What is a POS System and how does it Work?

Invented in 1879 by James Ritty under the name ‘Ritty’s Incorruptible Cashier’, the traditional point of sale (POS) system was initially known as a ‘cash register’ and was handled manually. In 1973, IBM modified the cash registers and introduced the first computer-based cash register which was initially used in the restaurant industry. After the introduction of credit cards in the 1980s, these devices evolved to suit the latest industry trends and hence, the first microprocessor-controlled cash registers were introduced.

So,

What is a Point of Sale (POS) System?

Before talking about the system, let us understand what a point of sale is. A point of sale also referred to as the point of purchase is the place in a store where transactions take place. Here, the customer pays for the chosen products/services and the merchant/sales executive issues a payment receipt confirming the completion of the transaction.

Nexa CB910 Cash Drawer

To complete the entire purchasing and selling process, a set of robust hardware components and software is used, known as a point of sale (POS) system.

Fun Facts:

  • “The global point of sale (POS) market size is expected to grow from USD 25.24 billion in 2022 to USD 70.75 billion by 2029, with a CAGR of 15.9% during the forecast period.”
  • “The Australian POS market size is anticipated to grow at a CAGR of more than 10% during 2020-2024 on account of technological advancements, affordable internet connectivity and increasing penetration of smartphones.”

How do Point of Sale (POS) Systems Work?

Point of sale (POS) systems not only allow businesses to process payments but also help them track and manage sales, track and manage inventory, and a lot more. Setting up a point of sale (POS) system depends on whether you have an online store, a brick-and-mortar store, or both. With digitisation, today’s point of sale (POS) systems are also entirely digital, which means, you can checkout customers from any location. All you require is an internet-enabled device and an app.

The steps in which point of sale (POS) systems work

  • In the first step, the customer chooses the preferred product/service and asks the sales executive to process the transaction. In case the customer purchases a product from a physical store, the sales executive scans the barcode from the product using a barcode scanner and the price gets displayed on the monitor as well as on the customer-facing display. In online stores, the price of the product gets displayed when the customer navigates from the shopping cart to the checkout page.
  • The point of sale (POS) system calculates the sales tax and the system updates the inventory count to notify that the item is sold.
  • In this step, the customer pays for the purchased product using a preferred mode of payment. You need to ensure that your payment processor is equipped to support all the latest payment modes.
  • Finally, after accepting the payment, the sales executive issues a payment receipt containing purchase-related information to the customer, thereby completing the transaction officially.

Components of a Point of Sale (POS) System

  1. Hardware: The point of sale (POS) hardware is the combination of all the input and output devices that allow the smooth operations of the point of sale (POS) software.

The different types of point of sale (POS) hardware:

  • POS Monitor: The point of sale (POS) software is installed in the point of sale (POS) monitor which is why it is called the ‘heart’ of the point of sale (POS) system. Earlier, these devices used to be installed on the counter tops at retail stores and you can spot them in some retail stores too. However, nowadays, mobile point of sale (mPOS) systems are the new trend using which provide retailers with the facility to checkout customers from any location within the store, just with the help of a stable internet connection, and an updated device that supports multiple modes of payments.
  • Barcode Scanner: One of the essential point of sale (POS) hardware tools is a barcode scanner. These devices are used to scan barcodes from products, fetch and display product-related information on the point of sale (POS) monitor. Barcode scanners are beneficial in speeding the transaction process, tracking inventory levels, checking product availability, and other tasks. Zebra LS2208 Barcode Scanner, Datalogic Quickscan QD2590, and Honeywell Voyager 1250G Laser Barcode Scanner are some of the bestselling barcode scanners in Australia.
  • Cash Drawer: Albeit cashless payments are trending, cash payments are still equally popular and would probably never run out of trend. As a retailer, you would need a sturdy device to store the cash safely for which you would require a cash drawer. Cash drawers come with compartments to allow you to store cash and coins separately, facilitating cash transactions. Other than cash and coins, these devices are useful in storing essential bills and receipts and are usually connected to the monitor. Therefore, these devices open and close on receiving a command from the point of sale (POS) software. The bestselling cash drawers in Australia are VPOS Cash Drawer EC410, Nexa CB910 Cash Drawer with RK11 Connector, and HP Standard Cash Drawer in Black with 24V Solenoid.
  • Receipt Printer: Another crucial point of sale (POS) hardware component that a point of sale (POS) system requires is a receipt printer. As the name implies, these devices are used to print payment receipts for the customers and contain purchase-related information like date, time, and place of purchase, product name and number, price and tax breakup, etc. These receipts help in maintaining transparency with the customers and also allow retailers to promote their businesses since these slips can be customised with the company/brand logo, website address, etc. Also, customers can exchange/return a purchased product using these payment receipts. Some of the popular receipt printers in Australia are Epson TM-T82III Thermal Receipt Printer, Epson TM-U220B Dot Matrix Receipt Printer, and Bixolon SPPR310 Bluetooth Serial USB203DPI iOS, Android, and more.

