CATEGORY - PAYMENTS
What is POS, Types & How it works?
Payments - 1 Apr, 2024
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Table of Contents
Understanding Point of Sale (POS) Systems for Your Business?
Whether you want to sell online, in-store, or both, this simple guide will help you find the right POS system for your needs.
A POS system does more than just handle transactions. It helps with inventory management, tracks customer data, and provides insights into product performance. In this guide, you’ll learn about different POS systems and how they can make your business run smoother and more efficiently.What is Point of Sale (POS)?
A POS is where transactions happen between a business and its customers. It’s a mix of hardware and software that helps manage sales, inventory, and customer data.
Traditional Cash Registers vs. Modern POS:
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Traditional Cash Registers: Simple devices for ringing up sales and storing cash. They usually don’t track inventory or offer advanced features.
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Modern POS Solutions: More advanced. They track sales, manage inventory, handle customer relationships, and even analyze business performance. They integrate with other business tools and offer more flexibility and insights.
Essential Components of a POS System
A Point of Sale (POS) system is a crucial tool for businesses to manage sales, inventory, and customer data efficiently. It consists of both hardware and software components.
Hardware Components
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POS Terminal: This is the main interface where transactions are processed. It typically includes a touchscreen, keyboard, and mouse.
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Cash Drawer: A secure compartment to store cash and coins.
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Receipt Printer: Prints customer receipts and sales reports.
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Barcode Scanner: Reads product barcodes to quickly input item information.
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Card Reader: Processes credit, debit, and other card payments.
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Customer Display: Displays transaction details to the customer.
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Monitor: Provides a visual interface for the cashier.
Software Components
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POS Software: The core of the system, handling sales transactions, inventory management, customer data, and reporting.
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Payment Processing Software: Easily integrates with payment gateway for card readers to process payments securely.
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Inventory Management Software: Tracks product levels, reorder points, and sales data.
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Employee Management Software: Manages employee schedules, time tracking, and payroll.
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Customer Relationship Management (CRM) Software: Collects and analyzes customer data to improve sales and marketing.
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Reporting Software: Generates sales reports, inventory reports, and other business analytics.
Additional Components (Optional)
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Kitchen Display System (KDS): For restaurants to manage food orders.
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Scale: For weighing products, especially in grocery stores.
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Drawer Security: Protects the cash drawer from theft.
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Mobile POS: Allows for sales processing on handheld devices.
Choosing the right components depends on the specific needs of your business. For example, a small retail store might require a basic POS system with a cash drawer, receipt printer, and barcode scanner, while a restaurant would need a more complex system with a KDS and kitchen printers.
How Does a POS System Work in Business?
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Starting a Sale: The cashier scans the item’s barcode or enters it manually into the POS system. This adds the item to the sale.
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Adjusting Quantities: If a customer wants more than one item, the cashier updates the quantity. The system automatically adjusts the total price.
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Processing Payment: The customer chooses a payment method (cash, card, payment link, BNPL, SNPL, Cardless EMIs, or QR code payment). The POS system processes the payment, updates the sale record, and prints a receipt.
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Managing Inventory:
- Tracking Stock Levels: The POS system keeps track of inventory as items are sold. It updates stock levels in real-time.
- Low-Stock Alerts: When stock levels drop below a certain point, the system alerts you. This helps prevent running out of popular items.
- Reorder Points: The system can set reorder points for each item. When stock hits this point, it suggests reordering to maintain inventory levels.
Types of POS systems
There are five types of POS systems available in the market
- Traditional POS: This is the classic setup with a register, monitor, and software installed directly in your store. It’s reliable but can be expensive upfront and limit access to your sales data.
- Cloud POS: This system works online, and you can access it anywhere with internet access. It is flexible, cost-effective, and allows you to watch what’s happening in your business while you are not.
- Mobile POS: Great for mobile sales or micro-enterprises, this system utilizes a smartphone or tablet to take payments. Affordable and easy to install, it streamlines the process for new streamers with budget constraints.
- Touch-screen ordering Stations, also known as Self-Service Kiosks, are iPad-based ordering tablets found at your local restaurant or movie theater. These kiosks allow customers to get in and out faster, reducing wait times.
- All-in-one POS: These systems include all necessary components in one product, including hardware, software, and processing. This simplifies setup and saves money in the long run.
Difference Between POS System and POS Machine
POS System vs. POS Machine
Feature | POS System | POS Machine |
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Scope |
Entire infrastructure for processing transactions & managing a business |
Single device for processing payments |
Components |
Software, hardware (terminal, scanner, printer), integrations with other systems |
Just the hardware terminal |
Functionality |
Processes payments, tracks inventory, manages employees, generates reports |
Primarily processes payments (credit cards, debit cards) |
Scalability |
Highly customizable and can grow with business needs |
Limited functionality, not suitable for complex operations |
Cost |
Higher upfront cost due to software and hardware |
Lower upfront cost, but limited functionality |
In simpler terms:
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The POS system is like a complete toolbox; inside are sales, inventory, and reporting tools.
