessly integrate both, offering a versatile and streamlined solution for your business.

Contact Eats365 today to learn more about how our restaurant POS can optimize your payment processes and ultimately drive growth.

FAQs

What's the basic EFTPOS meaning for a new cafe?

EFTPOS stands for Electronic Funds Transfer at Point of Sale. For your cafe, it's the secure system that lets you accept debit and credit card payments. It consists of the payment terminal (the machine), software, and a bank connection to process transactions instantly, providing a crucial way to get paid beyond just cash.

Can I legally add an EFTPOS surcharge for customers?

Yes, in Australia, you can add a surcharge to cover the cost of accepting card payments. However, the law (enforced by the ACCC) states that the surcharge must not be more than what it actually costs your business to process the payment. You cannot profit from it. Clear signage informing customers of the surcharge is also essential.

What is an integrated EFTPOS system for a restaurant?

An integrated EFTPOS system directly connects your payment terminal to your Point of Sale (POS) system. When a bill is finalised on the POS, the exact amount is automatically pushed to the EFTPOS machine. This prevents keying errors by staff, speeds up service during busy periods, and makes your end-of-day reconciliation much faster and more accurate.

Which EFTPOS machine is best for my food truck?

For a food truck, the best option is a mobile or wireless EFTPOS machine. Key features to look for are a long battery life and reliable 4G or Wi-Fi connectivity to ensure you can operate anywhere. Providers like Square, Zeller, and Tyro offer compact, portable terminals that are ideal for taking payments on the go, often with simple pricing models suited for businesses with fluctuating sales.