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What is POS? | The Definitive Guide to Point of Sale System

If you are a business owner, the chances are that you have dealt with POS systems before. Ahead of you is a comprehensive guide on what is pos.

A point of sale system is a suite of technology that retailers and restaurant owners use to manage their business. From ordering inventory, processing transactions, managing customers and staff- it’s the central hub for running any retail or food establishment.

Point of sale systems has been a massive help to those who want to open their retail store. It doesn’t matter if you are an entrepreneur with many business ventures or someone looking for a career change; POS has the tools to make your life easier.

  • What is POS?
  • What is a POS system?
  • What is a mobile POS system?
  • A POS system needs many different hardware components to function correctly.
  • What is a POS transaction?
  • What are the main features of a POS system?

Are you shopping for a new POS system?

We’ve created a free POS Buyer’s Guide that can help you plan your store growth and choose the right system for now, as well as in the future.


What is POS?

POS is an abbreviation for point of sale, which refers to any place where a transaction can happen. POS includes anything from product sales at retail stores or in-person services like hair salons.

When it comes to retail, the point of sale is usually at or near a cash register. If you’re in an old-fashioned diner where waitresses bring your food instead of ordering from a cashier, then that area by the cash registers would also be considered part of the point of sale.

For thosewithe a mobile POS, the entire store becomes an actual point of sale.


What is POS a system?

In other words, what is point of sale? Point of sale systems consists of two components: hardware and software. These tools allow merchants to take payments in popular methods and analyze their business with data on inventory management, employees, customers,s and sales.

Traditionally, what is POS?

Traditional POS systems are traditionally set up on-site, which means they require an in-store server and can only be used within a specific area of your store. Click To Tweet

That’s why you need to have all the necessary equipment at your front desk: computer, cash register, receipt printer scanner, etc.

In the early 2000s, a new technology emerged: cloud-based storage and computing. This advancement allowed for further development in POS technologies with mobility.


What is a mobile POS system?

Cloud-based servers have allowed retailers to access their POS system by logging in with any device, whether a laptop, desktop or tablet. The downside is that these devices can be lost or stolen easily.

What is a POS system in a mobile? A mobile POS system is perfect for the busy retailer who wants to manage their business from any device, at anytime.

Thank timeratization of great customer experiences

With Apple Pay, it is now possible for retailers to serve customers and process transactions from anywhere. This has resulted in shorter lineups at the cashier because people can pay with theirphonese instead of waiting for a clerk’s assistance. The customer experience that was once exclusive to big retail stores like Walmart or Target is now available everywhere.

I also found that mobile POS systems allowed me to sell at pop-up shops and trade shows, as well as festivals.

What are the benefits of a mobile POS system? 

  • Mobile checkout and payments
  • When I first began hiring salespeople, I just assumed pay andand bonuses would be enough motivation. However, people are not just motivated by pay.
  • A recent study found that high perform high-performing want real-time access to their performance data.
  • Advanced customer data 
  • One of the most important tasks as a business owner is to manage your employees. This includes scheduling and delegating work, making sure they are well trained in their position, and allowing them time for personal needs such as lunch breaks or coffee team runs.
  • Integrated payment processing
  • Now, I can manage my business anywhere with an internet connection.
  • Open up new stores, fast
  • Customer relationships are the most critical part oessential any They must be managed carefully to ensure success.

  what is pos

What hardware does a POS system need?

There are a few pieces of hardware for any retailer that you will need. For example, if your business is located in a mall or other large space with parking available on site then it might be beneficial to have an automated car wash system for convenience and cleanliness.

  • POS terminal
  • Credit card reader
  • Receipt printer
  • Barcode scanner
  • Cash drawer

1. POS terminal

POS stands for Point of Sale, and a POS terminal is the device that mobile point-of-sale software runs on.

Traditionally, a cash register was the only POS terminal. Nowadays m erchants can use any device with internet connectivity—a desktop computer, laptop, or tablet to do their work.

