A point of sale, or point of purchase, is where you ring up customers. When customers check out online, walk up to your checkout counter, or pick out an item from your stand or booth, they’re at the point of sale.

Your point-of-sale system is the hardware and software that enable your business to make those sales.

How does a POS system work at a small business?

A POS system allows your business to accept payments from customers and keep track of sales. It sounds simple enough, but the setup can work in different ways, depending on whether you sell online, have a physical storefront, or both.

A point-of-sale system used to refer to the cash register at a store. Today, modern POS systems are entirely digital, which means you can check out a customer wherever you are. All you need is a POS app and an internet-enabled device, such as a tablet or phone.

So what does a POS system do? Usually, it works like this:

 

  1. A customer decides to buy your product or service. If you have a physical store, they may ask a sales associate to ring them up. That associate could use a bar code scanner to look up the item’s price. Some POS systems, such as the Square Point of Sale, also allow you to scan items visually with the camera on your device. For online stores this step happens when a customer finishes adding items to their cart and clicks the checkout button.
  2. Your POS system calculates the price of the item, including any sales tax. Then the system updates the inventory count to show that the item is sold.
  3. Your customer pays. To finish their purchase, your customer will have to use their credit card, tap card, debit card, loyalty points, gift card, or cash to make the payment go through. Depending on the type of payment they choose, your customer’s bank then has to authorize the transaction.
  4. The point-of-sale transaction is finalized. This is the moment when you officially make a sale. The payment goes through, a digital or printed receipt is created, and you ship or hand your customer the items they bought.

Which types of hardware and software does a POS system typically include?

Every POS system uses POS software, but not all businesses need POS hardware.

If you have an online store, then all of your sales happen on your website, so you don’t need POS hardware to help you accept payments. But if you have a cafe, you may need a register and a credit card reader. If you operate a food truck, a phone or tablet could be all you need to process orders.

Here’s a rundown of common types of POS hardware and software, which can help you figure out the total cost of your POS system. Keep in mind that what you need depends on your business.

Common types of POS hardware

POS hardware allows you to accept payments. If you’re getting a new POS system, you should make sure it accepts all forms of payment, including cash, credit cards (especially chip cards), and mobile payments. If it makes sense for your business, your POS system should also print receipts, store cash in cash drawers, and scan bar codes.

source: https://squareup.com/us/en/the-bottom-line/operating-your-business/what-pos-system#:~:text=A%20POS%20system%20allows%20your,cash%20register%20at%20a%20store.