What’s the Point of a Point of Sale (POS) System?

A point of sale system, or POS, is the place where your customer makes a payment for products or services at your store. Simply put, every time a customer makes a purchase, they’re completing a point of sale transaction.

The latest point of sale software goes beyond credit card processing to help retailers and restaurants incorporate mobile POS features and contactless payment options, ecommerce integration capabilities, and more.

At Software Advice, our advisors help small business software buyers find the right retail POS software everyday. We asked senior advisor Julia Morton, who helps POS software buyers, about the importance of a good point of sale system

The POS serves as the central component for your business; it’s the hub where everything—like sales, inventory management, payment processing, and customer management—merges.

In fact—according to a survey we ran among retailers last fall (methodology below)—almost a quarter of the business leaders we surveyed (23%) were prioritizing their point of sale infrastructure (upgrading an existing system or investing in a new POS system) more during COVID-19 while an additional 43% were maintaining their pre-pandemic level of prioritization. In other words, even during a global pandemic, 2/3 of retail leaders weren’t willing or able to deprioritize their POS technology.

Hardware components of a POS system

Monitor/tablet: Displays the product database and enables other functions, such as employee clock-in and viewing sales reports. Tablets—especially iPads—are popular for replacing bulkier monitors.

Barcode scanner: Automates the checkout process. Scanning barcodes pulls product info and adds it to the checkout total. Barcode scanners can also integrate with inventory management systems to automatically adjust stock levels.

Credit card reader: Since the EMV payment standard went live in 2015, secure and EMV-compliant credit card readers are a must-have. Non-compliant retailers face potentially huge losses on account of fraud liability.

Receipt printer: Email and text receipts may be gaining popularity, but paper receipts remain essential for providing customers with a quick snapshot of their purchase or returns.

Cash drawer: It may fade away in years to come, but cash is still king. Until then, you’ll need a secure place to store cash for transactions. Another benefit of cash: there are no associated credit card fees.

Your POS system should enable you to:

Scan and count products digitally

Manage your stock by creating product variations (size, color)

Identify pieces of inventory with a unique serial number

Track inventory levels across multiple locations

Enable seamless ordering such as automatically setting custom reorders of best-sellers

Consolidate purchases and orders in one order