Overview
Electronic Funds Transfer at Point of Sale (EFTPOS) refers to the process of automatically debiting the purchase price from the customer’s bank or credit card account through a computer link between the retailer’s checkout till and the financial institution. The system typically requires the customer to possess a debit or credit card recognized by the retailer, and the transaction is authenticated using the customer’s Personal Identification Number (PIN) in the prevalent chip and PIN system. Many larger retailers also allow customers to withdraw cash as part of their purchase transaction, termed as ‘cashback’, which helps in reducing the amount of cash that needs to be counted, stored, and banked by the shop.
Examples of EFTPOS
-
Supermarket Purchases:
- A customer uses a debit card to pay for groceries, entering their PIN to authorize the transaction. The payment amount is instantly deducted from their bank account.
-
Retail Stores:
- A customer buys clothing and opts to get cashback. They pay using a credit card, entering their PIN, and an extra amount is dispensed as cash along with their purchase.
-
Restaurants:
- A diner pays the bill with a debit card, swiping it through the EFTPOS terminal and entering their PIN to complete the payment.
Frequently Asked Questions (FAQ)
What is EFTPOS?
EFTPOS stands for Electronic Funds Transfer at Point of Sale. It involves automatically debiting the purchase price from a customer’s bank or credit card, authenticated by a PIN.
What are the benefits of using EFTPOS for retailers?
EFTPOS minimizes the need to handle cash, reducing the risk of theft and management costs associated with cash handling. It also accelerates the checkout process.
How secure is an EFTPOS transaction?
EFTPOS transactions are secure as they require a Personal Identification Number (PIN) to authorize the payment, and card data is encrypted.
Can I get cashback with an EFTPOS purchase?
Yes, many larger shops allow customers to request cashback, which means they can get additional cash dispensed as part of their purchase transaction.
Do I need specific bank cards to use EFTPOS?
Yes, a recognized debit or credit card from participating banks or financial institutions is required to conduct EFTPOS transactions.
Related Terms
Debit Card:
A payment card that deducts money directly from a consumer’s checking account to pay for a purchase.
Credit Card:
A card issued by a financial company allowing the cardholder to borrow funds with which to pay for goods and services.
Personal Identification Number (PIN):
A security code used to validate electronic transactions, usually consisting of a 4-6 digit number known only to the user.
Cashback:
A service where customers can withdraw cash while making a purchase using their debit card at a participating retailer.
References and Online Resources
Suggested Books for Further Studies
- “Payment Systems: Design, Governance and Oversight” by Bengt Holmstrom and Jean Tirole
- “Principles of Payment Systems” by Richard A. Epstein
- “Direct and Electronic Payments: An Analysis and Prognosis” by Michael W. Grover
Accounting Basics: “Electronic Funds Transfer at Point of Sale (EFTPOS)” Fundamentals Quiz
Thank you for exploring the multifaceted concept of EFTPOS with us and challenging yourself with our quiz! Keep honing your financial expertise with our tailored content.
