September 22nd 2023.
What is a POS System?
A Point-of-Sale system, or POS, is a tool that allows businesses to process customer payments. In the past, these systems often consisted of cash registers, but they have quickly adapted to include a variety of physical and digital payment options. This includes credit cards, debit cards, and a range of online payment systems like PayPal, Venmo, Cash App, and Zelle.
POS systems also provide data about your business and sales performance. This data can be used to manage inventory, review employee performance, and improve the customer experience. To get set up with a POS system, businesses work with a POS vendor or payment management system. This usually comes with a fee and may include additional processing fees for card or electronic transactions.
How does a POS System work?
The POS system process consists of four key steps. First, a customer decides to buy your product. This is done either in-store by bringing an item to the checkout register, or online by adding the item to their digital cart and proceeding to check out. Scanning the item for sale removes it from inventory.
Second, the POS system calculates the price, including sales tax and fees. Third, the system processes the payment. For non-cash purchases, the system communicates with the system backing the customer's payment methods to transfer the funds electronically. For online purchases, the customer's card details are keyed in. The system then uses an electronic payment gateway to transfer the funds from their account into your system.
Finally, the transaction is finalized. The POS system records the sale in your transaction history and prints or sends a receipt to your customer. It may also include a prompt to sign up for loyalty programs.
What types of hardware and software do POS Systems include?
POS systems require both software and hardware. For online or eCommerce businesses, only software is needed. However, in-person businesses need a variety of hardware. This includes a cash register, a cash drawer, a card reader, a receipt printer, a barcode scanner, a connected mobile device, customer display screens, caller ID devices, coin dispensers, kitchen display screens, kitchen printers, digital menu boards, scales, and table-side ordering and payment devices.
The software is the backbone of the POS system and enables payment processing by facilitating the digital “handshake” between your system and the financial institution's system for your customer’s payment method. There are two main software options: on-premise and cloud-based. On-premise software gets installed on the physical systems present in your store or business location, while cloud-based solutions are compatible with all hardware options and are excellent for businesses using both online and physical sales channels.
What key features should I look for in a POS System?
When choosing a POS system, consider features such as sales reporting, inventory management, customer management, and employee management and reporting. Sales reports should provide a summary and detailed reports based on products, sales times, employees, total costs of times sold, retail amount, net profit, and gross margin. Inventory management should include the ability to generate or register serial numbers, scan and count products digitally, manage stock and product variations, track inventory levels, generate automatic purchase orders, and consolidate orders and purchases.
Customer management should include a built-in CRM or an integration with your current CRM to store customer data. This should attach the transaction to the customer and add it to their transaction history. Employee management and reporting should allow you to add employees to the system, track how many sales an employee processes during their shift, and track sign-ups for loyalty programs or store credit cards.
What is a POS System?
A Point-of-Sale (POS) System is an electronic device that allows businesses to process customer payments. Over the years, POS systems have evolved from the traditional cash registers to include a variety of payment options. Now, customers can pay with credit cards, debit cards, and various online payment systems.
Beyond processing sales, POS systems provide valuable data about your business and sales performance. This information can be used to manage inventory, review employee performance, and improve the customer experience. To get set up with a POS system, businesses typically work with a POS vendor or payment management system. This may come with a fee, plus additional processing fees for card or electronic transactions.
How does a POS System Work?
The POS system process consists of four main steps. First, the customer decides to purchase a product. For in-store purchases, the customer brings the item to the checkout register and the cashier enters the product into the POS system. For online purchases, the customer adds the item to their digital cart and proceeds to check out. Once the item is scanned or entered, it is removed from inventory.
The next step is for the POS system to calculate the price, including sales tax and fees. Then, the system processes payment. In-store customers can pay with cash, card, or mobile, depending on available payment methods. Online customers key in their card details and the system uses an electronic payment gateway to transfer funds into the business’s system. Finally, the transaction is finalized and a receipt is printed or sent to the customer.
What types of Hardware do POS Systems include?
The hardware required for in-person businesses varies depending on the business’s needs. Typical POS hardware includes a cash register, cash drawer, card reader, receipt printer, barcode scanner, and a connected mobile device. There are also some additional hardware add-ons that could be used, such as customer display screens, caller ID devices, self-serve kiosks, coin dispensers, kitchen display screens, kitchen printers, digital menu boards, scales, and table-side ordering and payment devices.
What Software do POS Systems include?
The software for a POS system is the backbone of the system. It facilitates the digital “handshake” between the business’s system and the financial institution’s system for the customer’s payment method. The two main software options available are on-premise and cloud-based. On-premise software gets installed on the physical systems present in the business’s location and the sales data and information are stored locally. Cloud-based software is less expensive and can be accessed from any device with an internet connection.
What key features should I look for in a POS System?
When choosing a POS system, it’s important to look for features that will help manage business operations. Sales reporting is one of the most important features, as it should be able to produce at-a-glance reports as well as detailed reports based on products, sales times, employees, total costs of times sold, retail amount, net profit, and gross margin.
Inventory management is also a must-have feature. The POS system should be able to generate or register serial numbers for products, scan and count products digitally, manage stock and product variations, track inventory levels, provide updates when inventory is running low, and generate automatic purchase orders for best-selling items.
Finally, a POS system should have features for customer management and employee management and reporting. The customer information should include identifying and demographic information as well as a loyalty or rewards system. The employee reports should track how many sales were made during a shift and the system should be able to track sign-ups for rewards programs or store credit cards.
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