July 15, 2024
The Basics of a Point of Sale System (POS)

Point of sale (POS) can be referred to as a check-out or cash wrap and is usually the location in a store or restaurant where transactions for the exchange goods and services occur. A point of sale system typically refers to the physical electronic hardware and peripherals that are used to conduct a transaction. This hardware can include a cash register, a dedicated computer or even a mobile smart device such as a tablet computer. Value Added Resellers (VAR) interchangeably use the term POS when they discuss the hardware and the checkout location. The credit card industry adds to the confusion. Merchant services providers who process credit card transaction and their Independent Sales Organizations (ISO’s) will refer to standalone credit card terminal as a POS as well. A POS in this sense is only the peripheral that reads the credit card, sends the transaction data between the store and credit card processor and may issue a receipt once approved.

The first POS hardware was a mechanical cash register invented by a Dayton saloon owner named James Ritty in 1879. The purpose was to keep employees and customers honest. It is hard to find a mechanical cash register today; the majority of POS systems are electronic, meaning they use an electronic cash register or computer system. Electronic POS is sometimes called ePOS. Electronic cash registers help streamline some of the end of day calculations that shop owners need to process on a daily basis. Realistically they are only used at shops that haven’t automated, need a backup system or don’t process many transactions on a daily basis.

The POS System is hardware which is combined with POS software and peripheral devices. This hardware helps a store clerk or associate manage the sales process. At a basic level POS software manages the transaction calculations. However, POS software is quite scalable and modules can be added for accounting, inventory and even customer relationship management (CRM.) Value priced software choices are available that can give a small shop owner some of the tools the large fortune 500 retailers use.

POS peripherals are devices like:

Receipt printers

Provide a physical record of the transaction

Magnetic stripe reader (MSR)

Automate the entry of credit card, driver’s license or loyalty card information

Bar code scanners

Automate the entry of information found on products, loyalty cards and coupons. This information is referenced in Universal Product Codes (UPC) and Quick Response (QR codes).

Cash Drawer

A drawer connected to the POS used to safely store cash and coins.

POS Keyboard

Typically is retail hardened keyboard built to stand up to the constant use in a retail environment and is used to enter customer, product or service data. Many times it will have the MSR built in. Many large stores use mechanical keyboards which are rated for higher use than a standard consumer keyboard.

Signature Capture

Used to save an electronic record of a customer’s signature

Electronic Scales

Automate data entry of weight information

Computer Display

Used as a computer display to show information. May have touch screen technology.

Typically large companies have built or customized the hardware, software and peripherals to fit their specific needs. The goal is to process transactions in the quickest and most accurate framework in order to keep their customers happy, associates trainable and accounting accurate.

Small and Medium businesses (SMB retailers) typically buy off the shelf hardware bundles with software customized for their industry vertical. Today this software no longer needs to reside on a computer in the store it can be hosted on a cloud and sold under the software as a service model (SaaS.)

Mobile POS is now available that keeps POS users from being tied down to a specific location in a store. Mobile POS devices allow for some or all of the functionality of both hardware and software contained in a traditional point of sale system on a device that fits in the user’s hand.

POS systems have come a long way since 1879 and will continue to change adding both features and benefits. In the end they will continue to help store and restaurant owners manage and measure their performance, alleviate rote work and increase customer satisfaction.