POS Terminals | 10 mins read

Complete Guide to POS Terminals- How to Choose The Right System

By Chloe Henderson

Insights into POS Terminals

Point-of-sale (POS) systems are used by businesses throughout all industries to optimize company operations, such as payment processing and inventory control. These systems streamline customer checkouts while perpetually tracking incoming funds and sold products. Different systems are equipped with various tools that allow stores to scan items and accept payments.

A case study revealed that 39% of business owners implemented POS systems to improve their overall operational efficiency. POS terminals not only expedite transactions but also integrate with established management software that tracks inventory, sales, labor, and demand forecasts.

Access to this quantitative data allows management to determine how to improve the customer's experience and drive profits. By implementing a point of sale terminal, businesses can save time, capital, and labor costs, while gaining valuable insight on sales, inventory, and demand.

What is a POS Terminal?

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A POS terminal is the hardware, such as a cash register, scanner, and computer that processes card payments and other transactions. The appliance is equipped with readers that accept debit, credit, and gift cards. Different card readers have various card processing capabilities, including-

  • Chip - Many credit cards are embedded with EMV technology chips that increase buyer security. Customers insert their card into the chip reader to fulfill the transaction.
  • Magnetic Stripe - Although this is more traditional, most cards today still have the magstripe, which requires customers to swipe their cards when making a purchase.
  • Contactless - One of the newest card payment methods allows consumers to buy goods without inserting or swiping a card. Near field communication (NFC), such as Apple or Google pay, can transmit account information to the POS terminal by tapping the card or phone on the hardware.
  • Online - Placing online purchases requires the customer to input their card information. Therefore, companies do not need to have a payment terminal. However, a POS system is still necessary to receive and process these transactions.

The information gathered from the hardware is automatically shared with the POS system, which processes the payment. Using this data, the software generates detailed reports on stock sales and customer demand so that management can make informed inventory decisions and marketing strategies.

Pros and Cons of Different POS Terminals

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There are several types of POS terminals available that cater to the needs of different industries and business sizes. Typically, there are four main POS categories, including.


Also known as on-premise, in-store POS technology is the traditional method of completing transactions. This option includes installing the POS software on a local server, which can be accessed by staff using the in-house monitors.

In-house systems are great for small business, as they provide-

  • Easy-to-Use Software - Comprehensive features make training employees simple.
  • Inventory Control and Accounting - Accurate data streamlines restocking and audits.
  • Security - Since stationary systems are located in-store and can only be accessed by approved staff, software hacking is reduced.
However, a Software Advice study showed that only 66% of retailers preferred on-premise POS terminals. Growing businesses have experienced issues with this traditional approach at times for the following reasons-

  • Expense - In-house systems can cost thousands of dollars for a multi-terminal installation in one location.
  • Limited Access - Since this method implements the system solely on the local server, users have to be inside the store to access data and view reports.


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As with many forms of technology, the cloud has innovated and improved the efficiency of POS solutions. This method can be used on multiple remote terminals rather than installing the software on a single server. This solution increases the functionality of the on-premise strategy by providing convenience and mobility.

The benefits of a cloud-based POS system include-

  • Availability - The cloud allows staff to access the system from any device with WIFI connectivity.
  • Affordability - This method does not require a high upfront cost. Instead, businesses can begin their software with a subscription, starting at less than $100 on average.
  • Automatic Updates - Terminals that run off the cloud get automatic software updates at no extra cost, giving them access to new features.
  • Easy to Use - Provided updates allow programmers to innovate the software to continue to make it more user friendly.
  • Customer Support - Cloud POS systems are usually offered with free customer support at any hour. Whether it's a number or website, there is always a representative to help troubleshoot any issue that may occur.
For companies that haven't updated their operations, cloud-based POS may pose some problems, such as-

  • Internet-Dependence - All terminals require an internet connection to access the software. Therefore, if a business does not offer internet or the connection is unstable, the terminals may experience disruptions or run slowly. Companies with this issue may need to invest in multiple networks or connection extenders to prevent buffering.
  • Security Risks - Hackers that can tap into the internet connection and software can have access to all inventory and transaction data. Therefore, companies should invest in a firewall to prevent security breaches.


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Also known as mPOS systems, the mobile method is a subcategory of the cloud solution that offers mobile hardware such as tablets or phones. A report from Capterra disclosed that 44% of all stores use mPOS systems, most of whom are small to mid-size businesses. This strategy is appealing to startups and retail stores due to its-

  • Mobility - This solution is great for stores that require employees to be away from the checkout counter or on a sales floor, allowing them to travel with the software.
  • Reliable Terminals - Investing in reliable terminals, such as tablets or handheld devices, can last a store up to seven years without a need to upgrade.
Despite all of the advantages of handheld technology, mPOS systems can create more expenses, such as-

  • Repairs - Mobile terminals are more likely to get damaged from accidents. Therefore, companies should be aware of any costs to fix or replace hardware.

