What Is a POS System? Learn How to Define Point Of Sale For Business

Retail shops and hospitality businesses come in all different shapes and sizes. You've got your brick-and-mortar clothing stores, your online boutiques, your restaurants, bars and hotels. Online or in-store, there's one thing they've all got in common. That thing? Every shop needs to have a solid point-of-sale (POS) system.

Your POS system has an important role to play. It drives your entire checkout process. You can use it to ring up sales, take payments and make sure that every transaction is processed efficiently. 

But what is a POS system, exactly? 

How does it work? 

And where do you start with picking one for your business?

In this complete guide, we’re giving you the lowdown on the inner workings of POS systems and also shedding some light on how they work. By the end, you'll know what steps to take when checking out your customers, and the important role that POS solutions (like inventory management and customer relationship management) play in managing your retail or hospitality store’s back-office operations. 

Let’s get started. 

Explaining the POS system meaning

A point of sale system (sometimes called a “POS machine” or "Point of purchase system") is the hardware and software used to make in-store and online sales at your business. It's also your record-keeping solution for transactions, letting you to track revenue, customers, inventory, and more. 

POS systems can come in a lot of different shapes and sizes. Some people could use a computer, along with some other hardware like receipt printers and cash registers. Others use mobile devices like tablet POS and iPad solutions. The right POS solution for you will depend on your business' needs and the experience you want to give your customers.

Check out our 'How to use a POS system' guide for more!

How modern POS systems have evolved to provide point of sale service

Modern POS systems have come a long way from the old-fashioned cash registers. For one thing, these days, they offer a whole range of services beyond just processing sales (and making the really nice ‘cha-ching’ noise as you open the drawer). They've evolved to handle everything from inventory management to customer relationships.

One big change is how they've gone digital. Instead of clunky hardware, modern POS systems often run on sleek tablets or computers, making them more versatile and easier to use. They've also gotten smarter, with built-in features like inventory tracking and real-time sales reporting, giving businesses a clear picture of their operations at all times. Plus, they're more connected than ever, integrating with other software and tools to streamline tasks like accounting and marketing.

Advantages of using modern POS systems in your business operations

Once you’ve worked out the ins and outs of using your POS system, your company will see huge benefits like:

• Faster checkout experience: A modern hospitality or retail POS system makes the checkout process quicker and easier for both your brilliant team of cashiers and for your customers. This means that your employees can spend more time and energy on connecting with your shoppers and guests, instead of dealing with tech issues. For example, integrate your POS with Epos Now Payments and you can save up to 4 hours a month during sales.
• Greater visibility into your performance: A lot of the more modern, cloud-based point of sale systems have built-in data and analytics. This means that you'll be able to generate reports on a lot of different areas of your business. We're talking inventory data, sales data, employee data and customer data, all put into easy-to-read reports.
• A better handle on your inventory: As a retailer or hospitality business owner, your inventory is everything! It's super important to keep track of what you have in stock and manage it effectively. Luckily, with the right POS system, keeping tabs on your inventory and the physical goods you sell is totally possible. Look for a POS solution that helps you with inventory management tasks like adding products one by one or in large batches, ordering and getting new products into your inventory, and doing regular counts of your inventory to make sure everything adds up.

The main components found in POS solutions

Now that you've got a really clear understanding of what a POS system is, let's take a look at the different elements that make them up:

POS software

POS software, or point of sale software, is basically the programme that helps run all the tasks you need to make when you’re making a sale. Think of it as the brain behind the checkout process. At its most basic level, POS software can be used to work out how much each transaction costs, keep track of your sales, and monitor inventory.

But there’s more to POS software than just the basics. A modern POS system comes with advanced features that can really enhance your business operations. Take Epos Now, for example. Our POS solutions offer features completely tailored to your specific business. We're talking loyalty programmes that keep your customer satisfaction high and keep them coming back, reporting tools that give you detailed analytics on your business processes, employee management tools and other handy apps.

POS hardware

Now, POS hardware is the physical component(s) of your POS system. Think of them as the body, while your POS software is the brain. Check out some of the most common hardware out there below:

• 🖥️ POS terminals: This is the actual device that your POS software runs on. This may be a desktop computer, a laptop or mobile device (like an iPad, tablet POS, or smartphone). POS providers like Epos Now offer specially designed, easy-to-use hardware with touchscreens that make it easy to tap the screen to take orders, process customer sales or look up prices.
• 💳 ​ ​Card reader: Suppose you accept credit card payments (and by the way you absolutely should, check out our blog on why), you'll need to have a credit card reader to facilitate any payment processes. The type of credit card reader you'll need depends on your POS software and your terminal. Talk to your POS system provider to make sure that you’re using card readers compatible with their POS solution. 
• 🏷️ Barcode scanner: If you're a retail shop with a big catalogue of products, a barcode scanner will likely be needed. With it, you won't have to manually type in product numbers or search for products. Instead, you'll just need to scan the barcode and your POS system automatically adds the product to the transaction. 
• 🖨️ Receipt printer: A lot of shoppers will need physical receipts. Because of this, you'll need a device to print those much-needed receipts. When connected with your POS system, the receipt printer automatically produces receipts once you've completed the transaction.
• 💷 Cash drawers (AKA cash register): This is where your cash is held. A cash drawer or cash register stores your legal tender so you can collect payments and hand out change.

