Payment method spotlight: The evolution of eftpos in Australia

From kangaroos to Kyle Minogue, there are some things so embedded within Australian culture as to be iconic. When it comes to the Aussie payments landscape, that thing is eftpos. Unlike other regions in the world that might rely predominantly on credit cards or digital wallets, eftpos holds a unique place within the local payments ecosystem, and has become synonymous with everyday transactions. 

But since the introduction of eftpos in 1984, local payment method trends and consumer preferences have undergone drastic change. How has the scheme adapted, and how can businesses make the most of its latest developments like Card Not Present (CNP)?

Australia is a card-dominant country: as of 2022, , and 51% of all transactions are on debit cards. This share has been increasing year on year. Cash represented just 13% of local transactions – a huge decline from 70% in 2007. More than one third of Aussie consumers now tap their mobile device to pay. This is over two-thirds for those aged between 18 - 29 years.

Looking to alternative payment methods, PayPal is Australia’s most popular digital wallet, and was used by 9.8 million (43.8%) Australians in 2022. Australia is also the home to buy now, pay later (BNPL) methods such as Afterpay and Zip. Afterpay claims over 3.2 million people use their product in Australia (15.2%), while Zip processes about half of those volumes.

As Australia’s local debit card scheme, eftpos facilitates electronic debit payments both in physical stores and online, making it a popular and versatile payment solution for businesses.

eftpos Australia is the company behind the original EFTPOS – meaning electronic funds transfer at point of sale – system, introduced to Australia back in 1984. All eftpos transactions are processed in Australia using their infrastructure. Since then, eftpos has continued to adapt to the changing payments landscape – from a centralised network and contactless chip in 2014 to mobile payments in 2017. In 2020, eftpos introduced digital payment identity solutions with connectID, a solution built to keep Australians more secure in the digital economy.

In 2021 eftpos became part of (APP). The formation of APP brought together three of Australia’s leading domestic payment companies – BPAY Group, NPP, and eftpos – in an aim to deliver significant benefits to Australian consumers and businesses today and in the future.

As you probably know, the eftpos system allows consumers to debit payments directly from their bank accounts, thus eliminating the need for cash. The process is quick, secure, and convenient for both customers and businesses. The scheme is accepted at nearly 1 million terminals, has over 60 million cards in the market, and sees over 2 billion transactions a year (as at end of 2020). Australians commonly use eftpos branded debit cards for a wide range of transactions – from purchasing a cup of coffee at a local cafe to settling utility bills. It offers the simplicity of cash transactions but with the convenience of electronic payment methods. Standard interchange ++ fees apply to eftpos transactions. 

In Australia, debit transactions are typically made via one of the three main card scheme networks: eftpos, Debit Mastercard, or Visa Debit. Most debit cards are dual-network cards, co-branded as either Visa with eftpos, or MasterCard with eftpos. More than 35 million debit cards are contactless-enabled dual network cards, allowing a payment to be processed via either eftpos or one of the international networks. 

Now let’s look at the latest development to impact businesses processing with eftpos. As contactless payments continue to increase in popularity, innovation in debit payments are giving businesses more choice and flexibility in how these transactions are processed. One such update is least-cost-routing (LCR), also known as merchant-choice routing (MCR). LCR allows businesses to, among other benefits, route a payment via the debit network that costs the least in transaction processing fees, as well as automatically retry certain refused transactions.

Until recently, least-cost routing in Australia was limited to in-person debit payments made with a physical debit card, and online debit card transactions could only be processed via the international networks. As of mid 2023, however, LCR is available for online transactions following eftpos' new Card Not Present (CNP) functionality for online payments.

While the shopper experience like checkout flow and shopper statement won’t change from this new routing option, eftpos CNP is a significant development for any business accepting transactions in Australia. From cost-saving opportunities to regulatory implications, you can read more about the latest updates and what it might mean for your business in our recent guide to least-cost routing changes in Australia.

Staying abreast of local payment trends, even familiar ones, can provide a host of benefits to businesses – benefits that are often overlooked. From strategically routing transactions through the most cost-efficient network to improving speed and reliability, businesses can reduce their overall payment processing expenses, improve customer satisfaction, and streamline operational efficiency.

Ready to drive your businesses forward in the Australian market? Stay across the latest trends, innovations, and opportunities with the 2023 Australia Retail Report.