The Hardware and Software Components of a Point of Sale System

In 2021, the global point of sale (POS) market exceeded USD 65 billion which is expected to grow at 10% CAGR from 2022 to 2028.

I am sure you’ve all come across the monitor placed at the checkout counters of any retail store where the store assistant scans the label attached to the product you are about to purchase, displays the amount you owe on a screen facing you, and helps you pay for the purchased item, thus completing the transaction. The term given to this place where the sale is made is called ‘point of sale’ (POS). Similarly, if you are shopping online, the final check out point is the point of sale. It is the most critical step of any shopping journey, which is why you need to provide your shoppers a great shopping experience.

In this article, we have talked about the fundamentals of a POS system that you ought to know if you are planning on starting or growing you retail business.

Let us start by understanding

What is a POS system?

Remember the traditional cash registers that retail business owners used to maintain to process and keep a track of their sales each day? A POS system is the technologically advanced and modernised version of those cash registers. An amalgamation of both hardware and software, the POS system performs numerous other functions like inventory tracking, employee management, managing customer data, etc. aside from simply tracking a transaction history.

Types of POS system

From simple processors to complex cloud-based systems, POS systems vary based on the type of business - online or physical and the size of your business - small, medium, or large enterprises. 

1.     Mobile POS System (mPOS): As the name suggests, a mobile POS system requires electronic devices like smartphones, tablets, or other mobile devices as a terminal that can read your credit card. It is portable and allows you to connect other POS accessories like barcode scanners and receipt printers mostly using bluetooth. Mobile printers help in processing payments and offer other capabilities like inventory management, loyalty programs, sales monitoring, reporting, and more. Suited specifically for small businesses, mPOS systems do not consume much space and are extremely convenient and affordable. 

2.     Terminal POS System: Unlike mobile POS systems, terminal POS systems require a combination of hardware and software. Other than processing payments, they offer numerous benefits like inventory management, reporting, analysis, CRM, etc. and are particularly suited for businesses that have cash-dedicated cash drawers. 

3.     Cloud POS System: Also known as web-based POS system, the cloud POS can be used with your computer, tablet, or printer and performs all the functionalities of a terminal POS. The only difference between the terminal POS and the cloud POS is that the terminal POS is run locally whereas the cloud POS is installed in data centres and maintained by your POS vendor. 

Benefits of a POS System

1.     Better Inventory Management: Connecting your POS system with your inventory is extremely crucial for every retail business as it is not humanly possible to rummage through every item in your inventory in case a customer asks for a specific item. The inventory gets adjusted accordingly as you make sales and notifies when the item needs to be re-stocked. It also notifies when any item doesn’t sell as anticipated. Managing your inventory using a POS system eliminates the chances of theft too. 

2.     Accurate Accounting: For every business to function smoothly, financial reporting is essential. Installing an accounting software in your POS system helps in tracking the transactions into proper accounting categories and produce monthly or quarterly reports that helps in tax purposes. Financial reports can also be used to create balance sheets, income statements, or cash flow statements. 

3.     Quick and Secure Transactions: Customers do not like to wait in a queue for long. Therefore, retail stores must have a fast checkout process. This is where a POS system proves to be beneficial. Not only do they offer a fast checkout process, but they are also highly secure. Most importantly, since the products are scanned using a barcode scanner, accuracy in every transaction is maintained. 

4.     Reporting and Analysis: The reporting feature of a POS system helps businesses keep a close eye on the sales, profit, and expenses. You can fetch real-time data using a POS system. If you own a cloud POS system, you can access the business reports from any location. Also, with POS systems you can gather information like customer’s purchase data to forecast models and formulate detailed report. 

5.     Better Employee Performance: With the sales reports, you can ensure that the productivity of your employees is always high. You can keep track of their check-in and check-outs to make sure your payroll data is accurate. 

6.     Detailed Receipts: Customers are provided with a detailed receipt of their purchase. The POS system can use the inventory data to draw out information like item price, product specifications, discounts if any. Adding coupons directly on the receipt, highlighting loyalty reward programs, acknowledging the return policy, and printing a link to a survey about the customer’s experience are some of the added advantages. 

7.     Customer Management: Using a POS system, you can enhance customer satisfaction by offering personalised services to your customers and promote continued interaction with them. At the same time, you can provide sales history, discounts, and customer rewards. 

Moving forward, let us discuss the components of the point of sale system.

1.     Hardware: The POS hardware comprises the physical setup, for example, a cash register connected to a computer, server, or a portable device like tablets or smartphones connected to a cloud-hosted system. Premium quality hardware is a business investment and you should pick POS hardware that offers flexibility, are easy-to-use, can integrate features supporting future growth. The popular hardware components include:

 

·       Barcode Scanner: The most crucial component of a POS system is a barcode scanner and is a must-buy for retail stores. Barcode scanners speeds up the checkout process, reducing transaction times which allows you to serve more customers. Depending on your business requirement, choose the right barcode scanner for your business. 

