The instance at which a retail transaction occurs is termed as the point of sale (POS) or point of purchase (POP). At the point of sale, a shopkeeper calculates the amount received by the customer. The shopkeeper then indicates the amount, might also prepare an invoice for the customer (which may be a cash register printout), and also indicates the options for the customer to make payment. Additionally, it is the time when a customer pays a shopkeeper in return for that product or following the completion of a service. The merchant after confirming the payment generate an invoice from the system. Receipts / Invoice are typically printed, although they can alternatively be dispensed with or transmitted electronically.

What is POS System?

A merchant may use a variety of devices, like weighing scales, barcode scanners, and cash registers, to calculate the amount payable by a customer. It can be the advance “POS cash register“, which is sometime also called “POS system“). Payment terminals, touch screens, and other hardware and software alternatives are available for such transactions.

Due to the fact that it serves as both a point of sale (POS) and a point of return (POR) or client order, the point of sale is commonly referred to as the point of service. Software for POS terminals may additionally have capabilities for further functionality, such as inventory management, CRM, financials, or warehousing.

What is a POS Transaction?

POS stands for Point of Sales. POS transactions usually occur whenever a buyer pays a certain amount offline or online to purchase goods from a merchant. The purpose of POS is to monitor and record all transactions between a buyer and a seller.

Features of Point of Sale Software

  • Create and Manage Customers Record
  • Add Products / Services
  • Purchase Stock
  • Manage Stock
  • Sale Stock
  • Record and Manage Business Expenses
  • Keep Employees Data and Manage their records ( Personal Information, Salary Records, Attendance Record )
  • Generate Profit / Loss reports (On Daily, Weekly & Monthly Basis).
  • Generate Sale reports.
  • Manage Upcoming and expire stock updates.
  • Manage Customer, Employees and supplier accounts.
  • Total Barcode System
  • Sale taxes integration

Some Examples of POS Transactions:

The best example of a real-life POS transaction would be at a supermarket. For instance, while you’re at a retail chain, you pick up a few goods and proceed to the checkout counter. At the checkout counter, the supermarket staff scans your chosen products and creates a receipt or a bill. Then, whenever you pay for those items with cash or a card, a POS transaction occurs.

How does a POS system work?

A point-of-sale system helps receive payments from customers and also 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 might also use a POS system that accepts offline payments, making it easier for the retailers and the customers to complete the transaction even without an internet connection.

Customers are guided by a POS system through a series of steps to make a successful purchase. This is how the process works.


Step 1: Customer picks the product or the service

This is the time when the customer adds your product or service to the shopping cart and gets ready for the checkout process.

Step 2: Point of Sale system price the items

The POS Software System computes the cost of the items in the shopping cart, including sales taxes and add discounts on them discounted products. POS software also identifies customer loyalty points, promo codes, and discount vouchers that customers might have, and calculates the final price accordingly.

Step 3: Customer pays you the Price

Customers make payments with their credit card, debit card, loyalty points, gift card, or cash to complete the transaction. It depends on the mode of payment chosen by your customer. The transaction must then be authorized by the customer’s bank.

Step 4: Finalize the Point of sale POS transaction

After accepting the payment, the POS machine generates a virtual or printed Invoice. POS machines that are compatible with your accounting system will then share this data to complete the entries in your financial records (In accounts Module).

What are the various Kinds of Point of Sale POS system?

POS Apps 

POS Apps are cloud-based applications that can be downloaded onto any device that supports them. These are used by the businesses that run on a strict budget, and require a versatile and portable point of sale system

Mobile POS Systems

Software system accessible on Mobile Phones. These Mobile POS Systems are used by 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. It is used by the businesses that seek to expedite the ordering and checkout processes

Cloud POS Systems

Systems that are totally hosted online and use cloud storage used by the 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 & also used by the 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. These softwares are used by Omnichannel retailers, who also need to sync stock levels.

Self-Service POS Systems

System that allows customers to scan and pay for their own merchandise or service used by the Quick-service businesses with self-service checkout options.

What components are commonly included in a POS system?

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 collection. However, if you accept physical payments (cash on delivery or on-the-spot cash payments), you may require a register and a credit card reader. Here’s an overview of common types of POS hardware and software.

Hardware components of a POS system

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.

Card reader
Enables customers to pay with their credit and debit cards without any hassles.

Cash drawers
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.

Barcode scanners
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.

Software features of a POS system

POS systems offer a variety of features including payment processing, customer data management, and inventory level tracking.

Payment processing
Integrates credit cards, debit cards, e-wallets, internet banking, and other modes of payment into the checkout process on the POS system.

Inventory management
This feature in POS systems tracks the stock level and stores key product data.

Employee management
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.

What are the benefits of point of sale systems?

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.

Multiple payment options

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.

Automates tasks

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.

Provides data insights

POS systems collect a plethora of data about your customers and enable you to make informed decisions about your inventory, marketing objectives, and operations.

Increases accuracy

Automation helps reduce errors in recording transactions and collecting payments, thus making the process more efficient and accurate.

Saves time

POS systems allow you to save time on administrative tasks, checkout processes, and other clerical workflows.

What to look for while choosing a POS system?

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:

  • Do a thorough quality check of your system, identify shortcomings, and list out the additional features that you’ll need.
  • While searching for the best POS system, make sure to consider factors such as integration capabilities with existing software, smooth user interface, inventory tools, scalability, and price.
  • Research about the different POS systems available in the market today and check out user reviews via online and offline channels. Enquire with other business owners about the POS systems that they use and take their feedback.
  • Explore various solutions, take demos, and narrow your choices down to the ones that fall in your budget range.

Here are some of the important questions to ask the vendor while choosing the POS system for your organization

  1. Is the POS system able to integrate with my current software?
  2. What payment methods are accepted by the POS system?
  3. What is the total cost of the software?
  4. Will the POS system help with inventory management, discount tracking, and other company requirements?
  5. Is there any hidden fees?

Leave a Reply

Your email address will not be published. Required fields are marked *