What Is A POS System?


Don’t miss out on the benefits a POS system can bring to your business.     

Today, we're going to dive into the wide world of POS systems to provide you with some insight into the features that could help streamline your day-to-day operations.

Which of these POS system features could be the most advantageous for you?

What Is A POS System?

What is a POS Systems

POS is an acronym for "point of sale." You can think of point of sale as "point of purchase" or the point where a transaction is made.

We call these systems POS systems because a point-of-sale transaction is one that happens between a customer purchasing a product or service and a business selling that product or service.

To complete these transactions, businesses almost always use POS systems.

Head over to POS transaction meaning for additional information

Think of the last time you visited your favorite restaurant or retail store. You likely made a purchase through their POS system.

At its most basic level, a merchant will often use a POS system that is a combination of software and hardware. These machines are used to accept non-cash payments, unlike standard cash register models. With a modern, high-quality POS system, you can accept credit card payments, gift card payments, and tap payments through Google or Apple Pay.

Now, in a way, POS systems are the next evolution of cash registers, providing businesses with greater functionality.

Point Of Sale (POS) System - A Deeper Definition

The true definition of a POS system is a hybrid system combining point of sale software and electronic hardware equipment, which is used by a merchant to accept credit card payments and complete point of sale transactions.

More often than not, storefronts will use point of sale terminals with built-in POS software. Together, these systems can not only handle sales transactions but also help optimize daily operations. Many business owners would probably agree that their POS system is at the heart of their business.

Some features often found on POS systems include:

  • Inventory management
  • Employee management
  • Menu Customization
  • Sales reporting and analytics
  • Labor reporting
  • Marketing tools

There are hundreds of POS systems out there, many of which are specific to certain industries. For example, a car wash business might use a POS system that is specific to car washes and a pizza joint might use a POS system that is specific to restaurants.

What Does a Modern POS System Consist Of?

More often than not, modern POS systems consist of touchscreen terminals and integrated POS software. The combination of hardware and software allows these systems to accept various types of payment. Sometimes, a point of sale solution company will bundle other pieces of hardware with the terminal, including a credit card reader, front-of-house receipt printer, kitchen printers, barcode scanner, cash drawer, or an on-site computer server.

With new technology on the market today, cloud-based point of sale solutions have become incredibly popular. With cloud-based point of sale solutions, all of your data is stored and synced online, meaning you need Internet connection to run one. Cloud-based POS software eliminates the need for in-store servers.

With so many modern POS systems and providers on the market today, the prices and features found in these systems can vary pretty greatly. How many terminals a business will need depends on the environment and the volume of customers they get daily. Many providers offer unique cloud-based point of sale solutions, as well as mobile solutions. The beauty of these types of solutions is that you will always have access to your data and sales no matter where you are.

As we said before, however, there are many kinds of POS systems out there, many of which are industry-specific. Let's explore the various point of sale system types you might run into.

Various Types Of Point of Sale (POS) Systems

Beyond accepting credit card payments, gift card payments, and other non-cash payments, there are plenty of reasons why restaurant owners look to point of sale solutions to optimize their business operations. Having the ability to monitor transactions, utilize reporting features, and track financial data, can be extremely helpful. Of course, that's only the tip of the iceberg.

Restaurant POS systems

often come with hundreds of unique features to increase efficiency. 

You might get a POS system with tableside ordering, for example, which allows front-of-house staff to send orders back to the kitchen without ever having to leave the floor. You might also find a restaurant point of sale system with inventory management to keep track of ingredients or one with a built-in time clock to help you get a better grip on your payroll.

Popular restaurant POS system functions include:

  • Loyalty programs
  • Online ordering
  • Customer management
  • Restaurant marketing
  • Menu performance
  • Sales reporting

It should be noted that different restaurants will require different systems depending on how they operate. From full-service restaurants to quick-service restaurants to pizza shops to cafes, the type of POS system that a business need might differ greatly from another.

The best POS systems for retail come supplied with the software required to run a retail business. Important features include:

  • Inventory tracking
  • Size Matrixing
  • Employee Commissions
  • Customer data
  • Gift Registry
  • Purchase Orders
  • Layaway
  • Stock Levels
  • Sales Reports

To scan items, a retail store might also require a barcode scanner. Similar to how different restaurants would need different point of sale systems, different retail stores might need different retail point of sale systems.

