Banking : EFTPOS

EFTPOS is an abbreviation for Electronic Funds Transfer at Point Of Sale. It is the most convenient method of paying for most purchases. Items can be paid for by EFTPOS using a debit or credit card.

This is the procedure that is followed to make an EFTPOS purchase from a company :

1.  The cost of all of the items to be purchased is added up, usually on a computerised till.
2.  The customer presents his debit or credit card to the shop assistant.
3.  The card is swiped through a magnetic stripe reader to input the card number and expiry date into a computer.
4.  The card number, payment amount and identity of the company that has sold the goods is sent to the bank's computer using a modem and telephone line.
5.  The bank's computer will look up the customer's account details in an accounts database.
6.  If the card is valid and the customer has enough money in his account then the payment is approved.
7.  A voucher is printed with the card number and purchase details on it.
8.  The customer must sign the voucher to authorise a payment.
9.  The sales assistant will verify that the signature matches that on the back of the debit card.
10.  The money is transferred electronically from the customer's bank account to the company's bank account.

Sometimes the card number can not be read automatically from the card by the magnetic stripe reader. If the magentic stripe has been damaged then the sales assistant can enter the card number using a small keyboard.

If the card is not valid or the customer does not have enough money to pay for the goods then an error message is printed onto the voucher to indicate that the purchase has not been approved.

Hardware Requirements

To process EFTPOS purchases a company must have a small computer called an EFTPOS terminal. An EFTPOS terminal includes these hardware devices :

In large stores such as supermarkets the EFTPOS Terminal is usually built into the till. This means that the sales assistant does not have to type the payment amount into the terminal and the same printer can be used to print till receipts and EFTPOS vouchers.

Advantages and Disadvantages of Paying be EFTPOS

  For Customer Making Purchase For Company Selling Goods
Advantages
  1. The customer does not have to carry enough cash to pay for large purchases.
  2. It is faster to pay by EFTPOS than by cheque because the customer does not have to write out the cheque.
  3. The customer's bank statement will show the name of the company that an EFTPOS payment was made to.
  1. The company can check that the customer has enough money to buy an item before he is allowed to take it.
  2. The money can be transferred immediately from the customer's bank account to the company's bank account.
Disadvantages
  1. For small purchases it is usually quicker to pay be cash.
  1. To accept payment by EFTPOS a company must have special hardware to connect its till(s) to the bank's computer using a telephone line. Some companies do not have this facility.

GCSE ICT Companion 04 - (C) P Meakin 2004