Australia’s payment sector has shifted from being heavily reliant on cash to being almost entirely digital in the span of a generation. Today, businesses and customers expect money to move quickly, securely, and with as little friction as possible. Electronic funds transfer (EFT) payments make that possible, from instant PayID transfers to BPAY bills. Below, we’ll explain how EFT payments work in Australia, what types of EFT payments are available, and the advantages and limitations of this payment method.

What’s in this article?

• What are EFT payments?
  
• How do EFT payments work in Australia?
  
• What types of EFT payments do businesses commonly use?
  
• What are the benefits of using EFT payments for Australian businesses?
  
• What challenges or limitations exist with EFT payments?
  
• How do EFT payments compare to alternative payment methods in Australia?
  
• How Stripe Payments can help
  

What are EFT payments?

An electronic funds transfer moves money between bank accounts electronically. The payer gives their bank permission through online banking or a digital agreement, and the funds are sent electronically to the payee. In Australia, EFTs are used for direct debits for subscriptions, direct credits for payroll, BPAY bill payments, instant PayID transfers, and more.

It’s easy to confuse EFT with eftpos, but they’re not the same thing. EFT is a general term for electronic transfers, while eftpos is a specific network that routes digital payments through point-of-sale (POS) terminals. An eftpos card purchase is one type of EFT; other examples include a BPAY bill payment and a PayID transfer.

The process is the same for EFT and eftpos: data moves across secure banking networks, accounts are verified, and funds shift electronically.

How do EFT payments work in Australia?

EFT payments work differently depending on which network is used: the Bulk Electronic Clearing System (BECS), the New Payments Platform (NPP), BPAY, or eftpos.

BECS is reliable but slower, which makes it a good fit for bulk, recurring payments. BECS Direct Debit is the long-standing batch system used for subscriptions, utilities, rent, loan repayment, and insurance. Transfers don’t run on weekends or public holidays.

The NPP is faster and available 24/7. It offers real-time settlement in seconds, with space for detailed payment descriptions. The NPP powers services such as PayID, which uses phone numbers or emails instead of bank account details, and PayTo, a modern alternative to direct debits.

BPAY transfers are reliable but tied to daily cutoff times and business day schedules. They’re largely used for bill payments. Meanwhile, eftpos payments are generally used in retail settings, either in person or online.

Aside from the specific network that’s used, every EFT in Australia follows the same general process.

Here’s a closer look at it:

• Initiation: The payer starts the process by entering account details in online banking, authorizing a direct debit, tapping a card at checkout, or selecting bank transfer.

• Verification: The bank checks that the account is valid and that funds are available. With newer systems such as PayID, this check happens instantly, before the money moves.

• Clearing and settlement: Banks exchange payment instructions and move the money. The speed at which this happens depends on which payment method is used.

• Notification: Once the payment is complete, both payer and payee receive confirmation.

What types of EFT payments do businesses commonly use?

Businesses in Australia have several EFT options, each suited to different needs. Here are the EFT payment types businesses can choose from.

BECS Direct Debit and Direct Credit

Direct Debit lets a business pull funds from a customer’s account on agreed dates. The legacy BECS system handles these debits in batches, which makes it a cost-effective option for recurring payments such as subscriptions, rent, utilities, and insurance. Customers authorize a direct debit request once, and payments continue automatically.

With Direct Credit, a business pushes funds into a recipient’s account. This is how payroll, refunds, supplier payments, and government benefits are typically handled.

PayTo

PayTo is the real-time version of direct debits. A business sets up an agreement with the customer, who authorizes it in their banking app. The agreement denotes the amount, frequency, and duration. Once it’s in place, PayTo enables instant payments with real-time fund checks and immediate confirmation. Customers can pause or move agreements between banks, and businesses get alerts about any changes.

BPAY

BPAY is the standard for bill payments in Australia. Businesses register as billers and provide a biller code and reference number. Customers pay directly through their online banking or mobile apps. It’s especially common for utilities, rates, and government services, although BPAY transactions follow banking cutoff times.

PayID

Traditional bank transfers rely on Bank State Branch (BSB) and account numbers. PayID, built on the NPP, replaces those with easy identifiers such as phone numbers, email addresses, and Australian Business Numbers (ABNs). Funds usually clear in seconds, which makes it simpler and faster to get paid.

Card payments

Card payments also fall under EFT. The eftpos network is central to in-person retail, because it routes card purchases directly from customer bank accounts. Today, eftpos also supports online payments and digital wallets.

Digital wallets

Wallets like Apple Pay and Google Pay let customers pay with a tap or a click, and they offer faster settlement and more flexibility for businesses and customers.

What are the benefits of using EFT payments for Australian businesses?

EFT has become the default for many businesses because it makes the process of moving funds faster, cheaper, and easier.

Here’s a closer look at the benefits:

• Speed and cash flow: Transfers settle faster than checks. And with PayID or PayTo, they clear in seconds or minutes. This predictability helps businesses keep cash flow steady without tying up working capital.

• Customer convenience: People can pay in the way that works for them, whether that’s through bank transfer, debit card, BPAY, or digital wallet. PayTo agreements go further and let customers manage recurring payments directly in their banking apps.

• Lower costs: Batch systems such as BECS are inexpensive. PayID and PayTo typically cost less than card payments, which carry interchange and scheme fees. BPAY tends to be more affordable for billers than credit card acceptance.

• Simpler reconciliation: EFT automatically generates digital records, which eases accounting and audits. NPP messages can carry detailed invoice references and minimize manual matching.

• Security: EFT relies on advanced encryption and fraud controls. PayTo mandates require explicit customer authorization and provide real-time alerts if an agreement changes. The ePayments Code adds consumer protections in cases of error or fraud.

• Scalability: EFT can be automated and scaled, from recurring debits to payroll. PayTo onboarding is fully digital, and batch files can handle thousands of transactions in one go.

The benefits of speed, lower costs, and built-in safeguards make EFT an important tool for businesses.

What challenges or limitations exist with EFT payments?

EFTs aren’t flawless, and businesses need to plan around their weak spots. Here’s what to watch for with EFT payments:

• Processing delays: BECS and BPAY don’t clear instantly. That can cause problems for businesses that watch cash flow closely.

• Errors and fraud: A mistyped BSB or account number can send funds to the wrong place. Recovery is sometimes possible, but the longer it takes to report the mistake, the harder it becomes to recover the funds. Scams add another layer of risk, with fraudulent actors tricking people into authorizing transfers.

• Bank fees and onboarding: Accessing BECS requires approval from your bank, and banks might charge for setup, file submissions, or account maintenance. Many businesses use payment providers to ease the process.

• Aging networks: BECS was designed decades ago. It operates only on business days and limits the data that can travel with each transaction. BECS is slated to be retired by June 2030, and businesses will need to migrate to NPP services before then.

How do EFT payments compare to alternative payment methods in Australia?

EFT is one of several major payment options in Australia, each with its own role.

Use of cash and checks has dwindled in Australia. Cash now accounts for only a small fraction of customer payments, and checks are almost never used. EFTs, which are faster, safer, and easier to track, have largely replaced them.

Buy now, pay later (BNPL) appeals to younger demographics and online shoppers. BNPL offers flexibility and simple checkout experiences, but usually at a higher cost to businesses. EFT lacks the financing element of BNPL, but it’s more reliable and costs less.

International wire transfers still dominate cross-border payments, but they’re slow and expensive. Domestic EFT payment networks such as the NPP don’t yet replace international options, although fintechs are attempting to bridge that gap.

How Stripe Payments can help

Stripe Payments provides a unified, global payment solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.

• Improve payment performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.