How does a POS system work?

By | 2017-09-09T08:34:56+00:00 August 28th, 2015|Tags: |

In this article we’re going to go right back to basics, and discuss how a POS system works from the ground up. We’ll also talk about how point of sale systems have evolved, and touch on some of the options now available to businesses.

Let’s start by going back a few decades and thinking about a point of sale system in its most basic form – which is, essentially, a cash register.

A typical cash regtister already looking out of date.

A typical cash regtister already looking out of date.

The earliest cash registers wouldn’t even “know” what products cost. The person operating the till would manually enter the prices of purchased items, often with the help of price tickets.

They would then take the money, place it in the cash drawer, and hand the customer a paper receipt. In some cases, the only transaction record the business would have would be their own copy of the paper till roll.

As point of sale systems evolved, they became more computerised, storing a product database on the register itself, on an attached computer, or on an onsite server.

Often they would include a barcode reader so there was no need to for any manual price entry, and they would also store transaction details electronically.

Nowadays, things are far more sophisticated. While some retail businesses still use systems as described above, many are moving on to advanced cloud-based POS systems, where all the important data is stored online.

The Key Components of a POS System

Regardless of how modern a POS system is, it still generally consists of some or all of the following components:

  • The POS system itself: This could be a cash register linked to a server or PC, or even an iPad or other tablet device linked to a cloud-based system.
  • A cash drawer – used to store the day’s takings, along with cheques, vouchers and payment slips.
  • A receipt printer – used to print receipts to hand to customers.
  • A barcode reader – typically used in retail environments with many different products.
  • A card machine – used to process payments made by debit or credit card.

Modern Point of Sale

If you’re setting up a modern business, it’s very unlikely you’ll want to choose a traditional, bespoke cash register. You can gain access to far more functionality at a lower cost by choosing a cloud-based point of sale system. These systems still allow you access to all the key components listed above, should you need them, but offer a whole host of extra benefits besides.

These benefits include advanced yet easy-to-use software. For example, it’s not uncommon to see iPads used in restaurant environments, complete with table plans and loads of functions to make life easier for waiting staff.

Modern POS systems also have the capability to integrate with other electronic systems and databases. This, for example, can mean that the day’s transactions are immediately reconciled with your accounting and inventory management systems. It’s even possible to integrate a bricks and mortar store with an online presence using certain POS systems.

Add in mPOS (mobile point of sale) and businesses that need it can even gain the ability to take card payments from anywhere with a network connection, making point of sale truly portable.

Things have come an awfully long way since checkout operators used to manually tap prices into a cash register. If you run a small business, you can now access the kind of functionality that even large retailers could have only dreamed about in years gone by.