Many retailers opt to use tablets as a way of tracking inventory and customer profiles. The advantage is that the flexibility allows them to move around without being tied down.

2. Credit card reader

A credit card terminal is , chants’ devicea to accept payments with a debit or credit card. It can be either an ATM, POS system, cash register etc.

There are three ways a credit card can accept payments:

  • Reading the magstripe on a card (swiping)
  • When a card is swiped, the chip can be read by EMV
  • ApplePay and other mobile payment providers use NFC to accept payments from customers.

Most consumers prefer cashless payments. By 2025, Business Insider predicts that 75% of all transactions will be cashless. Why? Because the customer doesn’t have to wait in line and can spend more time browsing or purchasing additional items.

Choose a credit card reader that:

  • Prints or emails receipts
  • Takes any payment
  • POS integration is crucial for businesses that use POS systems.

3. Receipt printer

Consumers are still preferring to receive their receipts in paper form, so merchants need to offer this option.

Receipt printers come in different types.

Impact printer

Impact printers are also called dot-matrix or transfer printers. They use either wax, resin, or an ink ribbon to print text and images on paper fed into the printer similarly to computer printing with cartridges. The head makes contact with the stripes, which creates an impact against the form.

Impact printers are often used in kitchens because they can withstand higher temperatures without compromising the printing ability.

Thermal receipt printer

Thermal printers are the most common type of receipt printer used at point-of-sale. They use heat to imprint text or images against a special kind of paper, and they’re quiet, fast, efficient and cost-effective because it doesn’t require ink like other types.

Receipt printers can be connected to a merchant’s POS terminal with either USB or Bluetooth. Most providers of POS systems will also provide the receipt printer paper.

4. Barcode scanner

Retailers with a lot of inventory need barcode scanners to help them manage their stock and speed up the checkout process. The way you connect it is similar to how receipt printers are connected: either by USB or Bluetooth.

There are different types of barcode scanners.

1D barcode scanners

A scanner is used to scan barcodes on products in a store.

2D barcode scanners

A two-dimensional barcode scanner is used to scan more complex codes such as Data Matrix, QR Code, and PDF417. These are the most common types of 2D barcodes that can be found in a store or business front, with drivers licenses being one example.

5. Cash drawer

Most businesses need a drawer to provide for customers who still want to pay in cash. Different sizes are available and can accommodate any type of business. A register tray is an insert that goes into the cash drawer ,and it includes compartments for different denominations.

what is pos

The number of compartments in a cash drawer will vary depending on the size. A smaller room may only have four or five, while larger ones can go up to six to eight.

When it comes to cash drawers, they have two primary connections: USB or Bluetooth.

With Lightspeed, you can get everything you need with our wireless hardware bundle. It’s easy to set, up and most POS system providers provide a list of compatible equipment.


What is a POS transaction?

The point of sale (POS) transaction is the moment where a customer pays for goods and services. This can be done in any form, such as cash or credit card.

When you make a purchase at the register, either with your PIN number or signature, it’s usually authenticated by an employee before they can complete that transaction.

After the cardholder enters their PIN number or other security features, it travels through ATM networks to its destination-the issuing bank. The banks can either authorize the transaction based on what type of account is being used and whether there are sufficient funds in that particular account.

In California and Westchester County, there is a law that requires retailers to post the price of each item on display so customers can see it before they buy.


What are a POS system’s key features?

POS software, which is a part of POS systems that power point-of-sale operations in retail stores and restaurants. The two parts are the cashier component and business management components.

Register software

Register software is the cashier-facing part of POS software. It’s where a customer will pay for their purchase and it’s also used to process returns, refunds, discounts and other tasks related to that transaction.

Business management software

Point of sale software is either installed on a desktop PC or accessed via any web browser. The advanced features included in business management software help you better understand and run your company.

One of the best ways to use a POS system is by integrating it with other software and apps that you may already be using. This will help your business run more efficiently because data can easily flow between different systems.