Payment terminals 

Payment processing is one of the main functions of POS systems. Every time your retail customer buys a product or pays for one of your services, your POS system will process the transaction. If the payment is made via debit or credit card, you'll need a payment terminal.

Now there's a lot of different ways a customer can pay, and you'll need to check that your payment terminal accepts the ones your business uses. These include:

• Secure online payments through your eCommerce site
• Magstripe credit cards (the ones you swipe through a reader)
• Chip cards have an embedded chip, making them more secure than traditional swipe cards
• Contactless payments - AKA contactless cards that customers can tap, or mobile wallets such as Google Pay, Apple Pay or Samsung Pay
• Card-not-present transactions occur when the customer and their credit card aren’t physically present. You manually enter their credit card information, which also happens when a customer enters their payment details while checking out online

Choosing the right POS system for your business

There are hundreds of POS systems out there, so how do you choose? In this section, we'll run you through everything you need to know about picking out the best POS system for your company.

Types of POS devices for different businesses

One of the first things you're going to want to consider is the type of POS system you want. Gone are the days when you just had a simple, old-fashioned cash register, not designed for your business type and size. There are now so many different types of POS systems out there like:

• Cloud-based POS systems: Like the Epos Now Complete Solution, this POS system stores data in the cloud, allowing you access and changes from any internet-connected device.
• Mobile POS systems: Portable and modern solutions where the POS software operates on a mobile POS system, like tablet POS devices or smartphones.
• Legacy POS systems: Also called on-premises, these are countertop POS systems that operate differently from newer systems. They store data locally. This means that all of your transaction info is saved on specific devices within a closed network.
• Multichannel POS systems: These systems are for businesses that work across lots of different channels, like physical stores, online platforms, and mobile apps, to sync all your point-of-sale data. (You may find some cloud-based POS systems and mobile POS systems can also handle multiple channels, giving you great flexibility on choice.)

Check out our complete 'Different types of POS systems' guide for more information and to help you decide.

Compare POS providers 

So you’ve figured out which device is best for your business. Now you need to consider the full package when deciding which POS provider to go for. Consider the following:

• PCI Compliance: Look for POS providers that adhere to Payment Card Industry Data Security Standard (PCI DSS) requirements to safeguard sensitive information.
• Support: Evaluate the level of support offered by each POS provider, including availability (24/7 support is ideal), response time, and the quality of assistance provided.
• Features and functionality: Compare the features and functionality offered by different POS providers to ensure they meet your business requirements. Think about things like inventory management, reporting capabilities, integration with third-party applications, and scalability.
• Cost: Consider factors such as setup fees, transaction fees, monthly subscriptions, and any additional costs for hardware or software upgrades.
• User experience: A user-friendly interface can improve efficiency and productivity in day-to-day operations. So make sure your POS provider shows you how easy it is to learn and use the system. (You’ll be using it pretty much every day, after all!)
• Set up and delivery: If you need a device RIGHT NOW, consider how quickly it can be delivered, how much time you need to set it up for your business, and how easy it will be to switch providers if you’re already with one.

How does Epos Now POS solution integrate with your existing business tools?

Integrating Epos Now’s POS solution with your existing business tools is straightforward and seamless. Epos Now’s system is designed to enhance your business operations and make managing different aspects of your business easier. Here's how it can fit into your current setup:

• All-in-one package: Epos Now offers a complete EPOS solution that includes a sleek POS system, a built-in printer, a payment terminal, and a cash drawer. This setup ensures that you have everything you need right out of the box.
• Easy setup and onboarding: With Epos Now, setting up and training your staff is quick and simple. The system is intuitive, so you can have your team up and running in minutes. The 1-on-1 onboarding ensures that you and your staff are comfortable using the system from day one.
• Real-time insights and reporting: Access vital business insights on the go from any device. Epos Now offers real-time reporting on staff performance, customer behaviour, sales, margins, and stock levels. This allows you to make informed decisions no matter where you are.
• Multi-channel ready: Epos Now supports online, delivery, and collection services. This means you can synchronise your online and physical locations, reach more customers, and offer convenient services like Click & Collect. All you need to do is choose your favourite third-party integrations from the Epos Now Appstore to add to your POS system.
• Seamless integration: The system can connect to over 100 apps, including leading accounting software, CRM tools, and payment systems. This flexibility ensures that you can continue using your preferred tools while benefiting from the advanced features of Epos Now.
• Industry-specific solutions: Whether you’re in retail or hospitality, Epos Now offers tailored features and accessories to boost efficiency, increase customer satisfaction, and meet your specific needs:

-Real-time inventory management 

-Powerful instant reporting

-Kitchen management with a kitchen display system

-Online ordering

- Table and QR code ordering

- And more!

• Reliable support: Epos Now provides 24/7 technical support in their premium package, plus unlimited training, ensuring that you always have the help you need. Their expert advice and resources, like a comprehensive blog portal, help you get the most out of your POS system