Comprehensive Overview of POS Systems

A POS system, or point-of-sale system, is a combination of hardware, software and payment services that businesses use to make sales. And as its name implies, this system exists at the physical or virtual point of sale. Online-only businesses, however, do not require hardware to complete their POS systems.

 

At minimum, a POS system records customer purchases, accepts payments and provides receipts, either by printing them or sending them electronically through text or email. Many of  the best POS systems  for small businesses also generate reports, help manage inventory and track employee hours, among other things.

Key Components of a POS System

1.       Hardware

§  POS Terminal – The main computer or tablet where the software runs.

§  Cash Drawer – Stores cash from sales

§  Receipt Printer – Prints transaction receipts for customers

§  Bar-code Scanner - Scans product bar-code to quickly enter items into the system

§  Card Reader - Processes Credit and debit card payments.

§  Customer Display – Shows the transaction details to the customer.

2.       Software

§  POS Software – The main application that manages sales transaction, inventory, customer data and reports.

§  Inventory Management - Tracks stock levels, orders, and deliveries.

§  Customer Relationship Management (CRM) -   Manages customer information and purchase history.

§  Employee Management - Tracks employee hours, sales performance, and permissions.

§  Analytics and Reporting - Generates reports on sales, inventory, and other business metrics.

How does POS system work?

1. .        Record the items being purchased. - First, the customer presents the items they want to purchase to the cashier. This usually means that the shopper brings the products to the checkout area, though some retailers can implement the checkout process on the sales floor. From there, your cashier would record the items and quantities being purchased by scanning them into the POS (if there’s a barcode scanner). If you’re using a mobile POS or are transacting on the go (like at an event), then recording the item could mean typing it into the point-of-sale software. The software will then record the purchase data (item name, quantity, etc.) and display the info on the screen.
2.       Collect and process payment. Once all items have been added to the sale, the cashier initiates the payment process by clicking or tapping the appropriate button on the POS display. At this point, they would ask how the customer would like to pay. If they’re paying in cash, then the cashier would simply take the payment, open the cash drawer, put the cash inside and hand the customer their change (if needed).  If the customer is using a credit card, then the cashier would select that payment method in the POS and prompt the customer to swipe, dip or tap their card using the credit card reader. The process is the same for mobile payments, but instead of using a physical card, the customer must hover their phone over the credit card terminal.
3.       Generate a receipt. Once the payment is approved, the POS system completes the sale and generates a receipt. Depending on your setup, this could involve printing a physical receipt or prompting the customer to enter their email or phone number so they can just have a digital copy.
4.       Offer loyalty points and rewards [optional]. This is an additional step that takes place in retail stores that offer loyalty programs. if you reward shoppers for their purchase, then your checkout process would involve a loyalty component, in which you ask customers to provide their details. This could be their email, phone number, birthday, or whatever info you use to track your loyalty program members. 

Benefits of POS system

·       Time Savings

A point-of-sale system saves a lot of time during the checkout process. You can check product details within moments, process payments, and gather important customer information. This takes a much shorter time than if you were checking products manually.

·       Improved Customer Experience

Thanks to cloud-based POS systems, customers can shop from an online store without requiring assistance from an in-store employee. They can also purchase items on the go without joining long checkout queues.

·       Important Insights

Using a POS system leaves you with a lot of useful data you can use in marketing, inventory planning, and goal setting. Features such as inventory management allow you to see your best-selling products and the customers buying them. Over time, you’ll be able to identify periods when you should stock up more or switch more attention to other products based on seasonal trends.

·     Increased Accuracy

There’s much less room for errors when using POS software to ring up sales than when doing it manually. This accuracy also extends to when you have to collect and merge data from multiple points of sale. With the software doing the heavy lifting, your reports are guaranteed to be accurate and well-organized.

·       Multiple Payment Methods

  Nowadays, it’s important to give your customers a wide array of payment methods to choose from. Gone are the days when most sales were completed with cash transactions. Today, the most common in-store payment method in the U.S. is credit cards, followed by debit cards. Cash comes third in popularity, followed by digital wallets. Go for a POS system that allows you to integrate all popular payment options into your business.

A POS system not only streamlines sales processes but also provides valuable insights and enhances overall business efficiency. Implementing a POS system can significantly improve both operational workflows and customer satisfaction.