The Deloitte Global found that by the end of 2023, 90% of adults will have a smartphone and use it for an average 65 times per day. As people become more tech savvy, independent retailers are starting to offer new POS functionalities in order to keep up with what consumers want.

Key features to look for in a retail point of sale:

  • Companies need to have a unified online and offline experience if they want to succeed.
  • Integrated payment processing
  • In order to be successful in sales, it is important that you have a good relationship with your customers. The more personal and professional the connection between you and your customer, the better.
  • Inventory management
  • Staff management 
  • Multi-store management
  • Advanced reporting
  • Integrations and add-ons
  • Ongoing support

1. Omnichannel selling capabilities

Customers have grown accustomed to being able to research products online before they ever step foot in your store. Once a customer walks through the door, it is likely that he or she already has an idea of what product they want.

Omnichannel shopping experiences start with a customer being able to browse and buy products online. It ends when the store provides an equally easy-to-browse, transactional experience.

A large number of retailers have found that the best way to keep up with their customers is by adapting and choosing a mobile POS system. This means they can run both brick-and-mortar and eCommerce stores from one platform.

Retailers can now look up whether or not they have a product in their inventory, see how much of the item is at various store locations and order them on-the-spot. They also get to offer either picking it up from the store or having it shipped directly.

As the mobile phone technology evolves and people’s buying habits change, retailers are increasingly looking for ways to integrate their online sales with in-store retail.

The benefits of an omnichannel point of sale:

  • I also found that when I opened up a retail store, my online sales doubled.
  • More and more shoppers are finding stores online.
  • I want to make sure that my customers are happy with the experience of coming into our store.
  • I offer multiple shipping options, such as standard and overnight delivery.
  • The solution to the challenge of keeping both in-store and online inventory synchronized is a combination of customer reviews, predictive analytics on consumer behavior, and more product variety.

2. Integrated payment processing

A lot of people don’t know how to read the contract that they sign when using a third-party payment processor. They end up feeling intimidated and scared because it seems like such an intense legal document.

Running a retail store is not as easy as it sounds. There are many aspects to take care of, including customers and employees who need customer service, online ordering that needs to be fulfilled quickly by hand or machine (depending on the business), inventory control for stock levels in stores and warehouses which requires constant work with suppliersmanufacturers

Retailers who used to rely on third-party payment processors are now turning to in-house systems. These solutions provide retailers with all the functionality they need without any of the hassle.

Retailers can work with a company that helps them manage both their business and its financials. The pricing is also more straightforward because there are no additional fees or monthly payments.

The result is that retailers can keep more of their money and not have to worry about the complexities associated with processing payments.

The benefits of POS-integrated payment processing:

  • Fixed transaction rate 
  • Our service is PCI compliant and has fraud prevention built in.
  • If you want to join this program, all you need is a smartphone and the ability to sign up for an account.

3. Customer relationship management (CRM) 

With your POS CRM database, you can keep track of customer information such as their name and address. You can also store the following:

  • Payment information
  • Payment history
  • Favorite products
  • Purchase history
  • Shopping frequency

CRM databases also let retailers set up timed promotions. These are specific time-limited offers that go back to their original price after the promotional period is over.

Loyalty program add-ons

POS system providers offer a mobile app-based loyalty program, as well.

According to a study, 83% of consumers are more likely to buy from businesses with loyalty programs. The majority prefer mobile app-based ones.

When you implement a loyalty program, it is because the customer has already shown that they value your business. They are rewarded with percentage discounts and other promotions not available to others for coming back time after time.

Loyalty programs give retailers the ability to market their products and services with targeted offers. They can do this by email, social media or any other channel.

Why are CRM and Loyalty add-ons valuable? 


If you show your customers that their business is appreciated and always recommend productsservices they will need, then the likelihood of them talking about your shop with friends increases.

Your customers become your best advocates and essentially do the marketing for you by telling their friends about how great they think your business is.

