What Is a Point-Of-Sale System [Hardware & Software It Uses]


What is a POS system? If you’re a business owner or work for another company, you must know to succeed at your job, as it is one of the most important tools to running a popular business. In this article, we will discuss what it is, the hardware and software of a POS system, and how it works. By the end, you will be more informed about the topic of POS systems. Happy reading!

What Is a POS System?

A POS, or point of sales system, is the place in a business or retail store where customers make a payment for purchased goods and services. It can be a physical place like a billing counter, as well as online. It not only keeps track of payments received but also helps with making sure inventory is up to date. A good POS system can help you analyze your sales patterns and make informed decisions for your business growth.

As POS systems are used by various businesses from retail to restaurants, you can easily choose the one that suits your needs the best.

DID YOU KNOW? The first POS system, a cash register, was invented in 1879 by a salon owner! We guess his sales were so high that he had to create the machine to keep track.

What Hardware Does a POS Use? 

Now that we have quickly gone over a point of sale system and its definition, let’s talk about the different hardware components used. While you may think that in today’s tech-advanced world businesses rarely use hardware components, this is not the case! Every business, especially physical stores and restaurants, use a hardware POS system.

Below are a few components of a hardware POS system:

  • Register: This is one of the most important parts of a POS system and a business. Most are either a traditional CPU or a tablet if you’re going for the latest technology. The cash register is situated on the billing counter and is used when the customer wants to check out.
  • Connected device: POS transactions are recorded on a device that is connected to the system. As mentioned, it can either be a tablet, iPad, or computer. You must only use the connected device to record a transaction! This will keep your information the most secure.
  • Barcode scanner: If you’ve ever visited a supermarket or grocery store, you may have noticed that all items are scanned when you checkout. This is performed using a barcode scanner. The scanner reads the barcode of the product, records point of sale transactions, and uploads the information to the computer. It not only keeps a track of sales but also inventory.
  • Credit card reader: As the name suggests, a credit card reader is a device that is used to make digital credit card payments for the purchase. Most readers also accept payments from debit, loyalty memberships, and gift cards. This is a must-have, especially for a restaurant POS; many people are shifting towards digital payments rather than carrying physical cash.
  • Receipt printer: A receipt printer prints points of sales transactions for the customer, as well as the store. It serves as proof of payment and purchase in case of any future discrepancies. You can choose a serial-dot matrix printer, thermal receipt printer, or a printer with magnetic ink character recognition.
  • Cash drawer: A cash drawer stores cash, receipts, bills, and other paperwork items related to the store or business. It is connected with the POS system and opens when it receives a signal. You should invest in good quality and secure cash drawer as they are the most used point of sale equipment.
DID YOU KNOW? Many businesses actually don’t use a POS and rely on traditional billing methods because they do not know how to use a POS system. Don’t shy away from one; it is very easy to learn and can make your business very profitable in the long run!

Key Takeaways

POS, or point of sale, is the place where clients can make a payment for their purchases. It can be a physical billing counter or a virtual payment terminal.
POS systems can help you keep track of sales, customers, and help make analytical decisions regarding your business.
To understand what a point of sale is, it is important to recognize it has two components – hardware, and software – that work in unison.
Hardware components include a barcode scanner, receipt printer, register, card reader, cash drawer, and a connected device

What Software Does a POS Use? 

Now that we have discussed the physical components of a POS, let’s take a look at the essential features a POS software must-have. A good POS software connects hardware so that both can work in unison.

  • Payment processing: Payment processing is one of the most important features of POS system software. This attribute records the transaction every time a customer buys a product or service. A good payment processing feature accepts payments in cash, a secure eCommerce site, magstripe credit cards, and chip cards. Some also include contactless payments like Apple Pay or card-not-present transactions.
  • POS reports: Point of sale transaction reports is yet another important feature. It keeps track of sales, inventory, employees, and various stores if a franchise. POS reports also help an owner or manager analyze sales, allowing them to form strategies for the future growth of the business.
  • Inventory management: Whether you run an online store or a physical store, it is important to keep a track of your inventory. A POS software with inventory management allows you to keep track of sales and informs you when an item is about to be out-of-stock. This will help you restock, manage and strategize your inventory.
  • Customer relationship management (CRM): Understanding the full POS meaning is nearly impossible without understanding CRM; good customer relationship management skills can take your business to the next level. It keeps track of your customers, their contact information, purchases, and the time of purchases. You can use this information and create personalized marketing techniques to increase your sales.
  • Employee management: While it is important to keep your customers in mind while running a business, it is equally important to pay attention to the employees. There are certain types of POS that also include an employee management feature. This records the time worked, maintains payroll, provides ease of training, and also keeps track of absences.
  • Receipts: If the POS system and its meaning make sense, physical or digital proof of transaction is easy as pie. Almost all POS software generates receipts automatically after a purchase has gone through. Receipts authorize the transaction and make refunds or exchange easier.
  • Tipping options: Some POS software allows customers to add tips to their bills before clicking the checkout button. The easier it is to tip, the customers are more likely to do so.
DID YOU KNOW? POS software also allows 24/7 accessible data. You can check your sales, inventory, or receipts anytime you want.

How Does a POS Work? 

The hardware and software components of a POS work in unison. While the hardware and transaction processing forms the front end of the software, the analytical part forms the back. Here are a few general steps to understand how to use a POS system:

  • The scanner scans the barcode of the items on the billing booth and looks up the selling price
  • The system will update the inventory about the sale of the product
  • Then it will calculate the final amount after sales tax or discounts (if any)
  • This updates the CRM 
  • The POS accepts the amount and clicks the checkout button
  • Finishes by printing the receipt


Point of sales systems definition is the place where customers make payments for orders and purchases. It has mainly two components, hardware, and software. Hardware includes a receipt printer, barcode scanner, and connected device, while features of POS software include payment processing, inventory management, and CRM. A POS works by recording sales and helping businesses make better decisions based on analyses.


What are POS systems used for?

A POS system is used to record transactions and sales for a business. It is the point where the customers can make a payment. It also helps keep track of inventory, clients, and sales.

What is the meaning of a POS system?

A POS, or point of sale system, is the place where customers can make a payment for their purchase. The system records sales, calculates bills, manages inventory, and keeps records of customers.

How does a POS system make money?

What is a POS system? If you have the answer easily after reading our article, we did our jobs. A POS records sales and helps businesses analyze sales patterns. It also helps companies make better decisions, thereby increasing profits.


I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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