What Is A Point Of Sale System? (With Types And Benefits)

By Indeed Editorial Team

Published 19 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A point of sale is the place where a customer transaction occurs. It helps retail managers and marketers track and predict sales trends and improve customer service. If you work in retail management, marketing or sales, learning about this essential retail term can help you develop strategies to increase your company's profits and enhance customer satisfaction. In this article, we define point of sale and discuss the benefits that this system can provide with tips on how to choose the right one for your products or services.

What Is A Point Of Sale System?

Knowing the answer to "What is a point of sale system?" can help you understand and record purchasing decisions. The term point of sale (POS), also known as point of purchase, refers to the time and location when a customer makes a transaction by purchasing goods or services. A POS system in a physical store is usually a terminal that accepts cash and card payments. Other stores have a self-checkout option where customers can control the system themselves. Online stores now have a webpage where customers can enter their payment and shipping details.

Sellers can find techniques to encourage customers to make additional purchases depending on the location of the system. For example, retail salespersons often place small, cheaper items near the POS terminals. This often encourages customers to make last-minute impulsive purchases that they might not have planned.

Related: What Does A Retail Salesperson Do? (Duties And Career Path)

Types Of Point Of Sale Systems

There are different types of POS systems depending on the requirements of your business:


Smartphones and tablets are perfect for retail businesses that want the flexibility to process transactions from anywhere. Such systems are cloud-based, which helps to make the checkout experience more convenient for customers. For retail businesses, this can generate more sales since customers can avoid waiting in queues or search for cash registers. This system is often effective for small restaurants, food trucks and other merchants who may not manage large quantities of stock.


A POS system in terminals uses hardware systems to process card payments at retail outlets. The terminal reads the magnetic strip on the credit card or debit card and transfers the necessary funds to the merchant. Customers also receive a receipt of the transaction via email or text. The terminal system works well for retailers and restaurants.

Self-service kiosk

A self-service kiosk allows consumers to make purchases and transactions independently. Customers can place their orders and pay for these goods and services on their own. This ensures no-contact service and customers can make transactions without waiting or delay. Self-service kiosk systems are particularly effective for low-traffic merchants.

Multichannel POS systems

A multichannel POS system allows merchants to sell in physical stores and online using a centralised program. This system is suitable for anyone who sells from more than one location. There are multiple payment processes in a multi-channel system, including credit cards, debit cards, cash and other payment types.

Open-source POS

Open-source POS enables you to choose the functions of your POS software. It allows for customisation so that merchants can choose the functions of your POS software. Besides the basic POS operation, you can customise features like barcode printing, many reporting tools and the ability to track inventory. Since this system can be expensive and more complicated than the others, it is well-suited for larger organisations.

Benefits Of Point Of Sale System

Here are some of the benefits of a POS system:

Collect sales data

A point-of-sale system helps to collect information about your sales and consumers. Modern-day POS software track data such as inventory, sales, invoicing and consumer habits. This feature lets you keep track of sold and in-stock items. This helps your company to better serve its customers.

Predict future trends

Collecting information about day-to-day transactions can help you predict future trends. For instance, once you analyse which products are selling well, you can order more of these products and reduce the stock that sells slowly. You can also gauge the days and times of day when business is at its peak. All of this information can help you schedule maintenance at an opportune time and service your customers better.

Enhance the transaction process

POS systems use software to automate transaction processes and make payments faster. For example, store POS systems use barcode scanners to identify an item and its price. Customers can also receive their invoice by mail or receive it directly on the spot with a receipt printer. They can avoid waiting for long hours and employees can efficiently complete transactions. Such quick transactions enhance customer experience and encourage them to return for more purchases later.

Better customer experience

Smooth and faster transactions can lead to better customer experience. It also helps to document your customers' information and have a better overview of your target market. You can also use the POS system to send promotions and related products to your customers and incentivise them to visit your store. This is only possible when you have thorough customer information that you can collect via a suitable POS system.

Related: What Is Customer Service? Definition And Career Advice

Better security

It is important to secure your business data from external threats and cyberattacks. Most POS systems offer double user authentication to reduce the intrusion of malicious users into the system. Cloud-based POS systems also help in backing up and protecting your data, which can be especially useful to recover them during natural disasters such as floods or store fires.

Simplified operations

A POS system can simplify complex business transactions. For example, if you use a computer for your inventory management, the next step is to scan your items to record them in the system. POS software also create reports of your sales, purchases and customers. Besides saving time on manual work, this also leads to fewer errors since the system assists you in every function.

6 Tips To Choose A POS system

Consider these six tips to help you choose the right POS system for your company:

Review the initial cost

While it is relatively cheaper to operate a POS system, purchasing and setting these systems can be significantly more expensive. The number of POS terminals you need for your store is also another important consideration. Consider the investment in software and additional hardware whenever you decide to select a POS system for your company.

Determine what system suits your hardware

It is important that you purchase a POS system that is compatible with the hardware in your store. This can help to eliminate the need for cash registers and barcode scanners. Consider updating your equipment if your POS system is not compatible. This can serve as a long-term investment for your business.

Identify which features you require

POS systems have a wide variety of features for the benefit of merchants. As a business owner, you might want to consider what the business needs when choosing a POS system. For instance, consider whether you require a system that accepts multiple payment methods, cloud storage, mobile registers or customer-facing display. The right set of features can make transactions easier and simpler for your business.

While choosing the right POS system, consider the skill levels of the employees and regular customers. For instance, at a tech-based retail store, you might choose a more complex system. In comparison, for stores that sell food products, it may be useful to instal a simpler POS system.

Plan training procedures

Purchasing the POS system is not enough. Once you have purchased and installed the system, the next step is to train your staff about the system so that they can use it effectively. In doing so, consider that extensive training might require an investment of more company resources, including money and additional efforts by senior leaders to train the junior staff. Before choosing the POS system, assess your training resources carefully.

Related: Types Of Workplace Training: Definitions And Examples

Select a system with growth potential

Consider the growth rate of the business while choosing the right POS system. Some systems may limit the number of registers you can use that can impact the growth of your business. If you expect your customer base to grow quickly, it is useful to select a POS system that can accommodate expansion and is compatible with your current business.

Plan customer support options

To ensure you choose the right POS for your company requirements, research the customer support that each system offers. For example, your company may require that the manufacturer offer maintenance, replacement parts and routine service to keep your system operational. You can also consider additional factors, such as installation of the hardware and availability of customer support representatives. You may find it helpful to read reviews of different POS systems to ensure that you choose a quality system with the customer support your company requires.


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