As forms of payment become increasingly diverse and cash recedes to the back burner, it is more important than ever for merchants to adapt and embrace POS systems.
What is a POS and a POS system?
A POS, or point of sale, is the location, time, and moment a transaction is completed and a purchase is made. This is where a customer makes a payment in exchange for goods or services.
A POS system, or point of sale system, is a combination of software and hardware that businesses use to process various types of customer payments. This robust solution furnishes companies with a secure and speedy way to transact both in-person and online transfers of funds.
As the bridge between merchant and buyer, a POS system provides the mechanisms involved in completing a purchase. This is where a consumer’s credit or debit card is read; it is where mobile payments are processed, and it is where proof of the purchase is recorded, stored, and provided to the customer in the form of a written or electronic receipt.
This complex POS hardware-software combo can be used to maintain customer and inventory details, making report generation, customer loyalty programs, and other relationship enhancements possible.
How POS systems work to process credit cards.
While the act of making a product purchase using a POS can literally take only a matter of seconds from start to finish, it involves a few steps behind the scenes. Let’s dive into how a POS system works:
- The customer decides to make a purchase. This could be a physical product at a brick-and-mortar store where the cashier uses a barcode scanner to enter the item into the POS system. Or this could be an online purchase for a service that the customer adds to their cart for checkout.
- The POS system then displays the product information and price. In the case of multiple pieces of merchandise, it tallies the total, including any applicable taxes. It will also update the store inventory to reflect the sale.
- The customer submits payment. The consumer waves, taps, or swipes their card or digital wallet-enabled phone or wearable device, in order to provide payment for the transaction.
- The information is passed to the merchant’s payment gateway, an intermediary that runs security screenings and checks for sufficient funds. In some cases, the customer’s bank or credit card provider will then have to approve the transaction.
- The payment is either authorized or declined. Once this “dialogue” with the other players in the payment process is completed, if accepted, a paper or digital receipt is generated as proof of purchase.
Types of hardware included in a POS system.
There are several physical devices that are commonly included in most POS solutions.
POS terminal or register.
The POS terminal is the face of your system. It is via this hardware that money changes hands. While it traditionally took the form of a cash register, today’s terminals can range from smartphones equipped with attached card readers to countertop terminals.
Regardless of whether it is a register, tablet, or smartphone, the device should accept a variety of payments. These should include chip, magstripe, and contactless. It should also possess the capability to handle online purchases.
Credit card reader or swiper.
The credit card swiper or reader is the physical device that is used to take in the information from a customer’s debit or credit card. This transfer of information can take place in several ways: via swiping, tapping, dipping, or waving. The merchant’s reader then sends the details to a payment processor for authorization.
Mobile handheld credit card machines.
Increasingly, sellers are embracing the flexibility and portability of mobile payment solutions. Using either a tablet or a smartphone that is outfitted with a payment processing application and connected to a mobile card reader, staff can securely take payments using all of the popular methods.
Because these devices are wireless, they can be used anywhere but remain connected to the store’s POS software at all times. This allows for real-time updates that aid in seamless communication across all touchpoints.
Cash drawer.
Today’s cash drawers do much more than store bills and coins. Compatible with multiple payment methods, they synchronize automatically with your centralized POS and server platform.
Security is a top priority, including electronic locks and password protection, and an antitheft design. Thanks to their integration with your POS, the drawers can automatically reconcile with financial records and generate sales reports.
Best of all, they are easy to maintain and make it possible for staff to access details such as transaction records from anywhere.
Receipt printer.
After a transaction has been completed, this device prints a record that can be given to the customer. It includes details such as what was bought, the total price, taxes that were applied, and any brand-specific promotions or offers.
There are two types of receipt printers: thermal and impact. Thermal printers use heat to transfer an image onto special paper, usually in black and white. Impact or dot matrix printers use a print head that strikes an ink ribbon. Although noisier, these can print multiple copies in various colors.
While the quietness and speed of thermal printers make them excellent for most retailers, restaurants benefit from the robustness and multifunctionality of impact receipt printers.
Barcode scanner.
Also called a price scanner or POS scanner, a barcode reader is used to capture and read details contained in a barcode. This scanner may be incorporated directly into your payment terminal or a separate device.
Smartphone scanning apps are a modern alternative to this traditional type. In both cases, the scanner translates the data from barcodes into numbers or letters that signify merchandise types and prices.
This facilitates increased accuracy, improved customer service, fewer pricing errors, and greater overall efficiency.
Benefits of using a POS system.
Incorporating a POS system can bring numerous advantages to your business.
Increased efficiency.
A modern POS facilitates fast and secure payments that can be effortlessly tracked. Automated processes mean reduced errors and the ability to utilize human resources more effectively.
Payment versatility.
In addition to taking cash and credit and debit cards, a POS also meets customers’ increasing preferences to make purchases using alternative methods. These include via digital wallets like Apple Pay and Google Pay as well as by using iPhone Tap to Pay.
Business optimization features.
In addition to its payment capabilities, the modern POS has numerous other built-in features that you can harness to streamline virtually every internal operation of your business.
These include inventory monitoring, customer relationships and employee management, report generation, and integration with third-party software.
How to use a POS system.
Using a POS system is going to be different depending on your business and the type of hardware you have. But the core functions of using a POS system are simple:
- Use the POS to calculate what is owed.
- Take the customer’s payment.
- Print the recipe for an authorized transaction.
It’s that easy. Here are more details on how to use a POS system and some of the most common types of POS systems and features.
North is a leading financial technology company that builds innovative, frictionless end-to-end payment solutions designed to simplify and grow businesses of all sizes. From the front door, to the back office, the developer world, and partnerships that expand the payments landscape, North offers proactive, comprehensive merchant services, in-house processing, and more.
