Home Technology What Is a POS System and How Does It Work?

What Is a POS System and How Does It Work?

by James Vinse

A Point of Sale, or simply POS system, comprises hardware and software that works together to process sales and payment transactions at sale points. Are you looking to start a business? Considering getting in a POS system might be the right choice for you. However, if you are only a consumer, you may have many questions about how POS systems work and if you might need one.

A POS performs all the functions regarding the cash register like tracking department items, tracking sales, adding taxes, and creating receipts. Using a POS system, products can be marketed to customers,  inventory can be tracked, and paperwork can be minimized through a smooth process. With an easy process, there is more time for the management of a personal venture.

How does a POS System Work?

A POS functioning can be a  little complex depending on your scale or industry. Explained here are the common functions of a POS system.

Management of Inventory

This occurs through feeding products into the system, where the system automatically keeps a record. So every time a product is sold, it is automatically deducted from the inventory list. With a POS system, you need to scan the barcode to add the price and product into the invoice.

After the transaction, the system will automatically subtract the quantity from the inventory. Also, some POS systems will alert you through notification or email whenever your inventory runs low.

Data Entry

A POS system can significantly reduce the time you spend entering products and customer data.  It will help you import data in mass to quickly set up your order and inventory across your retail solution. You can also lookup your customer database and product log and fill in the data automatically. This way, you won’t have to type data manually.

Customer Marketing

POS is a great tool for customer marketing. By tracking your customers’ contact information and purchases, you can design strategies to help you boost your business.  Once it integrates with your customer database and loyalty programs, you’ll be able to run various promotions simultaneously. Besides, most systems allow direct email reports and automated email marketing.

A POS system also improves your customer experience through face-to-face communication. Once a customer gets in, you can view their past transactions and upsell products or make recommendations. Moreover, you can record their other information such as favorite colors and birthdays. By doing this, you’ll be able to recognize and care for them. These little efforts will keep them coming back.


One of the essential features of a good POS system is running reports. Unlike the traditional system, a POS system will help you develop important reports such as customers, sales, marketing, and inventory. You can then send the reports automatically to your other accounting software and finance department.


When it comes to payments, a POS system will send the amount and payment details to the payment terminal so your customer can tap their card. Once the payment is complete, the system creates an invoice and records the transaction.

Common Types of POS Hardware

  • Register-A register is what helps you process your customers’ transactions.
  • Credit card reader-This hardware allows your customers to securely pay by credit card using a chip card, Apple pay, or magnetic strip card.
  • iPad or tablet- Since you can prop up these devices on a stand, they allow your time to clock in and out.
  • Bar Code Scanner- A barcode scanner reads the product’s details. It also helps you double-check the stock level, price, and other details.
  • Receipt Printer- This helps you print the receipt to show the customers when and what they bought and how much cash they paid.
  • Cash Drawer- Some POS systems are also connected to a cash drawer to help you track exactly when the drawer was opened.

Choosing the Best POS System

 If you are looking for the best POS system, make a list of the features you must have. You also need to consult your fellow business owners who are doing the same thing and ask them what system they are using.

Once you are done, start searching for one while ensuring you focus on an easy-to-use, secure, easy to maintain solution. Since usability and agility are important in a POS, consider flexibility in pricing, ease of use, hardware durability, data security, and customer service.

The POS system that you choose has a significant impact on how you run and grow your business. With several options out there, you don’t need to rush when looking for one. This way, you’ll evaluate different providers depending on your needs.

Related Posts

Leave a Comment