The basics of a point of sale (POS) system

The point of sale (POS) can be called a box or cash register and is usually the place of a store or restaurant where the exchange of goods and services are carried out. A point of sale system generally refers to the physical electronic hardware and peripherals that are used to conduct a transaction. This hardware can include a cash register, a dedicated computer, or even a smart mobile device like a tablet. Value Added Resellers (VARs) use the term POS interchangeably when talking about hardware and box location. The credit card industry adds to the confusion. Business service providers that process credit card transactions and their Independent Sales Organizations (ISO) will also refer to independent credit card terminals as POS. A POS in this sense is just the peripheral that reads the credit card, sends the transaction data between the store and the credit card processor and can issue a receipt once approved.

The first POS hardware was a mechanical cash register invented by Dayton salon owner James Ritty in 1879. The purpose was to keep employees and customers honest. Today it is difficult to find a mechanical cash register; Most POS systems are electronic, which means they use an electronic cash register or computer system. Electronic POS is sometimes called ePOS. Electronic cash registers help simplify some of the end-of-day calculations that store owners must process on a daily basis. Realistically, they’re only used in stores that haven’t been automated, need a backup system, or don’t process a lot of transactions on a daily basis.

The POS system is hardware that is combined with POS software and peripheral devices. This hardware helps a store associate or associate to manage the sales process. At a basic level, POS software manages transaction calculations. However, the POS software is quite scalable and modules for accounting, inventory, and even customer relationship management (CRM) can be added. Reasonably priced software options are available that can provide a small store owner with some of the tools used by large Fortune 500 retailers.

POS peripherals are devices like:

Receipt printers

Provide a physical record of the transaction.

Magnetic Stripe Reader (MSR)

Automate the entry of credit card, driver’s license or loyalty card information

Barcode scanners

Automate the entry of information found on products, loyalty cards and coupons. This information is referenced in Universal Product Codes (UPC) and Quick Response (QR codes).

Cash drawer

A drawer connected to the POS used to safely store cash and coins.

POS Keyboard

The rugged retail keyboard is typically built to withstand constant use in a retail environment and is used for entering customer, product, or service data. Many times it will have the MSR integrated. Many large stores use mechanical keyboards that are rated for higher usage than a standard consumer keyboard.

Signature capture

It is used to keep an electronic record of a customer’s signature.

Electronic scales

Automate data entry of weight information

Computer screen

It is used as a computer screen to display information. May have touch screen technology.

Typically, large companies have created or customized hardware, software, and peripherals to meet their specific needs. The goal is to process transactions in the fastest and most accurate framework to keep your customers happy, associates trained, and accurate bookkeeping.

Small and medium-sized businesses (SMB retailers) typically purchase ready-to-use hardware packages with custom software for their vertical industry. Today this software no longer needs to reside on a computer in the store, it can be hosted in a cloud and sold under the software as a service (SaaS) model.

Mobile POS is now available, preventing POS users from being tied to a specific location in a store. Mobile POS devices allow part or all of the functionality of both the hardware and software contained in a traditional point of sale system in a device that fits in the user’s hand.

POS systems have come a long way since 1879 and will continue to change adding features and benefits. In the end, they will continue to help store and restaurant owners manage and measure their performance, alleviate routine work, and increase customer satisfaction.

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