Self-Service Kiosk

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This solution is for unique businesses that have larger amounts of customers demanding a simple service or good. Many fast-food chains, movie theaters, gas stations, and grocery stores have implemented self-service kiosks to shorten the employee lines. Other benefits of kiosks include-

  • Efficiency - Customers with simple orders do not have to wait in a long line and can instead perform the transactions themselves. This reduces the wait times at all terminals by dispersing the buyers.
  • Cost Reduction - Organizations can save on labor costs at checkout with this automized terminal.
However, kiosks come with their disadvantages, including-

  • Theft Potential - Without employees present at checkout, it is easier for buyers to steal. Businesses should consider placing an employee at the kiosks to monitor purchases or to review receipts at the exit.
  • Customer Difficulties - Some consumers find newer technology hard to navigate and may need assistance when checking-out. Businesses should implement a help button that alerts a nearby employee when a buyer requires assistance.

POS Systems in Different Industries

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Understanding the needs of the industry is vital when determining what POS hardware is right for a company. There are several types of POS systems that cater to optimizing operations within different industries, including-


Retail stores have POS needs that revolve around merchandise and serving customers, therefore they need a system specializing in these requirements. Studies show that 36% of businesses that utilize POS software are in the retail industry because they seek to streamline checkouts.

When searching for retail software, useful features include-

  • Label printing without UPCs
  • Employee commissions generator
  • Item matrix to regulate products offered in different sizes or colors
  • Scales to weigh products
  • Web-based store integration


Businesses in the food industry do not need the extensive barcode scanning features required in retail. Instead, they should focus on POS systems that provide-

  • Remote order ticket printing for kitchen and bar
  • Customizable table map to quickly seat guests
  • Simultaneous check calculators for multiple customers
  • Ability to split checks and add gratuity options
  • Receipt printer
  • Assign orders to dining in, taking out, or delivery
  • Integrate online and third-party delivery orders


Salons have unique requirements as they deal with hospitality and merchandise. Spas and salons should purchase a system that integrates-

  • Online Bookings - Today, many customers prefer the convenience of booking appointments online, rather than calling in. Salons should implement POS systems that receive and alert management when new appointments have been made via their website.
  • Calendars - Business days can quickly become chaotic when walk-ins and scheduled appointments aren't appropriately managed. Calendars can be updated easily on software, allowing employees to assign walk-ins and new appointments without overbooking staff accurately.
  • Memberships - Some salons offer memberships to guests at an additional price that provides benefits and unique services. POS systems can store data, such as payment information, membership level, and purchase history, for each guest to make transactions quicker.

POS System Features

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There are unlimited options when it comes to choosing a POS software that meets all of the company's needs adequately. Software that works for one business may not always meet the requirements of another.

Organizations must pay close attention to the features offered by a POS service to avoid having to change the system in the future. A study by Software Advice showed that 36% of businesses sought new POS systems that offered more insight and features.

However, changing services can disrupt production and increase company expenses. To prevent this, companies should ensure their POS systems are able to carry out essential functions such as-

Inventory Control

POS systems should track transactions from in-store and online purchases to effectively manage inventory levels. By providing real-time product quantities, businesses can determine when to replenish items to avoid stockouts and profit loss.

Employee Management

Tracking employee schedules, wages, and commissions become simplified with modern POS software. Point of sale systems allow users to create employee profiles that store all of their information and track each staff member's shifts. This centralized access promotes full transparency throughout the staff, preventing miscommunication.

Reports and Analytics

Studies show that 47% of business owners' top priority when choosing a system is its ability to generate customized reports. These analytics give insight into inventory turnover rate, customer demand, and performance trends that allow management to make informed decisions on how to expand the business. Some additional metrics that are useful to have include-

  • Sales by item, employee, department, discount, and payment method
  • Stock value
  • Item reorder points
  • Shift reports
  • Cash drawer activity
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Customer Service

POS software tracks the purchase history of returning consumers on a database to customize coupons and loyalty programs. With the customer's permission, systems can automatically send marketing emails and exclusive deals to improve their overall experience.


To optimize the efficiency of all operations, businesses must find a POS system that integrates with other established software easily. The integration of services allows all employees, from warehouses to storefronts, to access updated information.

Payment Processing

To increase profits, systems should be able to accept all forms of payment, including cards, cash, checks, NFC, EBT, and coupons. Without these capabilities, businesses can miss out on sales and potential new customers.


For businesses that travel or are seeking expansion, having a mobile POS system allows employees to assist customers anywhere. This feature is a must for businesses such as food trucks and retailers with extensive facilities.

The Importance of POS Terminal Data

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The information POS terminals collect and analyze is essential for business scalability and profits.
Starting with inventory management, software tracks what items are purchased in real-time and updates all integrated systems.

Transactions both in-store and online are simultaneously calculated to display accurate stock levels. These quantities show warehouse managers what products are experiencing high demand and need to be reordered. By monitoring daily sales and setting appropriate reorder points, companies can avoid over and understocking products, saving on unnecessary inventory costs.

POS data also helps develop effective marketing strategies to sell high-profit items and improve customer satisfaction. Reports showing product demand and preferred platforms can determine if a campaign performs better online or in-store. Businesses can evaluate where to apply discounts, such as underselling goods, to increase their turnover rates while attracting more traffic.

The insights that modern POS software provides are endless. From understanding customers and business needs to limiting stock expenses, organizations can learn where to reduce their operating costs while increasing their bottom line.