guide to point of sale

What is a Point of Sale (POS) System? A 2022 Guide to Point of Sale

Merchants have many operational needs depending on their specific niche industry. Everyone requires payment processing; it’s impossible to operate today if a business’s sole payment mode is cash, especially given the diminishing use of cash in any given week. But a lot more needs to be done, including payroll, inventory management, and customer contacts management. They may even have a loyalty program requiring them to run promotional campaigns. Certain features and functionalities are specific to industries or the type of merchants, be it mobile versus a traditional brick-and-mortar operation or a service-oriented business versus one offering goods. 

All these business operations can easily consolidate all these operations for efficiency into a single device, the POS. There are many different items that can make up the POS system, or it can be a single terminal device. In this article, we offer a comprehensive guide to a Point of Sale system, starting with why businesses need one, how a Point of Sale system is used to process payments, the different types of POS systems available, and what capabilities are in demand for POS. 

What is a POS?

A POS is an acronym for Point of Sale, representing the different software and hardware systems businesses use to operate and process payments. It can be a single device or a combination of various terminals, readers, and screens that allow merchants to record their transactions and process their payments. 

Different merchants have different uses and definitions of POS systems. For a small mobile business, it may be a simple card reader that can also accept many different payment options. 

For other businesses, a POS will need to cater to all its operational needs. That may include customer service, reservations for both rooms and meeting rooms, inventory, tables, and employee management at their restaurants, spas, gift shops, and a multitude of other a la carte service offerings, which must be priced, often at customized rate. These services will then be processed for payment with options that may include credit and debit cards, mobile money, and digital wallets such as Apple Pay and Google Pay, among others. All these myriads of operations require an entire network of registers, cash drawers, connected devices such as tablets, card readers with EMV and NFC capabilities, and receipt printers. 

Types of POS available

There are many different types of businesses and a large variety of POS system solutions to cater to almost all types of businesses and needs. You can be a vendor at a farmers’ market or a food truck operator. Your business can be computer service delivery at the door or an eCommerce site. 

A business can be as small as a corner coffee shop or a large restaurant that requires an assortment of interoperable terminals throughout the operation managing everything from sales reports to inventory to supplies and raw materials. It may even include order-taking at the table and displaying that in the kitchen, which can update once ready. 

Below are the most used point of sale devices and terminals. These are a combination of both hardware and software POS solutions. 


Register – This device is used to record and process a customer’s transaction. 

Cash drawer – A locking drawer accompanies the register to hold cash. A cash drawer automatically opens the cash drawer to collect cash payments and can record all instances the drawers open to aid in fraud and theft prevention. 

Tablet devices – these are used at the register instead of a monitor and can be propped up as one display for the staff and another one facing the customer to ensure the transaction is recorded correctly. They can also be used as handhelds throughout the business to track inventory, conduct interviews, or take orders, among other uses. 

A card reader – the most common and vital device to accept noncash payments. An ideal card reader can accept all types of cards and has near-field communication and EMV capabilities to accept the latest payment options by swiping, dipping, or tapping their digital wallets such as Apple Pay, Google Pay, Samsung Pay, and a host of others. Card readers can be handheld terminals with attached touchscreens or small devices that can clip onto a smartphone or connected device such as a tablet to process the transaction.


Cloud-based or online POS systems – the POS offerings allow merchants to bring their own hardware devices and install the software onto them. These solutions aren’t as common but may be ideal for small businesses that would like to utilize their existing tablet or smart devices, given their limited use of noncash payments processing and other tertiary offerings. 

Another aspect of cloud-based POS is the software solutions of some of the biggest POS providers, such as Clover, that have their own App store for their point of sale system. The library of apps allows merchants to easily download additional add-on services they need for their business, such as payroll management software, QuickBooks integration, etc. 

Mobile POS options – this option is for small businesses that allow them to download a POS app that offers payment processing and some limited capabilities around customer information systems and inventory management. The app-based POS solution is geared towards small businesses or individual users that provide professional services on the go. The solution is often accompanied by a free mobile card reader that can connect to a smartphone or a tablet.

What capabilities are in demand for POS systems?

There are many varying needs that different business types have. Regarding POS capabilities, we look at some of the most commonly used functions that are a necessity based on how consumer payor may be required for security or legal purposes. 

