The EFTPOS System

So now that you know who is involved and the terminology behind it, the next step is to learn about how the eftpos system actually works.

This is where it all begins:

When your customer decides to buy an item and chooses to pay for it by eftpos, you as the merchant would swipe their card through the eftpos terminal, the pin pad encrypts the customer’s PIN and allocates a transaction number.

The terminal then dials the network (either Paymark or Eftpos NZ) and sends information of the transaction; this includes the merchant number, terminal number, transaction number and the encrypted PIN.

The network relays the information to the appropriate bank (this is your customer’s bank) which in turn accepts or declines the transaction and returns the message to the eftpos terminal.

At the time the transaction takes place the money is automatically debited from the customer’s account if accepted.

It is important to understand the merchant will get all their funds deposited in one lump sum each day (during the settlement window). The banks temporarily “hold” these funds until the terminal is settled.