What Is A POS? Defining A Point Of Sale System

Before choosing a system for your business, it’s important to learn about POS system components, POS features, how to use a POS system, and what a point of sale system can do for your business.

In this article, we’ll talk about different kinds of POS software, discuss types of POS hardware, break down how much a POS costs, and review point of sale system benefits. If you want specific recommendations, check out our article on the best POS systems for small businesses.

POS System Definition

A point of sale system, or POS, is any electronic system a business uses to process payments. If you think about the term literally, it means the location where the sale is concluded at a business.

A POS system includes hardware and software for accepting payments. It can also perform business management tasks, such as sales tracking and multi-location management.

The best POS systems for small businesses are cloud-based, with a lightweight hardware setup that may only include an iPad or tablet and a payment reader. Traditional POS systems include a full countertop setup with a customer-facing screen, scanner, and cash drawer.

Though POS systems usually consist of a tablet register, payment terminal, cash register, and other components, a POS system can also be just a smartphone with a mobile Bluetooth card reader. It is technically a POS system as long as you can use it to process credit card payments electronically. The best mobile POS systems can do almost everything a traditional POS used to do, and sometimes more.

With that said, most POS systems include additional features, such as customer management, sales reports, and barcode scanning. Many also come with additional point of sale hardware, like printers, additional card readers, and registers.

POS System Cost

POS system costs vary widely, but most modern tablet-based POS systems cost about $1,000 to $1,800 per terminal, plus ongoing monthly POS software costs ranging from about $50 to $300/month.

You also need to consider payment processing costs when choosing a POS, as an increasing number of POS systems require that you use their in-house payment processor. For flat-rate processors, the standard rate (for in-person payments) is about 2.3-2.6% + $0.10-$0.15.

Check out our article on POS system costs for more in-depth information.

What Are The Benefits Of Using A POS System?

Today’s point of sale systems are business management platforms that can help you monitor and manage nearly every aspect of your business.

All of the features/benefits of POS technology together help businesses increase efficiency as well as profitability.

Our article on POS benefits breaks down these advantages.

How To Use A POS System

There are three main steps to using a POS system at your business.

These steps will all go smoother if you choose a POS with high ease of use. When shopping for a POS, pay attention to reviews that mention the POS software’s ease of use — having a system that’s easy to train new hires on is especially important if you want to reduce your employee turnover rate.

POS Hardware Components

POS software can be fully mobile on your phone with no equipment or include a full countertop setup with a cash register and other components.

Many systems require you to purchase your POS hardware from the POS vendor, while others let you source your hardware yourself or use components you already have from a previously used system.

Some of the hardware you’ll need to consider purchasing is, a card reader or mobile processer, a receipt printer, a card scanner, and, if you own a restaurant, a kitchen display system.

Our complete buyer’s guide can help you decide what POS hardware you need.

Next Steps: Choosing The Right POS System

Now that you know the definition of a POS system, how much it costs, how to use one, and the ways POS can benefit your small business, you’re ready to begin shopping.

While it may seem like a daunting task, it’s worth it in the end. Check out our article on how to choose a POS system to learn more about the basic factors you should consider when looking into any POS system.