Table of contents

What is a POS? Everything you need to know

In this article you’ll learn:

  • What’s a POS system? How does it work?

  • What are the advantages of using a POS system for your business?

  • How to choose the right POS system for your business?

What is a POS?

POS stands for point of sale. 

It’s that point in the business when a transaction is completed. 

That means… 

…when your customer makes a purchase, makes a payment for it and receives a printed receipt, they complete a transaction at the point of sale.

A Point of Sale (POS) system is a combination of hardware and software that allows you to do more than just complete a transaction. 

It helps you manage all your business processes from one system, such as taking payments, tracking inventory, tracking revenue, and bookkeeping. 

It gives you full control of your business and brings all your important data together in one place. 

What are the advantages of using a POS system for your business? 

A POS system helps you speed up your checkout process, and take faster payments.

It also helps you reduce paperwork and optimise administrative tasks like:

  • Calculating total transactions made in a business day

  • Keeping track of your finances

  • Logging off your employees’ working hours

This gives you ample time to think about ways in which to grow your business. 

You can also spend more time interacting with your customers to enhance their experience.

If you’re planning to start a small business, a digital POS system is a must-have for you.

Old school cash registers could only be used to accept cash payments and print a receipt. Even the price of every product had to be manually added by the cashier.

A modern POS system, however, is a sales solution.

It not only allows you to have flexibility in accepting different payment methods but also provides you with tools to simplify your workflow. 

You can: 

Easily manage large inventory

Keeping track of your inventory is a very important step in running a successful business.

Running out of stock in the middle of a sale can result in an embarrassing situation with your customers. 

It can also ruin your professional reputation and create a feeling of mistrust in your customers. 

A good POS system can calculate your inventory stock in real-time, i.e. as you sell and notify you when it’s time to restock.

It also allows you to easily update your product catalogue with pictures and product descriptions to speed up your checkout process.

Create better sales strategies

One of the reasons to use a modern POS system is to be able to track your daily sales.

With a regular sales report, you can analyse the most common trends of your business, such as which of your products sell more and what are the ideal operating hours for your business. 

You can use this information, in turn, to increase your sales and ensure customer satisfaction by giving them exactly what they want.

Manage more than one employee

Tracking the performance of your employees can have the same result in helping your business as tracking your sales. 

You can track working hours, total transactions made and targets achieved and use this information to design overall sales strategies for your business.

A good POS system, however, does more than just track your employees’ performance. 

It also allows you to add and train your employees easily, and grant limited access based on what information is required by each employee.

Create better relations with your customers (CRM)

It goes without saying that customers are the backbone of your business. So it's important to make that extra effort to build strong lasting relationships with your customers.

A good POS system can track your customer’s data such as their purchase history, preferred payment method, and personal information. 

You can use these insights about your customers to develop marketing strategies such as making product suggestions. 

You can even design special bundles at discounted prices for your regular customers. 

Your POS system can also facilitate a built-in loyalty program to appreciate your customers for choosing your business.

Accept all payment methods

One of the reasons to switch to a POS system is the flexibility it offers in choosing payment methods. 

In the digital age of cryptocurrency, the cash-only payment method is soon becoming outdated. 

A good POS system allows you to have a variety of payment options such as integrated credit card processors, invoicing, vouchers, credit tickets, QR codes and others.

A wide range of payment options also makes your business accessible to tourists and international visitors who might not always carry the local money.

Easily take care of bookkeeping 

Setting up a business is often the easier part, what’s difficult comes after. 

Taking care of your finances, i.e. bookkeeping and accounting for your finances can be tedious, especially if you don’t like numbers.

Thankfully, modern POS systems allow you to regularly track your finances. They record your daily transactions and cash flow and provide ready-to-use digital reports. 

This reduces the manual effort of going through every transaction and then recording it in a sheet. 

Be taken care of

A good POS system also comes with a dedicated customer support team that can guide you through any glitches in your system.

