What is a Point of Sale System?

Before diving into the systems behind them, it’s useful to take a look at what a “point of sale” entails and what it is made up of. Also known as the point of purchase, it refers to the whole sales process and retail transaction between a customer and the merchant, at the time and place where they pay for a good or service. It begins with a calculation of the amount owed by the customer (often by issuing an invoice, using a cash register print out, barcode scanners, weighing scales), the indication of the payment amount and the options for payment, and the point at which the customer makes that payment, using a payment terminal or some sort of payment software, followed by the issuance of a receipt which is either printed or sent electronically.

The POS system is the software and technology involved in this point of sale process, and they are increasingly being adopted by businesses with the goal of improving customer experience, enhancing, business practices, and making internal management more sophisticated. It is more advanced than a basic cash register, as it includes features which make it possible to manage multiple data, ranging from sales to repairs, and customers to inventory. A POS system is useful when any of the following activities need to be carried out:

  • Processing monetary transactions
  • Allocating and scheduling facilities
  • Keeping records of services rendered to customers
  • Tracking goods and deliveries
  • Invoicing and tracking payments
  • Recording products, services and inventories
  • Adding up the costs of items
  • Accepting customer payment methods
  • Generating receipts
  • Foreign currency handling
  • Coupon validations
  • All customer-based functions such as returns, exchanges, gift card issuance, customer loyalty programs, discounts and promotional sales.

As defined by Yamarie Grullon, Head of Content Strategy at ShopKeep, "A point of sale system is a combination of software and hardware that allows a merchant to take transactions and simplify key day-to-day business operations."

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This means that a point of sale system in a retail or transaction context often involves several components. As well as consisting of three main parts in the system itself (software, hardware and a credit card processor), it also includes other elements of the sales process, such as the cash register (which is also composed of several parts, such as a monitor, cash drawer, receipt printer, customer display window and a barcode scanner), and a card reader. Often in retail, for the transaction of goods and services, the POS system and point of sale process also involves a conveyer belt or a weighing scales.

As technology advances, so does the design and functionality of POS systems available for businesses to incorporate into their point of sale process. Whether through touch screen interaction, signature capturing devices, or all-in-one units with advanced monitors, all of these options are liberating counter spaces while handling a variety of customer based functions and making the POS a more smooth and efficient process.

Two main POS software are deployed either through a traditional software model or through a cloud-based solution. With an on-premise model, you purchase a license for the software and install it onto your computers. This means you will be required to update and maintain the software throughout its use. With a cloud-based, Saas solution (Software as a Service), you access your POS system through the internet.

While a POS unit does manage all the customer sales and the point of sales process, this is only one of its functions. It also handles a lot of "back office" duties such as inventory control and the transferring of products to and from different locations. It also stores sales and customer information, to enable customer returns, and provides reports on trends and profit analysis. All of this data can help with marketing, management, and buyer projection analysis purposes.

POS systems themselves involve complex programming and software, especially when they include suites of features required by different end-users, such as for sales purposes, stock counting, reporting, ordering, barcode creating, and even bookkeeping. However, investing in the right POS system for your company is crucial, because as Grullon notes, they can drastically simplify crucial business operations, and “do more than just offer flexibility when processing daily transactions,’ therefore “improving a merchant’s chances of success by providing them with tools to streamline business processes.”

Who Needs a Point of Sale System?

No matter what kind of business you run, as soon as you start selling goods and services to customers in person, you will need a POS system to allow you streamline and manage the process. The main benefits of having a POS system are:

  • Easier and faster checkout experience
  • A decrease in human errors and data entry
  • Increased satisfaction from both customers and employees
  • Improved inventory tracking and management

Any business who is serious on taking action based on customer transaction data will need a POS system, especially if you want insight into your ROI, to see which items are your best sellers, identify your busiest hours, and which promotions are underperforming so you can optimize your staffing requirements and product orders. Because it records theft, a POS system is also needed for businesses who want to avoid or easily identify theft, and it also allows you to place certain control over which staff can override payments and exchanges.

Overall, a POS system offers different things to different users, depending on their business processes and point of sale method. Most POS systems are designed for the retail and hospitality industries, and many vendors offer a solution for both. Retail and hospitality are in most need of a POS system, and for different reasons in each case. Some businesses may also need several systems on-location, depending on the size of the business and how busy the checkout points are.