Other than the aforementioned hardware components, there are a few other tools that some businesses require.

  • Scale: Point of sale (POS) scales are devices used to measure the weight of a customer’s purchase and calculate the price appropriately. These devices ensure that the retailer isn’t over-charging or under-charging the customers.
  • Self-service Kiosks: These self-order point of sale (POS) systems allow customers to place orders and pay for them on their own, without any assistance from a sales executive. These devices ensure contactless payments and a seamless customer shopping experience.
  • Customer-facing displays: These digital screens can be spotted on counter tops and allow retailers or sales executives to display order-related information to the customers including the item names, price breakup, tax, loyalty information, and more during the checkout process. Businesses also use these devices to display personalised messages to the customers to build and maintain brand value.
  • Software: The operating system that oversees and manages the entire business operations is the point of sale (POS) software. It allows retailers/sales executive to ring up sales. Advanced point of sale (POS) software also helps with tracking and managing inventory generating sales reports, tracking customer information, and more. If you own an online and a physical store, the point of sale (POS) software integrates them both and allows you to run both the stores from a centralised system. Some of the popular point of sale (POS) software that businesses use are Vend, Shopify, Square, Lightspeed, and TouchBistro.

To pick the right point of sale (POS) software, you need to ensure that it supports the following features:

  • Payments Processing: One of the major functions of a point of sale (POS) system is processing payments. There are different payment methods including cash, online payments, Magstripe credit cards, chip cards, and contactless payments (including mobile wallets such as Google Pay, or Apple pay).
  • Inventory Management: The point of sale (POS) systems allow retailers to track all the products and notifies when certain products are running low or are out of stock.
  • Generating Sales Reports: These reports indicate the number of products you are selling and the profits your business is making. A detailed report helps in making data-driven business decisions.
  • Employee Management: You can track employee performances using the right team management software. These software can monitor the employee’s check-in and check-out time, the total sale they have made, and reward the top-performing employee.
  • Customer Relationship Management: Using the customer relationship management tool, you can have an overview of the customer’s purchase history, which will help you personalise communications and offer enhanced customer service.
  • Receipts: Payment receipts help customers return/exchange a purchased product conveniently. At the same time, a customised payment receipt acts as a marketing gimmick for retailers and helps them promote their businesses/brands.
  • Gift Cards: Your point of sale (POS) software should allow customers the flexibility to pay for their purchases using their gift cards irrespective of where they choose to shop from.

Types of Point of Sale (POS) System

  1. Mobile Point of Sale (POS) Systems: Perfect for retail merchants or restaurants that require a full-featured system, this type of point of sale (POS) system allows users to access business data from any location through cloud-based storage.
  • Touch Screen Point of Sale (POS) Systems: This type of point of sale (POS) system is designed to function on touch-screen devices including tablets, smartphones, and computers. Touch-screen point of sale (POS) systems are more customisable as compared to their traditional counterparts. These devices make transactions quicker and more convenient.
  • Cloud-based Point of Sale (POS) Systems: These point of sale (POS) systems are beneficial in recording transactions in real-time, allowing users to access data from any location, at any time. All you need is a stable internet connection. You can update your software easily.
  • Open-source Point of Sale (POS) Systems: This type of point of sale (POS) system is perfect for large-scale businesses or tech-savvy small businesses as they require more maintenance and updates. However, the upfront cost of an open-source point of sale (POS) system is low and can be customised easily as per your business needs.
  • Multichannel Point of Sale (POS) Systems: If you own an online and offline store, then a multistore point of sale (POS) system is the correct choice for you. This type of point of sale (POS) system allows you to access and manage data from all sales channels in one place.
  • Self-service Point of Sale (POS) Systems: This type of point of sale (POS) system is perfect for cafes and restaurants that have a simple menu option. Since customers are in control of their orders, it ensures better customer service. Also, these devices reduce wait time.
  • Point of Sale (POS) Apps: You can download these apps on any compatible device and access point of sale (POS) information from these devices. This type of point of sale (POS) system is perfect for making sales on the go, at events, or on the floor. Also, these are cost-effective as compared to a full point of sale (POS) system.

Wrapping Up,

Wondering which point of sale (POS) system to purchase?

Listed below are the top point of sale (POS) bundles in Australia:

Now that you have an idea about the point of sale (POS) system, you need to figure out where to purchase it from.

POS Sales Australia is the answer to your query! We are an online reseller of industry-leading point of sale (POS) systems. Our range of all-inclusive point of sale (POS) hardware and consumables are available at competitive prices that would pique your interests. For more personalised assistance with your purchase, contact us and our experts will help you make an informed decision that would suit your budget and your business needs.

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