What Is EFT Payment and How Does It Work?

Simply put, EFT (Electronic Funds Transfer) is a digital way to move money from one bank account to another, without needing cash, cheques, or paper forms. Whether you’re paying bills online, tapping your card at a café, or transferring money to a mate, you’re using EFT. It’s quick, reliable, and now a big part of how Aussies handle money every day, both in business and personal life.

Whether you’re a small business owner, a tradie, a café operator, or just someone trying to wrap your head around modern payment systems, this guide will give you the full picture.

Let’s unpack what EFT payments really are, how they work, and why they matter to both businesses and customers.

What Does EFT Stand For?

EFT stands for Electronic Funds Transfer.

In plain English? It’s any kind of payment where money is transferred electronically from one bank account to another—no need for cash or cheques.

You’ve probably used EFT without even thinking about it. Paying your phone bill online? That’s EFT. Getting your pay straight into your account? Also EFT. Tapping your card at the supermarket? Yep, that too.

Common Types of EFT Payments

Not all EFT payments look the same. There are several types that Aussies use every day, each suited for different situations:

1. Direct Debit

This is when you give a company permission to pull money from your account regularly—say, for a gym membership or energy bill. It’s a “set-and-forget” kind of payment.

2. Direct Credit

The opposite of a debit. Employers often use this to pay wages directly into your bank account.

3. BPAY

A popular Aussie method for paying bills. You use a biller code and reference number to pay directly from your bank account.

4. Online Bank Transfers

Transferring money to mates or paying invoices through your bank’s website or app? That’s an EFT too.

5. Card Payments (Debit/Credit)

Tapping, swiping, or inserting your card at a payment terminal is an EFT method.  It moves money electronically between your bank and the merchant, and is a key part of modern credit card processing systems. 

6. Mobile Payments (Apple Pay, Google Pay) 

These apps use your device to make EFT payments through your linked bank card.

7. OSKO Payments

Powered by the New Payments Platform (NPP), OSKO allows for real-time transfers, often landing in the recipient's account within seconds, even on weekends.

How Does an EFT Payment Actually Work?

Let’s break it down in a way that makes sense without techy jargon.

Step 1: You Start the Payment

You either swipe/tap your card, enter your banking details online, or set up a direct debit/credit arrangement.

Step 2: Payment Info Travels

The info (like your account number and amount) travels securely through a payment gateway or financial network.

Step 3: Your Bank Checks Things Out

Your bank makes sure you’ve got enough money in your account and verifies that it’s a legit transaction.

Step 4: Money Moves

If all looks good, the money is transferred electronically to the recipient’s bank.

Step 5: Confirmation

Both sides (you and the business or person receiving the money) usually get a notification or receipt.

Is EFT the Same as a Bank Transfer?

Pretty much! Bank transfers fall under the umbrella of EFT. The key difference is that EFT also includes things like card payments and BPAY, while “bank transfer” often refers to moving money directly between bank accounts.

So, all bank transfers are EFTs, but not all EFTs are bank transfers.

Benefits of Using EFT Payments

There’s a reason EFT is now the go-to method for moving money around. Here’s why it’s become so popular in Australia:

✅ Convenience

You can pay bills or transfer money without leaving your couch. No need to queue at the bank or post office.

✅ Speed

Some EFT methods (like OSKO) can move money almost instantly. Others may take a day or two, but it’s still faster than mailing a cheque.

✅ Safety

There’s no physical cash involved, which lowers the risk of theft or loss. Plus, banks have layers of security to protect your data.

✅ Record Keeping

EFT payments leave a digital trail, making it easier to track spending or sort your taxes come EOFY.

✅ Cost-Effective

No need to pay for envelopes, postage, or expensive merchant fees (in some cases). EFT can be more affordable, especially for small businesses.

EFT for Businesses: Why It Matters

If you’re running a business—whether it’s a coffee shop, a clothing store, or an online service—you can’t ignore EFT payments. In fact, most customers expect to have this option.

Here’s what EFT does for your business:

💳 Speeds Up Payments

Forget waiting for cheques to clear or cash to be counted. EFT means you get paid faster.

📊 Makes Accounting Easier

You’ve got a digital record of every transaction. This makes reconciliation, bookkeeping, and tax time a whole lot simpler.

💼 Improves Professionalism

Offering EFT options shows your business is up-to-date and customer-focused.

🛡 Reduces Security Risks

Less cash on the premises means fewer worries about theft or counting errors.

🌐 Enables Online Sales

EFT is essential for running an online store or accepting bookings via your website.

Things to Watch Out For

EFT is brilliant, but like anything, it’s not perfect. Here are a few potential hiccups to be aware of:

❗ Delays in Processing

Most EFTs are fast, but some (like standard bank transfers) may take up to 2 business days, especially over weekends or public holidays.

❗ Fraud & Scams

Cybercriminals are getting smarter. Always double-check account details, especially for large transactions. Businesses should use verified invoicing tools and strong passwords.

❗ Bank Fees

Depending on your bank and account type, EFT payments (especially international ones) might come with small fees.

How to Accept EFT Payments in Your Business

If you’re running a business and want to start taking EFT payments, here’s a basic checklist to get you going:

1. Open a Business Bank Account

Keep personal and business finances separate by opening a dedicated business bank account. Most Aussie banks offer low-fee or tailored business accounts.

2. Choose a POS System or Payment Processor

This is where a system like POSApt comes in handy. It connects with EFTPOS machines, manages your sales data, and helps keep track of everything.

3. Set Up EFTPOS Terminals

These are the card readers customers use to pay. You can set up EFTPOS through your bank or a third-party provider, depending on your business needs.

4. Offer Online Payment Options

If you’re selling online, set up a payment gateway like Stripe, Square, or PayPal. These allow you to accept EFT via card or bank transfer.

5. Display Accepted Payment Methods Clearly

Let customers know what you accept—Visa, Mastercard, OSKO, PayID, etc. It makes checkout smoother.

What’s the Difference Between EFTPOS and EFT?

Good question!

• EFT (Electronic Funds Transfer) is the broad term for any digital payment between bank accounts.
• EFTPOS (Electronic Funds Transfer at Point of Sale) refers specifically to card transactions made in-store using a card terminal.

So, when someone taps or inserts their card at your shop, they’re using EFTPOS—a form of EFT.

EFT in Australia: What Makes It Unique?

Australia’s banking system is one of the most advanced globally when it comes to digital payments. Here are a few Aussie-specific perks:

💥 OSKO

Launched in 2018, Osko allows real-time payments between most banks 24/7—even on weekends. Great for both businesses and customers.

🪪 PayID

This lets users receive money using their phone number or email instead of a BSB and account number. It’s safer and easier to remember.

💸 No-Cash Trend

Australia is rapidly heading towards a cashless economy, and EFT is leading the charge. Many businesses now run as card-only for convenience and security.

Final Thoughts: EFT Is Here to Stay

In a nutshell, EFT payments are an essential part of modern life—quick, safe, and downright convenient. Whether you’re paying your bills, sending money to a mate, or running a growing business, EFT makes transactions smoother and smarter.

And as tech keeps evolving, so will EFT systems—bringing faster, safer, and more versatile ways to move money. The key is to stay informed, use trusted providers, and keep an eye on security.

If you're a business owner looking to upgrade how you take payments, now’s the time to get serious about EFT. From smoother sales to better customer satisfaction, it’s one of the smartest moves you can make.

Need a POS system that supports EFT seamlessly?

With POSApt, you can integrate your point of sale with a range of EFTPOS machines, track transactions in real time, and offer your customers more ways to pay, without the hassle. It's the smarter way to run a business in today's digital-first world.