Starting a business is a lot of work, and one of the most complicated parts is how to build a POS system that can accept customers’ payments. If you’re new to building these systems, it can be a daunting task. Where do you even begin?

In this guide, we’re going to walk you through everything you need to know about how to build a POS system for your small business. From software to equipment, we’ve got it all covered.

How to Build a POS System

The ka-ching sound of the cash register is music to your ears. You’d love to hear it all day and all night.

A POS system is an all-in-one solution for managing your business. It not only helps you run the day-to-day aspects of your operations but also gives you the tools you need to grow.

A point of sale (POS) system is an indispensable tool for any business in the retail sector, the hospitality and service industries, or wholesalers. The global demand for these systems is set to grow by 3.5% annually, so the time to invest is now.

There are many different types of point-of-sale (POS) systems available today, and many of them are affordable and fit for businesses of all sizes. In this article, we’ll tell you how to create your own POS system for your business.

Point-of-sale systems provide a variety of functions for merchants, such as ringing up sales, processing returns, and totaling daily revenue. Additionally, POS systems offer merchants other features such as inventory tracking, customer relationship management tools, and streamlining sales with online integration.

Over the last decade, point of sale systems have evolved from clunky, expensive, and cumbersome on-premises solutions into lightweight, affordable, and user-friendly cloud and mobile applications. They now go beyond retail businesses.

What is a POS System?

A point of sale (POS) system is any hardware or software that records sales transactions. Restaurants use POS systems for tracking food inventory, taking orders, and calculating taxes.

Bar and nightclub owners often use POS software for keeping track of drink recipes, managing tabs, and accepting credit card payments.

Retailers and other businesses use a POS system for ringing up customers, printing receipts, and managing product inventories.

How Does POS Work?

When creating a point of sales (POS) system for your small business, it’s important to consider all the possible interactions that might occur. One common example is when customers check out at the cash register.

When a customer is ready to checkout, the cashier will scan each item’s barcode. Once all items have been scanned, the cashier will select the payment method and complete the sale. A receipt can be printed or emailed to the customer.

When you scan an item at the POS terminal, it gets deducted from inventory and added to your sales reports. This lets you keep track of what’s selling well and what needs to be restocked.

The transaction data, order information, and any discounts are sent directly to the Analytics Dashboard.

In the olden days, merchants had to spend a lot of time and effort trying to figure out what business strategies were successful. Now they can get insights into their businesses with just a few clicks of a button.

That is the power of point of sale.

POS Automation

In the past, sellers would spend a lot of time issuing and confirming purchases, calculating balances, and completing other routine operations. Thankfully, this process has been greatly simplified now.

When the cashier in the supermarket scans the product barcode, the POS system is automatically notified of the purchase. The customer then has the option to pay for the purchase using a bank terminal or in cash.

All you need to do is click a few buttons and the process will happen automatically.

What is happening behind the scenes?

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The above image shows how a business point of sale system works. We’ll explain how it works in simple language.

Payment. The client pays for the product with cash or a card. The POS system is integrated with the payment terminal, so the money is transferred to the seller’s account immediately. No need to count money and do other things manually — the machine will do it for you.

Receipts and checks. After the purchase is complete, a check or receipt is printed out automatically. You can customize them according to your needs and requirements: add a company logo, slogan, etc.

Now you know how business POS solutions work in general terms.

When a product’s barcode is scanned by the POS system, the corresponding product information is automatically transferred to the cash register program. This includes the price, markdown, and any possible discounts. The POS system then generates a sales check for the employee to give to the customer. This makes it quick and easy to ring up customers without having to manually input prices for each product.

The program is designed to issue the correct products, generate sales checks, and so on. The employees just need to accept payment from the customer and give them the products.

Now, let’s talk about how POS systems work in detail.

POS systems are used to take customer payments in a variety of businesses. First, the customer swipes their card over the terminal’s reader. The card data is then sent to the POS system, which contacts the PSP (Payment Service Provider).

The PSP reaches out to the bank to initiate the transaction authorization procedure (which bank depends on the type of credit card). The buyer is now prompted to enter a PIN to confirm the transaction. If everything goes well, an authorization code is sent to the POS system, and the buyer is informed that the payment was successful.

The POS system automates various tasks in a retail setting, such as checkout and accounting. It also connects to back-office systems, like warehouses and HR departments. This allows for a streamlined workflow and easy data exchange between different parts of the business.

The data flow between these components is constant, typically through a cloud server.

A cloud server is not the only way to process POS data. There are also other options like on-premise POS solutions.

How to Build a POS System for Your Business

Your point of sale (POS) system is only as useful as the equipment it’s running on. You can’t just use any cash register, scanner, or credit card reader. You need to find compatible hardware and software.

The companies that make point-of-sale systems build their programs to interface with specific hardware and protocols. This lets business owners get the most value out of their investment by pairing their system with the components that are designed to work with it.

