What is a Point of Sale System?

Ken Black

A point of sale system is the hardware and software required to conduct a point of sale transaction, which takes a customer's information, usually verifies it, begins a money transfer and approves the sale. All this often takes place in a matter of seconds, depending on the point of sale system in place. While there are a variety of ways different point of sales systems (POS systems) work, the main goal accomplishes the same thing.

Cashiers may use point of sale (POS) software.
Cashiers may use point of sale (POS) software.

In some cases, a POS can be as simple, in the retail environment, as a reader connected to a phone line. These are often the most inexpensive of systems. They look very much like a calculator with printing capabilities. This type of POS device often creates a delay as it dials into a network to verify information. This point of sale hardware often sits very unobtrusively on a desk and is a separate system than the cash register itself.

Cash registers can be part of a point of sale system.
Cash registers can be part of a point of sale system.

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A major retail point of sale system will include a fully integrated system, complete with cash registers capable of scanning credit cards and taking financial information. In those cases, there is usually a dedicated network line that is used to connect to a server which verifies the information. Thus, this type of POS can be far more efficient than those systems which simply use a standalone device.

Modern POS systems are usually linked to software which can be used to track, analyze and report on sales.
Modern POS systems are usually linked to software which can be used to track, analyze and report on sales.

In some cases, such as with a restaurant point of sale system, or restaurant POS, the system can include software that will do more than one thing. For example, some card readers at these restaurants can be used by a server, who swipes an identification card and enters an order, which is electronically transmitted to the kitchen. This keeps a record of who to notify when the order is ready and also tracks the server's sales. When the table is ready to check out, the same POS can be used to process a payment.

A point of sale system at a restaurant may be used to enter orders and send them to the kitchen.
A point of sale system at a restaurant may be used to enter orders and send them to the kitchen.

Point of sale software is also used in other ways. The server is responsible transmitting and processing information. For retail environments where the systems are fully integrated, there can be other information obtained and analyzed. For example, it can collect statistics about credit card usage, what types of products move on point of sale transactions versus cash transactions and so forth.

Many large and small retailers use point of sale terminals to process their daily sales transactions.
Many large and small retailers use point of sale terminals to process their daily sales transactions.

With the reliance on credit and debit cards, point of sale systems are becoming increasingly popular tools in the retail trade. Worldwide, more than 3,500 transactions on debit and credit cards are conducted on average each second. That is a significant customer base retailers would do well to service with a POS. The initial startup costs for the systems range from $1,500 US Dollars (USD) to more than $10,000 USD, depending on the sophistication.

Point of sale systems often use barcode scanners to automate pricing and track inventory.
Point of sale systems often use barcode scanners to automate pricing and track inventory.

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Discussion Comments

MikeCherone

Great discussion of Point of Sale systems. There is so much software out there. It's hard to find the "one."

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