EFTPOS and payments definitions

The 38 terms that turn up on a merchant statement or in a provider's quote, in plain English. Australian context, no jargon defended with more jargon.

Pricing and fees

Interchange fee: The fee the merchant's acquiring bank pays the customer's card-issuing bank on each card transaction. It's set by the card scheme (Visa, Mastercard, eftpos), not negotiable by the merchant, and is usually the single largest component of the cost of accepting a card.
Merchant Service Fee (MSF) / Merchant Discount Rate (MDR): The all-in fee a merchant pays their provider to accept card payments, usually a percentage of turnover. It bundles interchange, scheme fees and the provider's own margin.
Interchange Plus (IC+): A pricing model where the merchant is charged interchange at cost, passed straight through, plus a fixed, disclosed margin. Scheme fees usually sit inside that margin. More transparent than blended pricing.
Interchange Plus Plus (IC++): The most transparent pricing model: interchange **and** scheme fees are both passed through at cost, with the provider's margin shown as its own separate line. Suits merchants with the volume and appetite to audit their statement line by line.
Blended (flat-rate) pricing: One single rate applied across all card types, with nothing itemised. Simple and quick to quote, but the provider's margin is hidden and it can become expensive as a merchant's card mix shifts to premium cards.
Scheme fees: Fees charged by the card networks (Visa, Mastercard) to acquirers for using their rails, separate from interchange. On IC++ pricing they are passed through at cost; on other models they sit inside the provider's margin.
Effective rate: A merchant's true cost of card acceptance, calculated as total fees for a period divided by total card turnover, expressed as a percentage. The only fair way to compare providers, because headline rates hide monthly and per-terminal fees.
Surcharging: Adding a fee to a customer's bill to recover the cost of card acceptance. From **1 October 2026** the RBA is removing surcharging on eftpos, Mastercard and Visa payments, so merchants will no longer be able to surcharge those networks.
Premium / commercial cards: Rewards, business or corporate cards that carry higher interchange, so a merchant taking many of them pays more under blended pricing than the headline rate suggests.
Terminal rental vs purchase: Whether a merchant rents their EFTPOS hardware (an ongoing monthly fee that can outlive the device's value) or buys it outright. Long-running rentals are a common hidden cost.
Minimum monthly fee: A floor a provider charges if a merchant's transaction fees don't reach a set amount in a month. It penalises low-turnover or seasonal merchants.
Zero-cost / surcharge-free EFTPOS: A model where the customer surcharge is set to cover the merchant's fees, making acceptance "free" to the merchant. Its viability changes materially under the 1 October 2026 surcharge removal.

Routing and networks

Least Cost Routing (LCR) / Merchant Choice Routing: A feature that sends eligible dual-network debit transactions down the cheapest network — usually eftpos instead of Visa or Mastercard. Mandated by the RBA for card-present payments; often switched off by default, so many merchants pay more than they need to.
eftpos: Australia's domestic debit card network (now part of Australian Payments Plus). For most debit transactions it is cheaper for the merchant than the Visa or Mastercard networks, which is why Least Cost Routing exists.
Dual-network debit card: A debit card carrying two networks — Visa or Mastercard **and** eftpos (look for the eftpos logo). Because the transaction can travel on either, the merchant's terminal can route it to the cheaper one.
Scheme debit card: A debit card issued on the Visa or Mastercard network. If it is also dual-network, it can be routed to eftpos; if not, it can only travel on the scheme's rails.
Card scheme (network): The network that sets the rules and rails for card payments — Visa, Mastercard, eftpos, American Express. Schemes set interchange and scheme fees but do not usually deal with merchants directly.
Merchant Category Code (MCC): A four-digit code classifying a business by type. It can affect interchange rates and which scheme rules apply.

Who is who

Acquirer (acquiring bank): The bank or institution that holds the merchant's account, processes their card transactions and settles the funds to them. The merchant's side of a card payment.
Issuer (issuing bank): The bank that issued the cardholder's card and pays the merchant's acquirer (via the scheme) for the purchase. The customer's side.
Payment gateway: The service that authorises and processes online (card-not-present) payments, passing card data securely between the website, the schemes and the acquirer. The online equivalent of a physical terminal.
Payment Service Provider (PSP): A company that lets a merchant accept payments without a direct bank acquiring relationship, bundling acquiring, gateway and terminals into one account (e.g. Square, Zeller, Stripe).

Ways to take payment

Card-present (CP): A transaction where the card is physically presented at a terminal (tapped, inserted or swiped). Lower risk and lower cost than card-not- present.
Card-not-present (CNP): A transaction where the card is not physically present — online, over the phone (MOTO) or on a recurring basis. Higher fraud risk, usually higher fees, and outside the RBA's card-present LCR mandate.
EFTPOS terminal (machine): The device that reads a card at the point of sale and processes a card-present payment. May be countertop, portable (mobile) or integrated with a POS system.
Unattended terminal: A payment terminal that operates without a cashier — vending machines, parking, car washes, kiosks, laundromats. It needs specific hardware and certification many providers don't offer, so it's often hard to quote.
Tap on mobile (SoftPOS / Tap to Pay): Accepting contactless card payments directly on a smartphone, with no separate terminal. Suited to low-volume or mobile merchants for whom a dedicated terminal isn't worthwhile.
Contactless / NFC: Paying by tapping a card or phone near the terminal, using near-field communication, rather than inserting or swiping. The dominant method of in-person payment in Australia.
MOTO (Mail Order / Telephone Order): Card-not-present payments taken by phone or mail, where the merchant keys the card in manually. Higher risk and usually higher cost.
Point of Sale (POS): The system where a sale is completed — the till, software and hardware. **Integrated payments / integrated EFTPOS** means the terminal talks directly to the POS so amounts flow across automatically, removing keying errors.
Direct debit: Pulling funds directly from a customer's bank account on a schedule, common for subscriptions and recurring billing, rather than charging a card.

Money movement and risk

Settlement: The transfer of a merchant's takings from their processor into their bank account. **Same-day settlement** deposits funds the same day rather than the next business day, improving cash flow.
Chargeback: A forced reversal of a transaction initiated by the cardholder's bank, usually for a disputed or fraudulent charge. The merchant can lose the sale amount plus a fee.
PCI DSS: The Payment Card Industry Data Security Standard: the security rules every business handling card data must follow. Using compliant terminals and gateways reduces a merchant's own compliance burden.
Tokenisation: Replacing card details with a substitute "token" so the real number is never stored by the merchant, cutting fraud and PCI scope. **Scheme tokenisation** moves that token to the card scheme (Visa/Mastercard) itself, which can also shift a transaction into a cheaper interchange category.
Authorisation: The real-time check with the issuer that funds are available and the card is valid, holding the amount before the sale is settled.
Pre-authorisation: Placing a temporary hold on a customer's funds (e.g. a hotel or hire deposit) to be captured or released later.
Batch (settlement batch): The day's approved transactions grouped together and sent for settlement, typically once per day.

Now put the terms against real numbers

The comparison shows what each provider charges; the calculator turns it into your monthly cost.

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