Many software programs offer bundles that provide you with all the equipment and tools you need to fully utilize their features.

Open-source software has to be compatible with the minimum system requirements.

The type and number of equipment you will need depends on your business but can include iPads or tablets, a touch screen or display, a scanner, a receipt printer, an electronic drawer, a label printer, a credit card reader, and a weight-scale for weighed products.

 With all of these parts, your establishment will be well on its way to running efficiently.

Is POS Software Development Necessary?

Building your own POS system from scratch gives you a chance to tailor the solution exactly to your business needs.

Leasing or buying a ready-made solution may be appealing for those just starting out, but in the long run, it is more reliable and cost-efficient to build your point-of-sale system.

The main benefits of doing so are that you own the product code and can use it as a SaaS solution, minimizing the risks of data breaches (since no third party owns your sensitive data), and having full control over the software’s design, user experience, and workflows.

You also get to choose which technologies to use.

It is important to do your research and take your time when deciding on which POS system to invest in for your business.

Re-Engineering Legacy POS Systems

There are times when it’s justified to go back to an old system that still has business value.

There are several reasons why an organization might need to modernize its legacy applications. These systems may be critical to business operations, but using outdated technology can create some problems. Modernization can help to improve performance, security, and compliance with industry standards.

Re-engineering a legacy POS system can be a daunting task, but it is often necessary to keep up with the changing needs of businesses. There are many reasons why re-engineering may be necessary, such as the age and fragility of the system, lack of support, or evolving business needs.

However, with careful planning and execution, re-engineering can be successful and provide significant benefits for businesses.

The system might not be able to be maintained, supported, or improved because of poor architecture, outdated technology, bad design, or it’s just become a huge mess over time.

Many business owners do not put enough emphasis on updating their IT systems. While the initial costs of doing so may be high, the indirect costs can be even higher.

There are several reasons why you might consider re-engineering your point of sales (POS).

For instance, maintaining your legacy software can quickly become more expensive than the initial cost of developing it.

Failing to adhere to industry standards could also lead to hefty fines.

Outdated technology can also hinder your long-term profits and competitive edge.

Lastly, re-engineering your POS can increase efficiency by up to 50%.

What are the Key Benefits of POS Systems?

Not everyone needs to create their own POS system. There are cheaper, easier ways to go. If you need a POS system for your business, it might be better to invest in an off-the-shelf solution or use a bunch of different, cheaper consumer apps.

Get Valuable Business Insights

Do you want to be able to see your business from every angle? While those who use legacy point-of-sale software struggle to get a complete picture of their data, you can make informed decisions with 360-degree reporting and analytics. Having this information is crucial for business growth.

Many reports are great, but the right ones are even better.

Your POS system can be customized to provide you with insightful reports on sales performance, employee productivity, and inventory management. This will give you the ability to make data-driven decisions that can improve your business.

Streamline Your Business Processes

You can use your point-of-sale system to integrate and automate other key processes in your business.

New software makes it possible to rotate customers faster in a restaurant, check out more easily in retail, access data in real-time for customers and employees, and manage the back office more conveniently with accounting modules integration.

Accurate information with no more guesstimates means that you will have less lost data or costly human error. This also means that you will have the right amount of supplies on hand and won’t overstock or understock your inventory.

The system tracks your inventory and submits orders to suppliers automatically, so you can be confident that you will always have the supplies you need.

Creating an effective POS system is a key factor in ensuring your customers are satisfied.

Improve Customer Service

How can you go above and beyond for your clients? Use your point of sale (POS) system and customer databases to provide special discounts, membership programs, and personalized services for your best customers. By doing so, you’ll create brand loyalty that keeps them coming back!

By understanding your customers better and fulfilling their needs, you’re guaranteed to succeed.

Integrating with third-party applications makes marketing much easier.

Increase Employee Satisfaction

It’s no secret that happy employees lead to a thriving business. However, managing employees can be quite a challenge.

To develop a POS system that can orchestrate employee work schedules, it is necessary to create profiles for employees with their credentials, access to the system, incentives, and reward programs.

Boost Your Competitive Advantage

A custom POS system is a great investment for any business looking to take its operations to the next level. By streamlining processes and increasing efficiency, a custom POS system can provide a significant return on investment through increased cash flow, employee retention, and customer loyalty.

The cost of inaction is just as high as the cost of taking action. Doing nothing has consequences just as much as taking action does.

Conclusion

Now that we’ve gone over the basics of how to build a POS system, let’s go over some key points to remember.

When creating your restaurant’s point of sale (POS), it’s important to keep business goals in mind. Your point-of-sale (POS) should be aligned with your goals, including your user interface (UI), back-end, and functionality.

When creating a digital commerce solution, you should involve your operations, administration, and IT teams. You should also do research, and choose a development partner based on their experience, cost, and delivery time.