A POS system is a combination of software and hardware that accepts and processes multiple forms of digital payments. The software is tasked with processing, handling payment methods, and offering other value-added services, and the hardware involves a card acceptance machine. A POS system can be used by both businesses that have physical stores as well as those with solely an online presence.
A POS terminal has come to play a significant role when it comes to the management of business operations. Traditional POS systems were only meant for accepting card payments. However, over time, these systems evolved into processing other modes of contactless payments. Today, a POS system can even be used through a smartphone.
How does a POS system work?
A POS machine will have a scanner that scans the product and runs it against the inventory for its selling price. It will then update the stock when the product’s sale is completed. The POS system can calculate discounts, taxes, etc., to give the final amount to be paid. Lastly, the POS system will print a sales receipt for the purchase.
How is data stored on a POS system?
There are two ways to store data on a POS system, either by using on-site POS software or going for a cloud-based POS software. In the case of computerized POS systems, on-site POS software was usually the way of storing data. However, a lot of merchants nowadays prefer using cloud-based POS software. The reason for this is that the cost of cloud-based POS software is lesser than on-site POS software. Not just this, a cloud-based POS system also offers numerous advanced features with its software.
Understanding the critical components of a POS system (hardware & software)
When it comes to the hardware of POS systems, this might differ according to what the specific business requires. For instance, while a retail store might need a scanner, a café might not. Take a look at some of the most common hardware components:
- Barcode scanner
- Interface (touchscreen, cash register, the smartphone with a POS system installed, monitor, etc.)
- Swipe machine
- Network devices
- Cash drawer
There are two categories of modern POS system software. One is the front end, and the other is the back end. The frontend interface, like a tablet screen or touchscreen, takes care of processing all the financial transactions. The backend involves a separate application window or browser provided by the POS manufacturer. This POS functionality consists in taking care of the management and providing analytics.
A POS system has long evolved from its original form, a primary cash register. Today, businesses recognize this system as a crucial retail management tool that takes care of financial transactions, inventory, customer relations, sales, bookkeeping, and so on. With the help of these features, merchants find it easy to automate a lot of their business operations through just one platform.