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A POS Machine is just one tool in that box, made explicitly for payment processing.
What are the use-cases for POS Machine
Below shared use-cases highlight how POS systems can transform various business processes, making them more efficient and effective
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Versatility Across Industries: POS systems are highly adaptable and can be customized to fit various industries. For instance, a retail store uses a POS system to handle sales and manage inventory, while a restaurant might use it for orders and table management.
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Streamlining Retail Operations: In retail stores, POS systems make the checkout process smooth and fast. They keep track of inventory levels, help manage stock, and provide detailed sales reports. This makes running a retail business more efficient.
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Enhancing Restaurant Management: Restaurants benefit greatly from POS systems. They simplify taking orders, managing tables, and even splitting bills among guests. This helps servers and kitchen staff stay organized and improve the overall dining experience.
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Boosting Service Industry Efficiency: In the service industry, POS systems can assist with booking appointments, managing customer interactions, and handling invoicing. This ensures better service delivery and smoother business operations.
Special Considerations: POS Innovation
Today’s POS systems are like supercharged cash registers. They can be customized to fit your business perfectly. For example, they can handle loyalty programs where customers earn points for their purchases!
Many businesses, especially online stores, are turning to cloud-based POS systems. These are like having a powerful computer in the sky, so you don’t need to spend a lot on equipment upfront.
In restaurants and hotels, customers can even use POS systems themselves! You might order your meal from a screen at your table or use a device to pay your hotel bill. That’s the magic of POS innovation.
POS systems aren’t just about tech anymore; they can also be stylish! Companies design attractive displays that match their brand and encourage customers to buy more. Even the look and movement of these displays can shape how people see your business.
How do you choose the right POS machine for your business?
Choosing a point-of-sale (POS) system can seem overwhelming at first, but it’s really just picking the right tool for your business. Here’s a simple guide to help you find the best POS system for you.
- Think About Your Needs: What type of business do you run? Do you need just basic payment processing, or do you want features like inventory management and customer accounts?
- Budget It Out: POS systems come in different price ranges. Factor in the cost of hardware (like tablets or computers), software, and any monthly fees.
- Ease of Use: Make sure the system is easy for you and your staff to use. Test out demos or free trials to see if it’s comfortable to work with.
- Customer Payment Options: Ensure the system supports all payment methods, including credit cards and mobile wallets.
- Growth Potential: Choose a POS system that can grow with your business. Will it still be effective if you open new locations or expand your product range?
By keeping these points in mind, you’ll be well on your way to finding the perfect POS system to help your business run smoothly!
The Benefits of Using a POS System for Your Business
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Boost Operational Efficiency: POS systems speed up transactions, making checkout quicker and easier for both customers and staff.
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Better Inventory Management: Keep track of your stock effortlessly, reducing the chances of running out of popular items and cutting down on excess inventory costs.
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Enhanced Customer Service: Create and manage loyalty programs, and offer personalized experiences to your customers, leading to increased satisfaction and repeat business.
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Valuable Data Insights: Gain access to detailed sales reports and customer data, helping you make informed decisions and develop effective growth strategies.
Conclusion
The proper selection of a POS system could help your business a lot. It can do just about anything you’d ever want it to, at a reasonable cost, be it your profit calculation, maintaining happy customers, or even growing your business. The right POS system turns into an investment that quickly pays itself back.
FAQ's
What is a POS transaction?
A POS (Point of Sale) transaction is when you use your debit or credit card at a shop’s billing counter to pay for something. You might see “POS” on your bank statement for these purchases.
What is the POS limit?
POS limits depend on your bank. Check your bank statement or app for details.
What does POS mean in retail?
In retail, POS refers to the system used at billing counters to process payments (UPI/credit/debit cards, etc.).
Who offers retail POS in India?
Easebuzz POS is a brand offering POS systems in India. These are like cash registers on tablets or phones, helping businesses manage bills.
What’s different between retail POS software and systems?
Retail POS software and systems help shops manage billing, inventory, and customer data. Easebuzz POS likely offers such a system.
What is POS with banking?
POS with banking refers to using a POS system for card payments. It’s not directly related to your bank account; transactions use your bank’s network.
Is POS transaction safe?
POS transactions are generally safe if you use them at reputable stores. Be careful when swiping your card at suspicious machines.
What are POS charges in the bank?
POS machines accepting card & UPI payments come with fees. Banks charge merchants a monthly discount rate (MDR), typically a percentage of the transaction amount. Some merchants try to pass this cost onto you, the customer.