In order to ensure the smooth running of your business, it'd be good foresight to choose a POS system provider with a dedicated support team.

How to choose the right POS system for your business?

To choose the right POS system, think about the size of your business and then go for the POS system that offers the functionalities needed to deal with your everyday activities. 

A mobile POS for a mobile business:

Mobile Point of Sale systems are essentially payment processors. 

They’re ideal for small businesses that don't need a lot of features such as large scale inventory management, employee management, and CRM functions. 

Mobile POS systems are suitable for businesses like pop-up stores, farmer’s markets, donation camps, or contractors.

Most payment processors offer the POS app for free, but you have to pay a fixed transaction fee to accept card payments. 

A tablet POS for small businesses:

Tablet Point of Sale solutions are also mobile and can be used by small brick and mortar businesses such as coffee shops, small retail stores and fashion boutiques.

Tablet POS is a modern phenomenon and uses cloud-based servers to store data.

It doesn’t require a lot of investment and can be easily paired with a compatible card terminal. 

Depending on the functionalities required by your business, you can either use the free app (with basic features) or opt for a monthly subscription.

It offers you features such as bookkeeping and customer relationship management.

A terminal POS for medium to large businesses:

Terminal POS systems are more common in supermarkets, full-service restaurants, and large beauty salons. 

Terminal POS systems are all-in-one systems that include barcode scanners, receipt printers, cash drawers, and other hardware that a small business mightn't require. 

They also offer more complicated software features such as complex inventory function for a supermarket, tipping option for a restaurant, or appointment booking for a beauty salon.

These systems generally use on-site servers to store data making it difficult for them to be portable. 

What are the key components of a POS system? 

A POS system is a combination of hardware and software that work together to help you run your business more efficiently.

The hardware bundle consists of:

A tablet or desktop display unit

A display unit supports the POS app which is the customer-facing front-end of your system. You can take payments and access your product catalogue from here.

A card reader for digital payments

A card reader is used to accept credit and debit card payments, along with other forms of NFC (near-field communication) payments, such as Apple Pay, and Google Pay

This gives your customers a wide range of payment options and you can avoid losing any sales.

A lockable cash drawer 

A cash drawer is traditionally used to store payments made in cash, cheques and stamps and is secured with a lock. 

An optional receipt printer

A receipt printer is used to print receipts for your customers. It’s an optional element in your POS system, as many people nowadays opt for electronic receipts to save paper.

A barcode scanner for faster checkout

A barcode scanner is an important element in a retail POS setup. It links to the inventory count to give real-time updates of your stock levels. 

A wireless router 

A wireless router connects all the elements of your POS system with each other so they can work in sync and reduce manual effort on your part. 

The software is a combination of:

The customer-facing app

The POS app is the initial checkout interface for your system. It's also the frontend which your customers can interact with.

You can access your product catalogue, take payments, and even open and close business days with the app.

The merchant-facing dashboard 

You can add inventory to your system and generate reports to analyse your daily sales in the dashboard. 

You can also keep track of your finances in the dashboard and create digital bookkeeping reports.

Another important element of a POS system is a secure server that can safely store all your data. This can be achieved in 2 ways:

  • With on-site servers

  • With cloud-based server

An on-site server needs a physical storage facility and, therefore, requires capital investment.

It would also need dedicated IT support to constantly maintain and update the server to prevent it from being hacked. 

But cloud servers don’t need any of that. 

Since they’re hosted online, cloud servers occupy no physical space in your store and can be maintained by your POS provider. 

Connecting your POS system to the cloud makes it more mobile and flexible.

  • Your system is easier to move because it doesn't need to be wired to a server. It just needs a good router to connect to the internet. 

  • It also gives you the freedom to manage your business remotely from anywhere in the world. All you need is to log in to the cloud server to access your transactions.


A POS system helps you bring all your business processes together in one place and reduce the time used in basic admin tasks, allowing you to have more time to develop your business. Depending on the size of your business you can choose the mobile, tablet or terminal POS system. 

Rashi Jasrapuria