POS Systems For The Retail Industry

The retail industry makes the most use out of POS terminals. Retail locations are seeing a growing need for these systems as they drastically increase the speed of customer service and transaction. For example, POS systems remove the need for price tags - because the product code of an item is added to its selling price during stocking, the cashier merely needs to san this code in order for the system to process the sale. It also eliminates the need to change price tags in the case of a price change, as this can be updated in the inventory section of the system.

Another major benefit for the retail industry is the ease with which businesses can implement discounts and loyalty schemes which keeping in control of stocks, reports, purchases, profits, and exchanges using the POS system. The reporting feature is extremely useful for accounting and tax purposes, and retail businesses are also able to store credit for customers and other useful data which can speed up their purchasing process in the future.

Retail is often a very fast paced environment, and POS systems offer high and consistent operating speed when carrying out a point of sale. Hardware and systems are normally priced at around $4000 per checkout lane.

POS Systems For The Hospitality Industry

POS systems have revolutionized the hospitality industry. The hospitality industry also has a great need for POS systems, often in more diverse ways than other industries, as hospitality services and goods are transacted in a variety of ways. Inventory needs also differ greatly between hospitality businesses, as a business which carries primarily perishable goods will need administration capabilities which can prompt or signal expiring products.

Other hospitality businesses, such as restaurants, in particular, will be more concerned about the sales window functionality of a POS system, and cafes whose menus change frequently will need the functionality of creating item buttons. The need to add service charges and discounts is also important for hospitality businesses, and POS systems meet all these requirements in a single unit. Busy restaurants often need portable and multiple POS systems, in the case of holding receipts and payments, splitting bills, recording queue times and sending alert messages, as well as accommodating for both table service and takeaways. The hospitality industry, therefore, requires a POS system which incorporates registers and computers, which track everything from sales to payroll.

The fast-food sector has seen an increased demand for POS systems in particular, especially for touch screen solutions. The efficiency improves the fast-service experience, and also makes communication among staff easier, allowing for better service. POS systems in fast-food businesses can create and print checks, send orders to the kitchen for preparation, process all sales from cash to credit cards, as well as take care of back business management needs. They are displayed either on front counter tops facing the customer or beside a cashier who is simultaneously managing the flow of customers from a drive-through window. This also allows for the ordering, purchasing and receiving of food to all occur in one place, in one go, without the need for any additional movement.

POS Systems For The Others Industries

As well as the retail and hospitality industries, POS systems also serve the needs of the following businesses:

  • Wholesale
  • Leasing businesses, when dealing with goods and properties
  • Equipment shops
  • Repair facilities
  • Healthcare management
  • Leisure facilities such as cinemas and sports facilities
  • Outdoor environments, where wireless all-in-one POS systems are required
  • Health centers such as spa centers, which would need a system to store historical records regarding specific customers’ needs.
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How Do You Use a Point of Sale System?

In terms of their use, POS systems are all about improving the user experience. The design of the front end screen, whether touchscreen or otherwise, is essential for maximizing efficiency and ease of use. This goes for both the position of the cashier employee and the customer who is using it to enter in payment details. In these cases, user interface design is critical, as well as understanding the context and environment of the customer's purchase. Often, speed of navigation is not the most important thing either, as business performance also relies on a system which is enjoyable and intuitive to use. The less time your customer or employer spends figuring out the next step to take on the system to complete a task, the better!

The better the user experience and user interface, the quicker the service, which translates to a shorter queue, more business, and increase in return, and more spacious retail or dining experience. Grocery outlets and cafes are in particular need to this benefit, as they involve high-traffic operations, so it is important that the flow of their technology does not cause interruptions or distractions, allowing everything to be processed quickly and without error. Often, a clean and simple interface does come at the expense of several more complex features, however it is important to remember that not all businesses will need as high a level of complexity as another.

Advances and changes in technology and applications means that the way we use POS systems is constantly changing. Many POS transactions are now being conducted using mobile phones and tablets, which are expected to replace traditional payment techniques because of their positive attributes such as portability, lower cost, and better user experience. The convenience of a remote financial transaction will also affect how POS systems are used in the future, and at the moment, retailers are greatly benefiting from the automation and organization which they provide.

Attention is also being paid to how we can make these solutions 100% accessible, as the switch from keyboards to touchscreens has made it difficult for individuals with sight impairments to enter their private card details.

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