What is POS terminal?
POS stands for point of sale and can refer to either an electronic cash register (ECR) or the software that runs the system. The POS software is the brains of the operation and is used to process transactions, calculate taxes, and create reports about the operation. POS terminals are the hardware devices that make it possible for your POS software to interact with the outside world. POS systems are a combination of hardware and software systems for processing card payments at retail locations.
The Comprehensive Guide to POS Terminals- What You Need to Know
What is a POS Terminal and Why Does it Matter?
If you've ever shopped at a retail store that accepts credit cards as a form of payment, you've likely seen a point-of-sale terminal. POS terminals, also known as credit card terminals, are cash registers that have a keypad and a screen. This screen lets the cashier enter the transaction information, such as the amount of the purchase and the customer's credit card information. A major advantage of a POS terminal is that it accepts payments faster compared to traditional methods of payment.
Sale POS terminals enable a smooth and safe method of payment compared to swipe and contactless methods. A POS terminal requires the cardholder to enter a PIN during transactions with the bank. Customers find it convenient to pay using a digital mode of payment at a POS register at restaurants, retail shops, gas stations, etc. Customers are not required to carry cash and can use credit cards and debit cards for payments.
POS systems help in streamlining small business operations by automating the payment process and tracking important sales data. Restaurant owners can monitor pricing accuracy, inventory fluctuations, gross revenue, and sales patterns with the help of a POS system. POS systems allow fast monitoring of a restaurant's inventory and purchasing trends that can assist in improving customer service and avoiding issues including out-of-stock sales.
Unlike a traditional terminal, a POS system can complete multiple tasks and improve the way your business works. POS terminals accept payments quickly and eliminate long lines for customers. No one wants to spend hours in lines waiting to be served.
POS systems are cost-effective and save time. Business owners can manage multiple business operations with one POS system. It helps in reducing costs incurred in the business and comes with various features like time and schedule management that boost the productivity of employees.
Note-: POS systems help in streamlining small business operations by automating the payment process and tracking important sales data.
How Does a POS Terminal Work?
A point sale terminal is a cash register that reads a credit card and prints a receipt. It is a computer designed to read, store, and process credit card information, enabling a merchant to complete a sale or provide a service to a customer. In this post, we're going to walk through the basics of how a point sale terminal works.
When a credit/debit card is used as the preferred way of payment, a point sale terminal reads the card's magnetic strip with the help of a card reader to check for sufficient funds in a customer's bank account to transfer to the merchant, then it makes the transfer.
The POS system saves transaction information including the customer's account number, date and time, the amount paid, etc. The POS system maintains customer data that can be used for analyzing and processing various business reports. The POS system sends the information to an attached receipt printer that prints a receipt or sends an email or text to the customer. Retailers have the option of either buying or leasing a POS terminal. Buying a system involves higher upfront costs while leasing involves monthly payments.
Different POS systems vary in functionality depending on a retailer's business needs including the choice of technology and components as well as payment methods.
POS systems consist of POS software and hardware components. Every POS register is equipped with software that registers, processes, and stores transaction details. Earlier on-site POS software was commonly used with POS systems, but now cloud-based or hybrid systems are the norm, relying on both the Internet and local hosting. Setting up an on-site POS software is expensive compared to a cloud-based system that comes with more options to integrate with other software.
POS hardware includes various components like an interface or a device where retailers can register transaction details including cash registers with buttons, or touch screen pos terminals. A POS system is equipped with a cash drawer that is used to collect cash inflow or saving any receipts related to various business processes. POS systems include a receipt printer that is used to print receipts for customers or end-of-day reports.
A barcode scanner is used to scan QR code payment, inventory management, and tracking. A POS system has a terminal that is used to process payments made by debit, credit, or online payments. Whether a retailer uses a cloud-based or on-premise system, network devices are necessary for the payment gateway to work via an Internet connection.
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What Types of Payment Does a POS Terminal Accept?
A POS system can help restaurants accept and process various payment methods quickly and securely. A POS allows customers to make payments for goods or services. Typically, there are two types of POS transactions for payment processing--in person or online, with receipts generated either in print or electronically. In-person transactions are when a payment card is present in its physical form and when electronic data is captured at the POS terminal. A few examples of in-person or card-present transactions are traditional credit card terminals, contactless terminals, card readers embedded on point sale terminals, and card readers attached to tablets or smartphones.
As the name suggests card-not-present transactions are when a credit or debit card is not present physically to a contact sales personnel. Card-not-present transactions are typically online transactions when a customer views product details online and orders desired products that are delivered to their doorstep.
Note-: There are two types of POS transactions for payment processing- in person or online.
1. Chip Cards
A chip card is a credit or debit card that has an embedded micro-computer chip as well as a traditional magnetic stripe. When a chip card is inserted into a card reader a contact card or held near a reader like a contactless card, data is transferred to a central computer of a pos register. The chip card includes encrypted information to provide higher data security when making transactions at stores, terminals, or automated teller machines (ATMs). Other terms used for chip cards are the Europay, MasterCard, Visa (EMV) card, smart cards, chip-and-PIN cards, and chip-and-signature cards.
