A point of sale(POS) system denotes the place where customers make payments for the products or services that they purchase. This also includes the software and the hardware(e.g. POS terminal, smartphones, etc.) that facilitate the process of managing the buy, return and exchange transactions.
According to Grand View Research, the global market for point-of-sale terminals is estimated to reach $125.9 billion by 2027.
A POS system helps receive payments from customers and track sales. However, the processes and tools used may vary from business to business. Businesses use online platforms, mobile phones, and on-site servers or legacy systems to complete POS transactions.
Many businesses today use POS systems that only require a good internet connection. Such online POS systems are useful for quick and easy fund transfers and help make collections smoother. Some businesses may use a POS system that accepts offline payments, making it easier for the retailers and the customers to close the transaction even without an internet connection.
A POS system directs customers through a sequence of stages for a successful purchase. Here is how the process works.
This is when the customer adds your product or service to the shopping cart and gets ready for the checkout process.
The POS tool computes the cost of the items in the shopping cart, including sales taxes and discounts on them. POS software also identifies customer loyalty points, promo codes, and discount vouchers that customers might have, and calculates the final price accordingly.
Customers make payments with their credit card, tap card, debit card, loyalty points, gift card, or cash to complete the transaction. Depending on the mode of payment chosen by your customer, the transaction must then be authorized by the customer’s bank.
Once the payment has been accepted, the POS machine generates a digital or printed receipt. POS machines that are integrated with your accounting system will then share this data to complete the entries in your financial records.
In the table below, we discuss the different types of POS systems available in the market today.
|Types of POS Systems||Used by|
(Cloud-based applications that can be downloaded onto any device that supports them)
|Businesses that run on a strict budget, and require a versatile and portable point-of-sale system|
|Mobile POS Systems
(Software system with mobile accessibility)
|Traveling merchants or retailers who require mobile solutions for on-spot sales|
|Touch Screen POS Systems
(System that operates on different types of touch screens such as smartphone, tablet, and computer)
|Businesses that seek to expedite the ordering and checkout processes|
|Cloud POS Systems
(Systems that are totally hosted online and use cloud storage)
|Businesses that wish to get reports and POS data from any location|
|Open Source POS Systems
(Software that can be used and modified for free)
|Businesses that want to build proprietary systems using in-house technical expertise|
|Multichannel POS Systems
(System that enables a business to engage with customers through multiple channels)
|Omnichannel retailers, who need to sync stock levels|
|Self-Service Kiosk POS Systems
(System that allows customers to scan and pay for their own merchandise or service)
|Quick-service businesses with self-service checkout options|
All POS systems use POS software; however, not all companies require POS hardware. It all depends on your sales channel—online or retail. If your sales happen through your website, then you don’t need POS hardware for payment collections. However, if you accept physical payments(cash on delivery or on-spot cash payment), you may require a register and a credit card reader.
Here’s an overview of common types of POS hardware and software.
Some hardware devices associated with POS systems include barcode scanners, cash drawers, keyboards, and receipt printers.
Automatic money handling system that registers and calculates transactions.
Displays the list of the products or services that have been provided and enables functions such as checking sales reports.
Enables customers to pay with their credit and debit cards without any hassles.
Cash drawers are used to store the cash safely. POS software linked to a cash drawer can reduce fraud by tracking when the drawer is accessed.
Scannable barcodes readily capture the code and retrieve the pre-fed information about the product. It also helps confirm the pricing, stock level, and other information.
POS systems offer a variety of features including payment processing, customer data management, and inventory level tracking.
Integrates credit cards, debit cards, e-wallets, internet banking, and other modes of payment into the checkout process on the POS system.
This feature in POS systems tracks the stock level and stores key product data.
POS systems can track employee activity—data access, working hours, etc. It allows you to set security levels on the system to control sensitive information access.
Customer relationship management (CRM)
A CRM tool that integrates with the POS software can store customer contact information and purchasing history, and manage loyalty programs.
An efficient point of sale (POS) system ensures that all your transactions are complete and accurately recorded. It boosts productivity and saves time by automatically tracking transactions and matching the cash in the register with that in your records. Here are some of the significant benefits that POS systems provide to businesses.
POS systems provide their customers with multiple payment methods. This makes it easier for the retailers to receive funds sooner and also saves the customer the trouble of signing checks or invoices.
POS systems are capable of handling a wide range of operations including inventory management and staff scheduling. This frees up your time and allows you to engage in strategic activities such as customer relationship building.
POS systems collect a plethora of data about your customers and enable you to make informed decisions about your inventory, marketing objectives, and operations.
Automation helps reduce errors in recording transactions and collecting payments, thus making the process more efficient and accurate.
POS systems allow you to save time on administrative tasks, checkout processes, and other clerical workflows.
Always keep your business needs in mind, both current and forecasted, when choosing POS software and hardware. For example, mobile point of sales (mPOS) systems can be much more budget-friendly and easy to use than an on-premises POS system. If you want to allow customers to check out by themselves, have a self-service terminal with touchscreen options.
Keep in mind the market trends and look out for the application features when you choose POS software.
If you plan to purchase or upgrade your POS system, here are some pointers to help you make a good decision:
Here are some of the important questions to ask the vendor while choosing the POS system for your organization
The leading POS systems not only help complete payment transactions but also offer real-time reports that can be accessed on the go via a mobile app or a website.
Point of sale or POS transactions refer to the location and channel where a buyer pays the seller. It can be offline or online.
A POS system costs between $3,000 and $10,000. However, the final POS pricing is determined by the type of POS hardware, software, and level of customization that you request for.
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