What Is a Point-of-Sale (POS) System & How Does it Work?

Some extent-of-sale (POS) system manages the purpose at which an merchandise or service is paid for in retail shops, eating places, bars, salons, and different companies that transact in-person gross sales. POS techniques are the software program and {hardware} that handle buy, return, and change transactions. The purpose of sale is often the register, checkout counter, or cash wrap. However it doesn’t at all times occur at a counter. The purpose of sale may also be curbside if a buyer is selecting up a click and collect order or on the gross sales ground by way of a cell POS.

However POS techniques do far more than deal with the checkout course of. Right here’s every thing you might want to find out about POS techniques—from how they work to how to decide on one which’s proper in your small enterprise.

How Do POS Methods Work?

As an alternative of clunky money registers, trendy POS techniques function on tablets, computer systems, and smartphones. Principally, POS techniques can work wherever your clients are—making it fast and straightforward to simply accept funds so long as you will have a steady web connection. Some additionally accommodate offline funds, during which case you don’t even want a connection.

how does a POS system work

It’s usually easy to determine how to use POS systems to course of transactions, however they accomplish that far more than that. As soon as the order is full, the POS works behind the scenes to assist replace on-hand stock ranges, observe buyer information, and extra.

behind the scenes of POS work

Frequent Options of POS Methods

When looking for the best POS system in your small enterprise, begin with figuring out which options you want—each as we speak and sooner or later. Bear in mind, the particular options your POS has relies on each the platform you select and the plan you join. Some types of POS systems have extra restricted and even specialised options—issues like desk mapping and menu administration for food-based companies, for instance.

POS system features

A POS system creates a fast and frictionless checkout expertise for each you and your clients. At checkout, simply add objects to a sale by way of barcode scanner or touch-screen entry. The whole will seem immediately with the choice so as to add coupons, loyalty factors, or different reductions on the contact of a button.

The checkout course of can also be an ideal time to assemble buyer data that results in information that serves them higher. Listed below are just a few methods POS techniques might help:

  • Acquire common buyer contact data
  • Create buyer profiles to retailer buy historical past
  • Acquire signups for electronic mail advertising newsletters and promotions
  • Enroll clients in loyalty applications

Bank card terminals imply cost reviews and reconciling tickets to gross sales. With POS techniques, it’s already finished for you—making your end-of-day easy and fast.

Plus, POS techniques make it straightforward to simply accept bank cards wherever you make a sale. Encryption strategies securely join card readers to smartphones and tablets for cell gross sales and allow you to simply accept on-line funds by way of your web site and enter phoned-in funds utilizing your POS system’s digital terminal.

Inventory management options are one of many high causes companies undertake a POS system. And now, principally each POS system allows you to create SKU numbers and retailer key product information, reminiscent of:

  • Provider data
  • Wholesale price (common, sale, and low cost costs for objects)
  • Variables (dimension or coloration)
  • Present inventory portions

Retail POS techniques usually have options to create and print barcodes and transport labels, in addition to observe orders for curbside pickup.

The very best POS techniques additionally provide superior stock options that enable you to handle buy orders and forecast product calls for. If you might want to observe stock wherever, a POS will enhance the method.

POS techniques observe each buy all the way down to the wonderful particulars, which aids immensely in your small enterprise’ advertising efforts. Monitoring buyer contact information, purchases, totals, cost strategies, and returns isn’t solely useful in total gross sales—but in addition focused advertising campaigns.

When who purchases what, who frequents your retailer essentially the most, and who the massive spenders are, your advertising efforts can get much more profitable.

E mail advertising campaigns are one of the vital in style advertising instruments inside POS techniques, as they construct and handle your electronic mail contact listing for you.

If you’re able to ship advertising emails with promotions, you should use your clients’ order histories to focus on these almost certainly to reply. With POS techniques, tying your order historical past to electronic mail campaigns helps you create far more practical campaigns. Some additionally provide options for promoting on social media platforms like Fb and Instagram, in addition to built-in loyalty and referral applications.

POS techniques provide quite a lot of worker administration instruments, too, with options for time monitoring, scheduling, commissions, inside reward applications, permissions, and extra.

