Debit cards are often compare to EFTPOS cards, and many debit cards have EFTPOS functionality.  However they are actually quite different.

EFTPOS stands for Electronic Funds Transfer at Point of Service and the money mostly comes from a standard bank account.  Debit cards are cards that use the credit card payment system supplied by providers such as Mastercard and VISA but are also tied to your bank account. This is the most important similarity.

What are the main differences

The first difference is that there is worldwide acceptance of debit cards.  EFTPOS cards are a home grown system that means that almost every EFTPOS accepting terminal is in Australia, although there are some in New Zealand too.  Debit cards on the other hand use the international credit card payment network and so are accepted at millions of terminals worldwide.

Another difference is that EFTPOS cards are slowly losing ground in the number of merchants that accept them within Australia. Even though they are losing popularity, they are still widely accepted.  It is cheaper for a merchant to simply maintain a credit and debit card terminal like Square.

Internet transactions and phone transactions are also possible with debit cards.  As debit cards use the credit card network, and internet shopping cart programs are designed to accept credit cards as a default for payments. Almost every site that accepts payment over the internet will be accepting debit cards.  EFTPOS at the moment is very restricted on transactions that are not face to face.

TIP: One way around this is to link your bank account to your Paypal account and shop online that way.

The cost to the consumer

Another difference is that the payment for use of the EFTPOS is by the bank or service provider, while with debit card payment is paid for by the shop. This is why there could be a potential surcharge on the total amount. These surcharges are capped at the cost price to the merchant. For many accounts there may be an unlimited or monthly quota of free transactions, an in effect these EFTPOS transactions would be free but on the more basic accounts each EFTPOS transaction may cost money.

Debit cards also offer greater protection against fraud.  This is because they are backed by international brands that have built up state of the art fraud detection and prevention systems.  There has been a growth in EFTPOS based fraud in the last few years as criminals have moved from credit cards to the relatively less sophisticated EFTPOS system.  If there is fraud most of the debit card providers will offer a zero liability policy that protects any card holder who lets the credit card company know in a timely manner of any unauthorised transactions.

There is also more chance of debit cards being accepted by merchants overseas due to the Visa and Mastercard logos. You’ll also have zero liability policies to help keep money protected.

So, debit card or EFTPOS?

So there you have it. These are the main differences between EFTPOS payments and debit card payments. The question is, will you hit SAV or CR?