4. Inventory management

This inventory management tool helps you understand all aspects of your stock. That could mean anything from basic tracking to setting up reorder triggers, so that if a product is running low, it can be replenished before any potential customer walks away.

Buying inventory is a gamble because it ties up your money and prevents you from using that cash to grow. Be smart about what, how much, and when you buy.

Retailers have to constantly juggle their inventory. It is one of the most challenging things they do, but it also has a significant impact on cash flow and revenue.

A Point of Sale system is a computerized cash register. It records the information about what you purchase and how much it costs, so that retailers can more easily manage their inventory.

With real-time inventory tracking, retailers can be confident that their in-store and online inventories are accurate. Click To Tweet

These features are designed to allow for real-time inventory management, but there is also a host of other benefits that come with it.

  • Special orders
  • Work order management
  • Layaways
  • Integrating with vendors and creating purchase orders is key to the success of my business.

Related read: 4 Ways to Increase Your Inventory’s ROI

5. Staff management 

With modern point of sale systems, you can easily track hours worked and sales performance. This allows for more effective employee management by rewarding your best staff while coaching those who need the most help. It also simplifies tedious tasks like payroll and scheduling.

what is pos

You should be able to create different user permissions for employees and managers. This way, you can give your manager access to the back end of POS while giving other users only front-end privileges.

Employers should also be able to track their employees’ hours and generate reports on performance.

I found out that the number of sales per employee and per shift is available at day’s end.

The best staff management features to look for: 

  • Schedule your employees
  • It is essential to know how each employee does their job and what they are doing. This will help you understand if any changes need to be made.
  • Give each user specific permissions

6. Multi-store management 

One of the most common reasons for adopting a mobile POS is to support your company’s growth from one store to many.

The best way to manage your business is from one place. Consolidate everything and you will be able to view it all in a single interface.

When you manage multiple stores, the benefits are not only that of more sales and higher revenue. There is also less time spent on administrative tasks like managing employee schedules or payroll issues.

  • Manage all of your retail outlets and eCommerce stores from one interface.
  • As you open new locations, be sure to account for the need of more stores and registers.
  • Set up a single purchase order for all locations.
  • This system will be a central hub for customer data, and it’ll enable managers to see all of the information from any location.
  • Moving items between stores
  • Compare store performance 

7. Advanced reporting

Outside of inventory tracking, one of the most important reasons to purchase a point-of-sale system is because it allows you access to reports that can give insight into all aspects of your business. This could mean anything from identifying which sales people are doing well and those who need more help, or understanding how many customers pay with credit cards versus debit cards so you know what payment methods work best for them.

These intuitive reports help you track your business more effectively and take action based on what is happening in the company.

A mobile POS should provide you with reports that detail your store’s hourly, daily, weekly and monthly sales.

Armed with this information, you can reduce labor costs and maximize the ROI of your inventory. You will also be able to predict high-volume sales periods which is helpful for staffing purposes. This data could identify star employees as well.

8. Integrations and add-ons 

Integrations and add-ons make your POS more functional by adding features like inventory management, delivery tracking, live customer service chat

Look for any new add-ons or integrations to your POS app that may be available from the marketplace.

  • Inventory management
  • Accounting
  • Scheduling 
  • Payroll
  • Warehouse management
  • Order fulfillment
  • Marketing

And much more. 

9. Ongoing support 

You may have a POS that is easy to use and intuitive, but there will be times when you get stuck. When this happens, you need 247 support so issues can be resolved quickly.

The company will usually offer live chat, email and phone support for their POS system.

The POS provider should have on-demand support, but you also need to make sure that they offer documentation like webinars and video tutorials. They should also provide a community where other retailers can chat with each other about the system.


Which POS is right for your business? 

Choosing the right point of sale system for your business is essential because it impacts how you run and grow your company.

The POS market is saturated with different companies, each of which has their own benefits and drawbacks. We’ll help you find the right one for your business by speaking to an expert.