For example, a liquor store would have much different needs for its POS software compared to a clothing store.

The best POS systems for small businesses are a bit more versatile than the other types of POS solutions on this list, due to the fact that small businesses come in many shapes and sizes. For the most part, a small business will likely use technology-heavy, app-based POS software or mobile platform.

Small businesses often can't afford to put hundreds of dollars per month into a POS system with expensive POS hardware. Industry experts often recommend tablet-style, cloud-based systems, which are flexible, lightweight, and cost-effective. Plus, the POS software found in these systems is usually plenty enough to increase efficiency.

The beauty of these POS systems is that they can process payments for small-volume businesses with speed and agility. 

Most of these app-based POS solutions come with feature-rich software, meaning you don't need to spend thousands on traditional POS hardware.

  • Inventory management
  • Employee Management
  • Integrated Payment Processing
  • Customer Information Storage
  • Sales Reports

POS Systems for Different Business Types

Point of sale systems go far beyond restaurant and retail businesses. Here are some of the business types you might see specific POS software and hardware for:

How Do POS Systems Work?

Once you understand what a POS system is, you need to understand how one works. Implementing a POS into your business can take a lot of work, especially if you're new to the system. Contrary to what some might believe, there is a world's difference between cash registers and point of sale systems.

Here is a little summary of what you need to know when it comes to setting up a POS system:

Setting Up Your POS System

Depending on how your business functions, you'll need to consider different hardware and software components. A retail store will need a retail-friendly POS system while a bar or nightclub will need a bar/nightclub-friendly system. Looking for specific hardware, such as a POS terminal or credit card reader, that aligns with your business, is important.

Start by considering whether you need things like terminals, servers, receipt printers, barcode scanners, self-checkout kiosks, scales, etc. Do people often use regular credit cards or chip cards?

Once you've done that, think of the way you need your software to operate. Do you need a better way to manage the ingredients in your restaurant? If so, you'll need a POS system that has that feature. You might want to set up a loyalty program to get returning customers. Finding a point of sale solution with software that can offer and keep track of loyalty programs for customers will be key.

Programming Your Point of Sale System

Next, you will need to program your POS system software with your products, services, inventory, or menus. We recommend looking for a company that can help you with the programming portion of the setup unless you have the time, energy, and tech-savvy personality to do it yourself.

Processing Payments

The only way that you can start processing credit card or non-cash payments with your POS system is by starting a merchant account with a payment provider. This part of the setup is a requirement. Without it, your business will not be able to accept a credit card or perform a single, non-cash POS transaction.

It is important to note that some POS companies offer their customers payment integration. However, if your particular POS company does not act as a merchant services provider, you will need to find a third-party service to integrate. This can be good or bad depending on the credit card fees.

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If your POS provider has installation services or support, we highly recommend taking advantage of them. It is important that you set your POS system up properly so that you can take advantage of all of the onboard features. Without installing your point of sale system properly, you take the risk of running into technical issues, which you don't want to have to deal with as a business.


From learning how to swipe a credit card to dealing with deeper parts of the business, such as inventory management or payroll, business owners and employees will need to know how to utilize POS software and hardware. More often than not, a POS provider will provide training, either for free or an additional fee. Make sure to take advantage of this training.


Different types of POS solutions will have different hardware integrations. Here are some of the most popular hardware components and integrations you might consider for your point of purchase system:

  • Cash drawer
  • Cash register
  • Credit Card reader
  • POS terminal
  • Receipt Printer

Conclusion - What Is a POS System and How Can You Find The Best POS System For Your Needs?

While the definition of POS is simple, the way that POS solutions operate can vary. And with so many great POS solutions on the market, it can feel quite overwhelming to find the right one.

The best thing that you can do to find a POS system for your business is to ask business owners within your network, read trusted reviews, browse through helpful case studies, and ask for demos from various POS providers.

We understand that getting quotes from different providers can be incredibly time-consuming. Our service provides FREE quotes from multiple POS providers based on your needs and budget.

Answer the few quick questions below to let us know what you're looking for!

Tyler Connaghan Author

Tyler Connaghan

Contributing Author