Some additionally let you entry or combine full payroll administration so your time monitoring and payroll instruments are in a single automated system. Some techniques provide this function immediately, whereas others provide this answer by way of third-party integrations.

POS techniques observe each sale intimately—even essentially the most primary reviews can inform you which objects are high sellers and sluggish movers, resulting in extra knowledgeable buying choices.

Gross sales monitoring additionally helps you pinpoint and predict seasonal upticks in sure classes or total gross sales so you’ll be able to plan your stock and staffing to satisfy your busy cycles. General, POS techniques make it straightforward to remain on high of retail data analysis.

A POS system that gives multichannel sales can join your in-store and on-line gross sales actions in a single handy, centralized system.

Many POS techniques combine with many on-line gross sales platforms to sync your gross sales, funds, clients, and even stock counts between the in-store system and on-line gross sales channels.

Advantages of POS Methods

POS techniques are designed to avoid wasting you time and improve productiveness.

  • Saves time: Whether or not you’re the proprietor or affiliate, POS techniques assist save time relating to managerial duties and the checkout course of.
  • Provides insights: POS techniques present a wealth of knowledge about your clients—which helps you make higher choices concerning your stock, advertising, targets, and processes.
  • Scales with what you are promoting: Usually, POS software program will at all times include well timed updates that enable you to keep forward of the curve as know-how inevitably evolves.
  • Automates the much less enjoyable stuff: From stock administration to worker scheduling, POS techniques deal with this give you the results you want so you’ll be able to focus in your extra essential to-do’s.
  • Will increase accuracy: If you don’t must enter costs and objects manually, the room for error will get smaller.
  • Gives versatile cost choices: Since most POS techniques include common updates, your small enterprise can provide the most recent and best cost strategies. A research by the Federal Reserve exhibits the steady decline of cash and check payments alongside an increase in debit, credit score, and digital funds.

POS {Hardware}

For brick-and-mortar small companies, you’ll want {hardware} that connects together with your POS system. The excellent news: The only of small companies solely want a linked machine (desktop or pill, for instance) and bank card reader.

POS Hardware

Listed below are just a few sorts of {hardware} to contemplate, however needless to say what you’ll want principally relies on the kind and dimension of what you are promoting:


Most registers are actually within the type of a desktop pc (with monitor), however many companies nonetheless use easy money registers. Money registers are usually helpful for many who solely want the naked minimal, as they already include money drawers and no different bells or whistles are wanted.

Related Machine

A tool like a pill or smartphone can simply take the place of a desktop pc. Tablets additionally can be utilized with a stand for ease of use.

Money Drawer

Money drawers aren’t only a secure area for money, however generally is a great spot to prepare and hold card cost receipts.

Receipt Printer

Nowadays, receipts will be emailed, printed, or neither. Receipt printers provide the skill to offer most well-liked choices in your clients and likewise assist you will have sources in your personal gross sales monitoring and administration.

Barcode Scanner

Barcode scanners not solely assist streamline the checkout course of, however it may additionally present your small enterprise the power to handle and observe costs, inventory ranges, and extra.

POS System Prices

Being able to streamline your transactions for each you and your buyer doesn’t have to return with a hefty price ticket. That’s the place understanding the distinction between server and cloud POS techniques is available in.

Server POS techniques are saved regionally and usually price greater than cloud techniques on account of setup and licensing charges. Some can even embrace upkeep and month-to-month charges, along with {hardware} prices.

Cloud POS techniques have decrease setup charges, however the month-to-month charges generally is a bit larger than server POS techniques. Nevertheless, there are reasonably priced (and even free) choices—like Square, for instance—that also include flexibility, safety, and ease-of-use.

The best way to find out how much you should pay for a POS system lies in what your small enterprise must thrive. Listed below are just a few inquiries to ask your self when deciding your price range:

  • Does this software program meet my wants?
  • Is it straightforward to make use of?
  • Does it save me time?
  • Ought to I lease, buy, or finance my {hardware}?
  • Will the software program and {hardware} scale with my enterprise?
  • Have I factored in bank card processing charges?
  • Ought to I pay month-to-month or yearly?

