What is a POS Terminal?

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  • Written By: Wilbert Bledsoe
  • Edited By: A. Joseph
  • Last Modified Date: 12 September 2019
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A point-of-sale (POS) terminal is an electronic device used by businesses to process payment transactions from credit cards, debit cards and individual checking accounts. This type of terminal often uses a combination of a computer, a bar code reader, an optical scanner and a magnetic strip reader as well as a cash register to process customers' credit information. After a customer’s credit card or debit card is swiped through the magnetic strip reader during checkout, the total purchase amount is usually transferred directly to the seller’s account. Some POS terminals capture and store customer information for processing at a later time by a central computer.

Many large and small retailers use POS terminals to process their daily sales transactions. POS terminals are often used by grocery stores, convenience stores and department stores. Some non-retailers, such as insurance companies, hospitals, and restaurants, also use POS terminals to process electronic payment transactions. In addition, these payment systems are also used by Internet retailers to process electronic commerce sales transactions.

Generally, the owner of an electronic commerce website does not need to lease a POS terminal to process customer orders. Internet retailers can often use a merchant account or online payment vendor to accept and process credit card payments online. Most Internet merchant account packages feature an Internet payment gateway, shopping cart and a virtual POS terminal. A virtual terminal usually also allows retailers to accept credit card orders over the phone.


Standard interchange language (SIL) is computer software that allows for the interchange of data between the direct store delivery and point-of-sale software programs. Direct store delivery software is often used by retailers to track store deliveries. SIL language often aids in the process of information used in the completion of electronic transactions by the POS terminal. The language was created by the food and grocery industry in 1991 to help retailers manage their payment and order systems more efficiently.

For years after the POS terminal was first introduced in 1979, customers often still had to line up at the checkout counter to pay for their goods. In 1992, some stores installed self-checkout terminals in an effort to speed up the checkout and payment process for customers. Generally, self-checkout terminals allow customers to purchase their goods faster without waiting in line. Most self-checkout terminals often feature a barcode scanner, weight scale and credit card reader. Typically, self-checkout terminals are used by shoppers who purchase a small number of items.


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Post 5

POS self check out has been a real pain for me at times. I get errors, etc. Perhaps I start going too fast for the machine, ironic, since computers are supposed to make everything faster. Not sure that's always true, but generally they do more good than harm.

Post 4

It took me awhile to get the hang of using self checkout, but now that I am used to it that is the first place I usually go.

This works out great especially if I only have a few items and don't want to wait in line. If I have a lot of produce I don't use it, but other than that it works great.

Using the POS touch screen device is so common, that I hardly ever see anybody write a check anymore. Even when they do, it is processed through a machine and handed back to them.

I remember when POS terminals were first introduced. It took awhile for my parents to start using them because they were so used to using cash. Now they use them all the time and don't think anything about it.

Post 3

I worked as a retail cashier when I was going to college and remember dealing with cash and checks every day. My kids don't remember anything but using a POS system wherever they go.

Even if my son is stopping at a gas station and buying a bottle of Coke, he will use his debit card because he never carries cash.

I don't carry nearly as much cash as I used to, and rely on using a POS terminal most of the time.

It makes it more convenient at the time, but takes a lot more time when you are balancing your checkbook.

Post 2

These days everyone has a debit card. And if they do not have a debit card they have a credit card or a gift card or a pre-paid card or some such thing. As a result of all these cards there are card readers next to almost every cash register in America. Some times this is really convenient, but I think it has consequences that we may be overlooking.

First, I am shocked at how often people use their cards. Its as if everyone has forgotten that cash exists. And people use cards to make such tiny purchases. True story, last week I saw a woman use a card to buy a 49 cent pack of gum. Really! She

didn't have 2 quarters.

Second, when you only use a card you can't keep track of how much you're spending. If you have a hundred dollars cash, you can watch that stack of paper shrink as you buy things. It never works this way with cards. In fact, you can even spend more money that you have and it will not cut you off. I think it just invites people to be irresponsible.

Post 1

I run a small office supply store. I can remember back in the day, not that long ago at all really, when you would have to swipe a customers card onto a piece of carbon paper and then process all the days transactions later after business hours. Most customers will probably remember this strange looking device and the grating sound that it made as it passed over the card.

Now we have a contemporary scanner where customers just swipe their card and it process the transaction immediately. This is so much easier for both the business and the merchant. I guess that it takes time for things to improve, but I'm really surprised we went so long with those junky old machines.

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