A point-of-sale (POS) system is an essential tool for your business. It serves multiple functions beyond processing payments. It helps manage inventory, customer interactions, sales, and reporting from one platform. While POS systems have evolved significantly from traditional cash registers, they continue to be a focus of technological advancements. This blog will discuss key trends in the point-of-sale market projected for 2025. This information will assist you in making well-informed decisions about buying a new system, negotiating with suppliers, or upgrading your current setup.
What Is a POS system?
A point-of-sale system, or POS system, includes both hardware and software designed to process payments swiftly. However, its capabilities extend beyond payment processing. A POS system can also manage inventory, handle customer relationships, and generate sales reports.
Fundamentally, a POS system acts as the operational hub for physical stores, with various models available to suit different types of businesses.
Key elements of a POS system include hardware and software components that work together to facilitate efficient transactions:
Hardware Components
- Card Reader: This device processes payments by reading the card details and swiping, tapping, or inserting the card. Some POS terminals can also serve as card readers, and certain software allows mobile phones to function in this capacity.
- POS Terminal: This is the primary device used for processing sales. It can be a computer, tablet, mobile phone, or a specialized POS terminal. This terminal runs the POS software and connects to various other hardware elements.
- Barcode Scanner: This device speeds up the checkout process by scanning product barcodes, which helps reduce errors and input product information quickly.
- Receipt Printer: It prints physical receipts detailing customers’ purchases. Many modern systems also offer the option to send digital receipts via email or text.
- Cash Drawer: This drawer is connected to the POS terminal and opens automatically upon cash payment processing. It securely stores cash from transactions securely.
These hardware components are often available as separate devices, though some suppliers provide integrated terminals that include a card reader, receipt printer, and barcode scanner.
Software Components
- POS Software: This is the core application that operates the POS system, which can be installed on the device locally or accessed via the cloud.
- Customer Relationship Management (CRM): This component stores customer data such as purchase history, preferences, and contact details, which helps provide personalized service and implement effective marketing strategies.
- Inventory Management: Not all POS systems include inventory management, but those that do can track stock levels, automatically update quantities as sales occur, and alert when stock is low.
- Sales Reporting: This feature generates detailed reports on sales trends, employee performance, and other crucial metrics. While all POS systems include reporting functions, the complexity and insights vary, ranging from simple daily sales summaries to intricate analytical reports.
Current Overview of the Point-of-Sale Market
The POS market is growing significantly worldwide, with projections showing continued strong growth. In 2023, the global market was valued at about $29.02 billion and is expected to rise to $33.41 billion in 2024, reaching approximately $110.22 billion by 2032. This represents an annual growth rate of about 16.1% over the forecast period.
In the U.S., the POS market was valued at $4.97 billion in 2022 and is predicted to grow to $5.61 billion in 2023, with estimates suggesting it will reach $13.49 billion by 2030. This corresponds to an annual growth rate of 13.3% during the forecast period. The growth is primarily driven by the increased use of digital payment methods and mobile wallets, which improve the overall user experience.
Several factors are driving this market growth, such as the increase in NFC and contactless payments, government initiatives promoting digital payments, and quick developments in payment technologies. Additionally, the retail sector gains significantly from using advanced POS systems, which save time and costs and provide immediate data on sales performance.
Key Trends Shaping the Growth of POS Market Outlook
1. Cloud-Based POS Systems Are Taking Over
The way we use POS systems is changing fast. By 2025, it’s expected that most businesses will use cloud-based POS systems. These systems are great because they let you run your business from anywhere and keep your data the same across different locations. Cloud POS systems can handle it all, whether it’s a small family-owned shop or a big franchise with multiple locations. They’re easy to grow with your business, secure your data well, and are cheaper to keep up. In 2020, over 60% of new POS system purchases were cloud-based, popular especially among retailers and restaurants.
Cloud POS systems let you see your sales and stock information in real time, which is crucial for managing your business well. You can use these systems on any device that connects to the internet, whether running a single store or a chain of restaurants. This flexibility is great for today’s shopping and dining environments, adapting to varied buying behaviors like finding a product online and buying it in a store or vice versa.
2. AI Enhancements in POS Systems
Artificial intelligence (AI) has changed the way retail works. By 2025, AI will revolutionize POS systems, making shopping more personal, business operations more efficient, and decision-making smarter through predictive analytics and automation. About 15% of U.S. businesses use POS systems with AI capabilities, and around 40% plan to start using AI-based POS systems within the next year.
In 2021, nearly 40% of retailers whose customers are aged 18 to 24 have adopted AI-driven POS systems to meet customer expectations better and boost their sales.
AI in POS systems will enable dynamic pricing, adjusting prices in real-time based on the market and customers’ actions. This flexibility helps businesses keep up with market changes, keeps customers happy by offering fair prices, and helps retailers increase their sales.
Additionally, AI-driven POS systems will take over key business tasks like managing inventory and processing transactions, saving time and reducing mistakes. These systems can handle complicated tasks like accepting payments across different platforms, including online and through mobile apps, making everything more streamlined.
For customers, AI means more personalized shopping experiences. AI can analyze data from past purchases and browsing habits to provide custom recommendations and special offers. This personal touch builds stronger customer loyalty and drives sales by targeting marketing more effectively.