·       Receipt Printer: Even though customers prefer digital receipts via email or SMS, that save you the cost of paper rolls, it is always a good idea to own a traditional receipt printer integrated with your POS system. There are customers who require receipts to maintain their purchase history and they come in handy especially when they exchange or return the purchased item. There is a plethora of receipt printers available in the market. Therefore, ensure that you pick the right receipt printer depending on your business needs. 

·       Kitchen Printer: If you are a restaurant or a hotel owner, kitchen printer is a must-have component of your POS system. They help in minimising the scope of incorrect food orders and save ample time. If you purchase kitchen printers online, make sure you check its specifications to determine if they can integrate with your POS system. Advanced hospitality software solutions allow you to sync orders from your website and online delivery partners with your POS system. 

·       Cash Drawer: Remember how retail stores used to maintain cash registers for sale? POS system is the modern and technologically advanced version of the traditional cash registers. Under POS system, a cash drawer is one of the hardware components used to store cash and bill receipts. Even though a large Australian population prefer electronic payment methods, there would be times when you would require a cash drawer. Therefore, it is wise to have a cash drawer integrated with your POS system. 

·       Computer and Keyboard: The heart of the POS system is the computer. You can integrate, monitor, and manage your entire business on that computer. Even though mobile POS are trendy, there are a few drawbacks to it. A terminal POS system with a sturdy computer is your solution if you own and manage larger enterprises, warehouses, and larger inventory. At the same time, care should be taken while picking the POS keyboard as all your commands will be entered using the keyboard. You would be able to open and close your cash drawer using the keyboard. 

·       Customer-facing Display: Standalone displays are the most widely preferred option for customer-facing display. As the name suggests, this screen faces the customer and displays all information related to the recent purchase. 

·       EMV-enabled Card Reader:  Another key component of a POS system is the card reader that facilitates contactless payments. 

BONUS: Another item that you can purchase along with the usual POS bundle are label printers. Used to print barcode labels, label printers are a wise investment if you run a packaging business, a warehouse, or industrial supplies that require labelling. Even though there are a few options of label printers to choose from, direct thermal printers are the most popular ones. You can also buy direct thermal label printer online and use them for your business needs. 

2.     Software: The primary task of a POS software is to store information and maintain it within a database. You can avail a wide range of capabilities like billing and order processing, sales monitoring and reporting, inventory tracking, and many more using a feature-rich POS software. There are several POS software that can be integrated to 3^rd party software like accounting software, email marketing software, and eCommerce platforms for selling your products online.

While picking the POS software, make sure it offers the following functions- 

·       Online Capability: Most brick-and-mortar stores have shifted their base to the online platform. Even if you aren’t planning on selling your products online, purchasing a POS software that offers eCommerce functionality is always an added advantage. You can simply sell digital products like gift cards or downloadable if you wish to avoid the hassle of arranging for shipping. 

·       Inventory Management: The latest POS solutions make inventory management easy and allows you to view sales, check the stock levels, create low-stock alerts, etc. You can also install powerful tools for inventory management in your POS system and integrate them with your software for enhanced results. 

·       Staff Management: A robust software handles team management tasks like reporting timecards, tracking breaks, and system permissions through your POS terminal. 

·       Customer Management:  Using a POS software, you can create customer profiles and view their purchase history and behaviours. This would help in generating rewards for your loyal customers. 

·       External App Integration: Syncing your POS software to your external accounting software, booking system, and shipping app helps in making the expansion process smooth. 

Factors to Consider while Purchasing the Right POS System for your Business

Now that we have discussed the hardware and software components of a POS System in detail, let us discuss the important considerations to pick the right solution.

1.     Your Business Needs: This step comes before you start browsing through the internet to find the right POS system for your companies. Unless you determine the requirements of your business, it would be difficult for you to figure out which solution will function appropriately for your business. 

2.      Shortcomings in the Existing System: If you already own a POS system and you are planning on replacing it, you need to identify its shortcomings that will help you figure out the features you want in your new system, some extra tasks that you want your new POS system to carry out, and the pain points you wish to eliminate. 

3.     Hardware: A point of sale system is a huge investment. Therefore, if you are content with the hardware you’re using, you can simply focus on solutions that work with that. For example, you are using a smartphone for you POS. Here, you need to look for solutions that would function perfectly on your smartphone. 

4.     Software: Like hardware, if you are satisfied with the software and apps that you are already using, ensure that your POS system integrates with the apps in your business. 

5.     Roadmap: Determining your goal is equally important as knowing your business needs. For example, if you plan on opening multiple stores at different locations, your POS system should have a multi-store feature that would help you in managing all your stores conveniently, from any location. 

Conclusion

For premium quality POS components, POS Sales Australia is the one-stop solution for all your POS needs. Contact us for a detailed walk though of our extensive range of products.