Point-of-Sale System (POS): What is it and How Does It Work?

A point of sale, sometimes known as a point of purchase, is where customers are billed. When customers check out online, come up to your checkout counter, or pick an item from your stand or booth, they are at the point of sale.

Your point-of-sale system is the technology and software that allows your company to make such sales.

 

In a small business, what is the purpose of a point-of-sale system?

A POS system may be used to accept payments from customers and maintain track of sales. It looks simple enough, but the arrangement may work in a variety of ways depending on whether you sell online, have a physical store, or both ways.

A point-of-sale system refers to the cash register at a shop. Modern point-of-sale systems are completely digital, allowing you to check out a customer from any location. All you'll need is a POS app and an internet-connected device, such as a tablet or phone.

So, what is the purpose of a point-of-sale system? This is how it normally goes:

1. A customer decides whether or not to buy your product or service. They can request a direct call from for a sales manager in the case of having a physical store. That assistant might utilize a bar code scanner to look up the item's price. 

Some POS systems, such as Square Point of Sale, also allow you to scan items visually using your smartphone.This procedure begins when a customer completes their shopping cart and clicks the checkout button on an online store.

2. Your POS system calculates the item's price, including any sales tax. The inventory count is then adjusted to reflect the fact that the item has been sold.

3. Payment is the responsibility of your customer. Your consumer will need to pay with a credit card, tap card, debit card, loyalty points, gift card, or cash to complete their transaction. Depending on the type of payment your consumer choose, their bank must then authorize the transaction.

4. The transaction is finalized at the moment of sale. This is the point at which a formal sale is made. You process the payment, produce a digital or printed receipt, then ship or deliver the items to your customer.

Which sorts of hardware and software are found in a typical POS system?

All POS systems employ POS software, although not all businesses require POS hardware.

Because all of your transactions take place online, you won't need POS hardware to accept payments if you run an internet business. However, if you operate a café, you might need a cash register and a credit card reader. You might simply need a small laptop or a tablet to accept orders if you run a business like a food truck.

Here's a summary of common POS hardware and software, which can help you estimate the entire cost of your POS system. Keep in mind that your requirements are unique to your business.

Commonly used point-of-sale hardware

Using POS gear, you may accept payments. If you're purshacing a new point-of-sale system, be sure it accepts a variety of payment methods, including mobile payments, credit cards and cash. If it makes sense for your business, your POS system should print receipts, keep cash in cash drawers, and scan bar codes.

This list of hardware can be useful as you examine your POS setup options.

• A client transaction register is a tool that assists in the computation and processing of client transactions.
• A portable device, such as an iPad or another tablet, can be used as a monitor replacement. Your crew may clock in and out using tablets that are propped up with a stand.
• Credit card reader: Whether your customers utilize contactless payments like Apple Pay, chip cards, or magnetic stripe (magstripe) cards, a credit card reader lets them to pay securely with their credit card in-store.
• Even if you accept contactless payments, you'll probably need a safe place to keep your cash. POS software attached to a cash drawer helps decrease fraud by tracking when the cash drawer is accessed.
• A printed receipt allows customers to know exactly what they bought, when they bought it, and how much they paid.
• The product data on an item is scanned by a bar code scanner, which allows you to ring it up. It's also a simple way to double-check price, stock levels, and other details.

Most POS software has the following features.

Your business's command center is your POS software. It allows you to search through your library for items and make basic sales. More complicated point-of-sale systems include sales reporting, customer contact software, inventory management, and other valuable features. POS systems facilitate the transfer of funds to your bank account after each sale.

Certain POS solutions, such as Square, incorporate the functions listed below. Other systems may require the installation of third-party software in order to perform the services you require. Find out how Square compares to other point-of-sale systems.

• Payments are processed.
• Payment processing is one of the most critical functions of a POS system. When a customer buys anything, your POS system processes the transaction.
• A point-of-sale system may accept a number of different payment methods, including:
• Cash
• You may take safe online payments through your eCommerce site.
• Swipe cards, often known as magstripe credit cards, are credit cards that can be swiped.
• Credit cards with a chip in them are known as chip cards.
• Customers can make contactless purchases by touching a contactless card or using a mobile wallet (e.g., Google Pay or Apple Pay)

When your customer and their credit card aren't physically present, you'll have to manually enter their credit card information. When a customer checks out online and sends their payment information, this might also happen.
Inventory management is crucial.
Inventory management software allows you to keep track of all your things. Some inventory management software may connect to your sales data and alert you when a product is running low.

At the point of sale, reports are available.

You can see how much money you're making and how much you're selling using POS reports. If you have clear reports, you can sell more and make better business decisions.

Employee supervision is essential.

You may use team management software to keep track of when and how your employees work. It may also be used by your team to clock in and out, and some software may provide access to certain tasks to staff.

Customer relationship management (CRM)

With a CRM system linked to your POS software, you can see what your customers bought and when they bought it. Use this knowledge to personalize your communications, marketing, and customer service.

Receipts

Receipts speed up refund processing by providing a digital or physical trail for the item purchased. They can also help to boost your company's image.

Supporting a suggestion

Tips can account for a large portion of a restaurant's or service professional's income. When POS systems allow customers to add a digital tip during the checkout process, they are more inclined to tip.

Now that you've learned more about POS systems, you're ready to choose the finest one for your company, regardless of what you sell or where you sell it.