3. Growth and Adoption of Contactless Payments Technologies
The popularity of contactless payments is soaring, especially with technologies like Near Field Communication (NFC), which make transactions easy and secure. By 2026, the market for contactless payments is expected to be worth about $100 billion, a 15% increase each year from 2020. This growth is fueled by more people using mobile and wearable tech, the addition of biometric security features, and more smartphones equipped with NFC.
As digital payments evolve, sectors like retail, transportation, and hospitality quickly adopt these technologies to make transactions faster and improve customer satisfaction. In 2021, 67% of retailers provided at least one form of contactless payment, up from 40% in 2019. Additionally, over 80% of consumers have utilized NFC contactless payments. The adoption of these methods is facilitated by the common use of integrated POS terminals, which support various payment options, including mobile payments and card transactions. This shift is influenced by the demand for enhanced security and quicker transaction processing.
4. The Impact of Mobile Payments on the POS System Is Still On!
By 2025, mobile payments are expected to be essential at POS terminals, driven by technological advances and changing consumer tastes. The adoption of mobile payment methods like Google Pay, Apple Pay, and Samsung Pay has transformed transaction processes by offering both convenience and improved security through biometric authentication and tokenization. This shift is particularly notable among younger customers who value speed and convenience in their financial transactions.
The mobile POS payments market is expected to grow substantially. Transaction values are forecasted to reach $10.85 trillion in 2024 and grow at an annual rate of 16.72%, reaching about $23.50 trillion by 2029.
Additionally, further developments in POS technology will likely emphasize mobile and contactless payment options to meet increasing consumer demand. Businesses are advised to upgrade their payment systems to support mobile and contactless transactions, positioning themselves to serve customers increasingly turning to digital wallets and contactless payment methods.
5. Industry-Specific POS Systems Are Gaining Traction
POS systems are becoming more specific to industries such as retail, hospitality, and healthcare. Companies want systems that meet their unique needs.
In retail, POS systems now include features like inventory tracking, loyalty programs, and customer relationship management. These systems can handle many transactions simultaneously and work well with other retail technologies to make operations smoother and improve the customer experience.
For restaurants and hotels, POS systems are being developed to better manage orders, handle payments, and improve customer service. Common features now include managing tables, taking online orders, and handling reservations. These systems help make service faster and more accurate, which makes customers happier.
In healthcare, POS systems focus on billing patients, processing payments securely, and connecting with health management systems. They are designed to run smoothly and meet strict rules.
Industries like manufacturing are also getting POS systems made for their needs. These systems help manage complex inventories, increase productivity, and provide detailed information that helps make business decisions.
6. Rise of Subscription-Based POS Software Solutions
More businesses, especially small—to medium-sized ones—are choosing subscription-based POS software to save money upfront and increase flexibility.
For smaller businesses, paying for these systems monthly or yearly is easier than paying a lot all at once. These systems also update regularly, have better security, and can adjust to how much the business needs them. They are starting to include more features, like managing inventory, maintaining customer relationships, and analyzing data. These features help businesses understand how they operate and their customers’ actions. The trend towards these cloud-based systems is expected to continue as they bring many benefits to businesses.
7. Self-Service Kiosks and Automated Checkouts Are Changing the Retail Game
Self-service kiosks and automated checkout systems are changing the way stores operate. In 2023, the market for these systems was worth $4.62 billion, and it is expected to grow to $15.49 billion by 2032. This growth, which will happen at a rate of 14.42% each year, is due to the greater need for automation to smooth store operations, cut labor costs, and make shopping more convenient for customers.
Stores are using these systems to speed up the shopping process, lessen wait times, and reduce the need for cashiers. Checkouts are becoming more advanced, with features like motion sensors and AI to recognize items better and interact with customers. This not only speeds up the checkout but also helps prevent theft and fraud by improving security.
8. Integrating POS Systems with Loyalty Programs for Enhanced Customer Engagement
Modern POS systems are often combined with loyalty programs, making tracking rewards easier and offering customized deals that keep customers coming back. By 2025, this integration will become essential for businesses offering a smooth and personalized checkout experience. Loyalty programs are not just for rewarding frequent customers; they also help businesses gather important data about what and how customers buy. This information is useful for creating better marketing strategies and promotions.
These integrated systems update data across different sales channels in real-time, smoothing transactions and improving the shopping experience by instantly rewarding customers and acknowledging their loyalty. They also connect directly with CRM systems and other business tools, making business operations more unified and efficient. This connectivity gives businesses more detailed insights into customers’ preferences and behavior.
Conclusion
As the POS market advances, businesses have opportunities to enhance their operations through smarter, more efficient, and customer-centric systems. Trends such as adopting cloud-based systems, AI integration, mobile payment technologies, and industry-specific solutions highlight the evolving needs of diverse sectors. The growing focus on automation, subscription-based models, and loyalty program integration demonstrates the shift toward seamless functionality and improved customer engagement.
By staying informed about these developments, businesses can better align their strategies to meet future demands, ensuring that their POS systems remain an asset in achieving operational excellence and customer satisfaction. Whether upgrading existing systems or investing in new solutions, understanding the trends shaping the market in 2025 will help make informed, strategic decisions.
