Point of sale, or POS, is the time and place where a retail transaction is finished. The merchant works out what the customer owes, the customer pays, and a receipt may follow. A POS system is the kit that makes it happen: scanners, registers, payment terminals and the software sitting behind them.
What a point of sale does at the counter
Strip it back and the point of sale is a moment as much as a place. It's where browsing turns into a completed transaction. Here's what happens there:
- The merchant calculates the amount the customer owes, shows that amount and sets out the ways the customer can pay.
- The customer pays for the goods, or for a service that has already been provided.
- Once payment is made, the merchant may hand over a receipt as proof of the transaction.
- Devices such as weighing scales, barcode scanners and cash registers help work out the amount owed.
- Payment terminals, touch screens and other hardware and software options take the payment itself.
You'll also hear it called the point of purchase, or POP. The two describe the same spot. Retailers and marketers tend to say point of purchase when they're talking about the checkout area from the customer's side of the counter, which is where any sale signage has to do its work. If you're dressing that area for a busy weekend, here are free places to make Black Friday sale banners.
How a sale moves through a POS system in practice
Picture a customer bringing three items to a till in a corner shop. The cashier doesn't type in what each one sells for. Each item carries a product code, and that code is linked to its selling figure in the system, so one scan fills in the line and the running total grows with it.
Loose goods work slightly differently. Fruit, vegetables or anything sold by weight go on a weighing scale, and the reading feeds into the total. Once everything is counted, the customer sees what they owe and chooses how to pay, whether that's on a payment terminal, a touch screen or another option the merchant offers.
When payment goes through and any receipt is handed over, the transaction is complete. That whole sequence, from the first scan to the receipt, is the point of sale.
Now swap the shop for an equipment repair workshop. Nothing comes off a shelf, because the job is already finished when the customer walks in. The bill is totalled for the work done, the customer settles it, and an emailed receipt closes things off. Same moment, different counter.
The part most people miss: it's more than a till
Most people picture a POS system as the box on the counter. The software side often does a lot more. POS terminal software can include extra functions such as inventory management, CRM, financials and warehousing, so the same system that takes payment may also look after stock, customer records and the books.
That changes what you're choosing when you pick one. A setup that only totals and takes payment leaves those other jobs to separate tools. Because POS software can also handle financials, its sales records are a natural starting point for working out your break-even point.
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How to try it: sizing up a POS setup for your counter
If you're weighing up a system for the first time, go through these checks one at a time and note which ones matter for your business:
- List the kit you'd use to total a sale: weighing scales, a barcode scanner or a cash register.
- Pick the ways customers will settle up, and note the kit each one needs.
- Decide whether receipts should be printed, sent electronically, or both.
- Check whether the software includes inventory management for tracking stock.
- Check whether it covers CRM, so customer records sit beside each sale.
- Check whether it handles financials and, if you hold goods in storage, warehousing.
Who a POS setup suits
It isn't only a shop thing. POS systems turn up in hospitality, in ticketing offices such as cinemas, in equipment repair shops and in leasing businesses. Repair shops use them to bill for work already done, and leasing businesses use them to take payment for what they let out. Anywhere a customer settles up for goods or a service, there's a point of sale, even if nobody calls it that.
Frequently asked questions
Does a POS setup need special hardware?
It can involve some, such as barcode scanners, cash registers or payment terminals, but software options are available for taking payment too.
If an item's selling figure changes, does every till need updating?
No. The change is made once in the inventory window, and every scan of that product code picks it up.
Is a cash register the same thing as a POS?
Not quite. A cash register is one device a merchant may use to work out the amount owed; the point of sale covers the whole moment, from totalling to payment and receipt.
Is a payment terminal a POS system?
Only part of one. The terminal handles the moment the customer pays; scanners, scales and registers do their work before that, when the total is being added up.
Does every sale need a receipt?
No. A receipt is the merchant's proof of the transaction, and it can be printed, sent electronically or left out altogether.