Near-field communication (NFC) – this technology is now built into almost all smart devices such as smartphones and tablets. NFC is the backbone of touchless payments, where the consumer can simply hover their phone close to a POS device or tap on it to pay for transactions. The technology allows the transfer of payment data required between the POS terminal and the mobile wallet, such as Apple Pay and Google Pay.

EMV-enabled card reader – EMV cards are quickly becoming the credit card standard in the US and have already been in place for years in the rest of the world. An EMV chip is a form of nanocomputer built into the credit card. It is that chip that is dipped into the POS terminal to process a transaction. Its encrypted and tokenized security mechanism that cannot be replicated or tinkered with, so it is impervious to fraudulent activity or theft. 

Furthermore, the EMV liability shift established by the major card networks in 2015 stipulates that if a fraudulent activity stemming from incorrectly processing an EMV chip card, i.e., it was swiped rather than dipped, results in a loss, it is the responsibility of the merchant who processed that transaction to bear that loss. As a result, POS systems with EMV-enabled card readers are an absolute must functionality for POS solutions to have. 

Security Mechanism – The best point of sale solutions include payment processing features that implement the latest security protocols, including 3D Secure, Card Code Verification service (CVV2), BIN checkers, ad Address Verification Systems (AVS), allowing merchants to stay in compliance with the latest PCI-DSS standards and help in reducing payment processing charges.

Tokenization is another strong security capability that is quickly becoming a standard for payment processing. Tokenization is a robust security protocol that protects consumer data by substituting sensitive personal payment details with a non-sensitive random string of numbers to process a transaction.

Integration – this is another crucial factor in choosing the right POS solution. Most POS have integration capabilities, but it is essential to understand the specific integration available for third-party apps. Numerous accounting software and apps may need integration, as well as a host of other services such as employee management software, CRM solutions, or automated email marketing or campaign tools. 

Some important considerations

There are a few critical considerations that merchants need to pay close attention to when deciding on what is the right POS system for their business needs. These considerations are essential as they can be very costly if ignored or may require merchants to overhaul their payment processing setup completely.

Beware of the Free POS – be very skeptical of any offers of ‘free’ POS terminals or leases for those systems. This is seldom done anymore by payment processors. However, if advertised, it is usually a gimmick and a very costly one.

Many payment processors simply offer free POS equipment and lock merchants into long-term noncancelable equipment leases that lock in higher payment processing fees. Effectively, POS equipment that may have cost only a few hundred dollars can end up costing merchants a few thousand dollars.

As a result, it behooves merchants to carefully review the agreement they are signing in which there is any mention of free or leased POS terminals.

Universal vs. Proprietary POS equipment – proprietary POS equipment will only work with particular payment processors, usually, their parent or sister company or a few others with which they have revenue-sharing partnerships. A perfect example of a proprietary POS would be Square’s Register, which only works with Square’s payment processing service.

Universal POS systems are ubiquitous and open, and they work with any payment processor without any stipulation to work with specific merchant service providers.

Customer Support – the overall support a POS system provider offers has the potential to make or break the overall experience with the product. The Payments industry has made great strides in its service offering. With the advent of online and social media, businesses’ reputations travel at the speed of light. They can quickly alienate potential customers at the slightest hint of a company and its product being poor custodians for merchants.

Nonetheless, businesses need to review the support offering of a POS systems provider carefully. Do they of 24/7 support, one that is easily accessible? Are the staff knowledgeable and trained to handle inquiries diligently, and can they do it empathetically? 

These are essential considerations and one for which online reviews and reports to the Better Business Bureau run rampant. Investment in the customer experience requires a long view of a business. POS systems vendors who’ve made that investment are likely those companies that have been around for some time or are most likely to become such businesses.

Support levels also indicate other areas of how a business conducts its operations. That tone and attitude manifest in other teams, such as sales teams. Companies espousing the long view nurture relationships over the long term rather than focus on quick sales closes. They are transparent and honest and answer questions without glossing over the challenging parts.

A point of sale system is an ideal investment for businesses of all types and industries. There are many considerations that merchants need to pay attention to when choosing a POS system, such as the type of POS system they need, how much they can afford, what specific features they must have or whether they need any third-party integrations, i.e., payment processing.

Merchants can bring into a single platform all the different business functions they need to manage, such as inventory, payroll, personnel, table service for restaurants, their database of client contacts, loyalty and referral programs, and any subsequent email campaigns targeting that audience. It is important to point out that these systems’ efficiency saves a tremendous amount of time and money.

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