2. Online Payments
The Internet and the convenience of online banking have made our lives so much easier. Instead of having to go to the bank and wait in long lines, you can conduct all of your financial transactions from the comfort of your own home. You can pay your bills, transfer money to another account, and even apply for a credit card.
Online payments are when a customer makes a payment for products and services bought online or offline over the Internet. The most common online payment methods are credit card and debit cards, as well as bank transfer, bitcoin wallet, e-wallet, and smart cards.
The process of an online payment starts when a customer visits the retailer's website and adds products or services to the cart, items they want to buy. The customer then fills a payment form with information including card number, expiration date, CVV code, address, etc. The customer is then either redirected to an external service or bank's website or continues the payment on the website or in an app, depending on the payment method.
The payment gateway has all rights reserved to confirm the accuracy of the customer's payment information. Once the information is verified, the process continues and the payment gateway approves the transaction. The customer receives a real-time notification about payment confirmation. An online payment provider then receives a payment from a customer's bank and transfers it to the merchant's account. Customers receive emails or texts informing them about the completion of the transaction.
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3. Contactless Payments
Contactless payment is a transaction that can be made without physically attaching the buyer's smartphone or credit card to the retailer's POS system. Contactless payment method utilizes NFC technology that stands for near field communication method. This technology involves a radio frequency identification (RFID) method to complete a contactless payment. NFC is a wireless communication technology that requires a specific radio frequency to enable the card or smartphone to communicate with the payment reader when they are near each other, usually 10 centimeters or less. Contactless payment transactions are easy and quick. They do not require customers to stand in long lines to make payments at POS checkouts, as they just have to wave their mobile devices or cards at the POS terminal without the need to enter their PINs.
Magstripe or magnetic cards include a thin magnetic label on the credit card that contains the cardholder's account details and other information. The magstripe cards store static information in three stripes on the back of the card. It uses modified iron-based magnetic particles to communicate data between the strip and the receiving credit card terminal. When a cardholder swipes a magstripe card, it transmits the cardholder's bank information to the cardholder's financial institution.
Main Benefits of a POS Terminal
A point of sale terminal is the new must-have office supply. As business owners everywhere can attest, the need for a POS terminal is on the rise. So if you are shopping for a new POS terminal for your business, you are likely to come across a lot of different options. One thing you might not know is that every POS terminal has a few main benefits.
1. Secure Payments
2. Inventory Management
A POS system helps in managing day-to-day sales and inventory of a business, as well as helps in growing businesses with their built-in loyalty and marketing software. The best POS systems have built-in inventory management software that is important for any small business. It helps make intelligent ordering decisions based on stock availability as well as buyer behavior and historical data.
3. Generate Reports
A POS software can provide report generation and analysis features that help retailers make profit-enhancing decisions. An effective POS system has one real-time central database that provides automatic updates. A point sale system reduces hours spent on administration and frees up time for owners to improve various business processes.
4. Better Customer Experience
Retailers can create loyalty programs for valued customers with the help of a POS system. The point sale system can offer a better customer experience as it can track customer loyalty points, gift cards, create repeat customers, and in turn increase sales. The POS systems capture buyer information and monitor buyer trends that can be used to design marketing campaigns and give customers a better experience. In today's world, retailers need to instantly access a POS system anytime and from anywhere and be able to work from home or while traveling in order to have better control over various business processes.
Best Practice Tips for Choosing the Right POS Terminal
A POS system has become a necessity for retailers to run their businesses efficiently. Modern POS systems can manage various business operations simultaneously. They can help with every aspect of the business including invoicing, inventory, accounting, and reporting. Today POS systems such as Plumpos are flexible, easy to use, and portable. With a POS system, a retailer can accept whatever form of payment your customers prefer.
1. Overall Business Success
Retailers now require a POS system to operate a successful business whether it is a new business or upgrading an old cash register. If it is a new business, a retailer would need a POS system that is not complicated, user-friendly, and will increase the overall efficiency of a business. In case a retailer is upgrading an older version of a POS system, it is necessary for the retailers to make sure the new POS system fulfills their requirements and helps in streamlining various business processes. In case a business owner wants to switch from a different POS system, then they need to decide whether the new system can help in resolving issues that they faced with the older POS.
2. Easy To Upgrade
Retailers can purchase customized POS systems according to their specific requirements. For example, retailers can get their POS systems integrated with accounting systems for tax preparation and maintaining employee payrolls. Retailers can also prepare employee schedules easily and manage employee time with a POS system. Retailers can utilize POS technology to manage their sales as well as items that need to be returned and restocked. It can generate charts, graphs, reports, and delivery locations on maps. This information can be used by retailers to manage their overall business and move ahead of their competitors.