The right way to Select a POS System

First issues first: All the time contemplate the wants of your small enterprise, each now and sooner or later. Any POS system you select will solely be pretty much as good because the functionalities what you are promoting must thrive.

Listed below are the highest 10 issues to contemplate when selecting a POS system:


All the time have a look at the prices—whether or not they’re month-to-month, setup, or cost processing charges.

Subsequent in line is the price of the {hardware} chances are you’ll want. The very best POS techniques provide interest-free financing or installment cost plans on {hardware} and have a number of software program pricing plans so you can begin with an reasonably priced choice and improve as what you are promoting grows.

Ease of Use

POS techniques must be user-friendly and require little coaching for employees. A few of the greatest techniques have tutorial movies, neighborhood boards, and demos or coaching modes so new workers can get comfy with the system.

Cost Processing

Select a POS system that features both built-in cost processing or integration with in style cost processors.


Some techniques run on generic {hardware} like iPads or Android tablets, whereas others perform on proprietary {hardware} techniques. Proprietary POS {hardware} will be extra sturdy; nevertheless, it may’t be repurposed if you happen to change techniques down the road.

Stock Instruments

All POS techniques have some sort of stock monitoring, however the perfect ones provide real-time inventory ranges with automated alerts, buy order administration, and forecasting instruments.

Reporting and Analytics

A very good POS system affords insights on gross sales, stock, buyer, and worker information. A fantastic POS system additionally gives uncooked information, consists of an automatic reporting dashboard, affords tips about how you can learn and act on reviews, and options choices for exporting reviews.


The very best POS system grows with what you are promoting. For instance, you probably have a retail retailer however plan to promote on-line sooner or later, guarantee your POS system has an built-in ecommerce answer so you’ll be able to handle your entire stock and buyer information in a single place.

Plan on opening extra shops? Your POS system ought to be capable of handle a number of places centrally.


If you happen to depend on different software program for ecommerce, accounting, or payroll, select a POS system that integrates with these merchandise. Observe: Many POS techniques provide these options as effectively, so it’s potential to search out one software program that does all of it.

Buyer Assist

Guarantee your POS system affords dwell cellphone help throughout your regular enterprise hours so you’ll be able to at all times get assist instantly if an issue arises.

Person Evaluations

All the time learn consumer evaluations earlier than making a last resolution. And, if potential, discuss to enterprise house owners in your space to get their firsthand account.

Tip: In case you are a longtime enterprise seeking to swap to a POS system from a money register, it’s potential you’ll need to modify payment processors. Nevertheless, many techniques are prepared to barter processing charges for companies over a sure quantity. When testing completely different techniques, ask if they’ll match or beat your present charges.

What Does the Way forward for POS Methods Look Like?

Over the previous few years, there’s been a significant shift in how POS techniques haven’t solely advanced the checkout course of however can streamline enterprise duties behind the scenes.

However one among our largest takeaways for the upcoming yr is versatile achievement alternatives. Based on Retail Consulting Associate’s 2021 POS & Buyer Engagement Report, greater than half of retailers are prioritizing delivery and pickup options—noting that that is key for brick-and-mortar shops to implement to cut back ongoing income impacts from COVID-19 and different unplanned occasions.

Listed below are only a few methods we’ll proceed to see POS systems shape the future for small businesses:

  • Elevated flexibility for cell cost choices
  • Elevated entry to gross sales information by way of cloud know-how
  • Extra personalised advertising options
  • Information and analytics that result in extra knowledgeable buying choices
  • All-in-one options join in-person, on-line, and social media gross sales
  • Simplified {hardware} choices

Backside Line

POS techniques are a should for small companies, as they assist streamline purchases, join gross sales information to advertising efforts, present flexibility to clients, handle product stock, and supply instruments to assist handle your employees.

Now that what to contemplate—and the way a POS system works—hold these three suggestions in thoughts:

  1. All the time ask for a demo
  2. Check a number of POS techniques
  3. Speak to different small enterprise house owners

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