A point of sale (POS) system is a combination of hardware and software that businesses use to process transactions, including sales, returns, and exchanges. POS systems can include a variety of components, such as a computer or tablet, a barcode scanner, a receipt printer, and a credit card terminal.
At its core, a POS system is a way for businesses to process transactions quickly and efficiently. When a customer is ready to make a purchase, they present their items to a cashier, who scans the items using a barcode scanner. This sends the item information to the POS software, which calculates the total cost of the purchase and displays it on the screen.
The customer can then pay for the purchase using a variety of methods, such as cash, credit, or debit card. If the customer is paying with a credit or debit card, the cashier will typically use a credit card terminal to process the transaction.
A credit card terminal is a device that connects to the POS system and enables businesses to accept payments by credit or debit card. When the customer swipes or inserts their card into the terminal, it communicates with the POS software to authorize the transaction. The terminal will prompt the customer to enter a personal identification number (PIN) if the card is a debit card, and read the chip, if the card has one, or complete contactless payment if supported by the terminal and the card.
The terminal will then connect to the payment gateway to process the transaction. Payment gateways are specialized services that process electronic transactions between merchants and financial institutions. They encrypt and transmit the customer’s card information to the card issuer for authorization and also send back the authorization to the terminal. Some terminals have a built-in gateway and are called all-in-one terminals.
Once the transaction has been authorized, the POS system will record the sale in its database and print a receipt for the customer.
POS systems can also be used to track inventory, manage employees, and produce reports on sales, inventory, and other business metrics. Additionally, some modern POS system can also be connected to a CRM (customer relationship management), and a loyalty system, which can track the customer purchase history and reward frequent shoppers.
Overall, a POS system streamlines the process of accepting payments and managing transactions, making it easy for businesses to process sales and track important data. And by connecting to a payment gateway and credit card terminal, a POS system enables businesses to accept a wide range of payment types, helping to ensure that customers can always complete their purchases quickly and easily.