What is a POS System?
A POS system is a point-of-sale information system, which refers to directly reading product sales information (such as product name, unit price, sales quantity, sales time, sales store, purchasing customer, etc.) when selling goods through automatic reading equipment (such as cash register). ), and transmit it to relevant departments through communication networks and computer systems for analysis and processing to improve operating efficiency.
POS systems are designed not only to serve the retail, wholesale and hospitality industries as historically is the case. Currently POS systems are also used in other industries，for example， goods and property leasing businesses, equipment repair shops, healthcare management, ticketing offices such as cinemas and sports facilities and many other operations where capabilities such as the following are required: processing monetary transactions, allocation and scheduling of facilities, keeping record and scheduling services rendered to customers, tracking of goods and processes (repair or manufacture), invoicing and tracking of debts and outstanding payments.
In the past, a POS in a shop would have been a big cash register and a ledger to record purchases and sales. Today we have more，lighter，smaller and more convenient options that do a lot of the work automatically – from basic customer purchases to inventory management.
Six Functions of a POS System
POS systems are one of the most complex software systems available because of the features that are required by different end users.So according to different users, the system will have many different functions. But Six basic functions are the same.
Payment function
Where there is a business and there is a payment process.Payment function is what most people think of when they hear the POS system. For most businesses, this is one of the most basic functions they need from a reliable POS.
Now there are multiple ways a POS system can furtherance a transaction. The most basic payment processing functionality is online debit card and credit card processing.
Then there are brick-and-mortar businesses. These types of stores will need credit card readers with the ability to accept multiple forms of credit card payment. The most basic is a magnetic-stripe card reader. These are the traditional credit card readers we’re used to seeing in stores.
You can also get ahead of the game by using credit card chip readers and near-field communication (NFC) readers for mobile devices. Credit card chip readers will allow customers to insert their chip containing cards. These readers enable enhanced security features for consumers.
NFC readers let customers use mobile payment apps like Apple Pay and Google Pay. Customers can pull out their smartphone, open their preferred payment app, and place it near your NFC reader to complete a transaction.
In general, a reliable POS system should have the ability to set up multiple payment methods, such as cash, check, debit card, credit card, etc.,so as to keep up with the spending habits of your customers.
Transaction management
There are a few aspects of transactions that you’ll need a POS system to account for. This includes having a navigable inventory database, issuing receipts, and customer tipping.
A crucial component of a POS is the ability to quickly ring up customers and have them on their way. Your employees gain access to an easy-to-use interface to quickly complete a customer’s order during the checkout process.
For every transaction, you’ll also need to be able to print a receipt or, at the very least, be able to email a digital receipt to customers. Some customers may want a physical receipt, while others are content with having a receipt emailed or receiving no receipt at all.
Additionally, if you operate a service-based business, you’ll need to give customers the option of leaving a tip for your workers. Pre-calculated percentages or customized tipping options help customers reward your workers for a job well done.
Sales reporting
POS systems are a helpful tool for tracking the performance of your business. POS software can track important business metrics and produce reports that gauge your financial health.
Modern POS systems enable you to run reports that will help you make informed business decisions. These reports can leverage sales data that will help you optimize your business operations and streamline a path to profitability.
Reporting features can help you determine which products are selling, what your margins are, and how much money you make from month to month. In this day and age, a data-driven approach to business is crucial to stay ahead of your competitors.
Inventory management
The POS system also has inventory management functions, which can record the purchase, sales and inventory status of goods in real time. Merchants can use the POS system to conduct inventory counts, replenishment warnings and other operations on goods to avoid excessive or insufficient inventory. The POS system can also generate inventory reports and sales reports to help merchants analyze inventory and sales to optimize purchasing and sales strategies.
Customer relationship management
Customer management and tracking your customer data is a great way to build brand loyalty for your business. POS systems can record information that creates a better relationship with your customers.
For starters, you can reward repeat customers with discounts or through a customer loyalty program. This will encourage customers to frequent your business more often after having more positive and personalized experiences.
You can also use your POS system to communicate with customers after a transaction. If your customers opt in to receive email marketing communications, you can start sending them promotional emails. Some POS systems let you communicate with customers, while others will enable you to connect to your pre-existing CRM system.
Employee management
Automated employee reporting in management through your POS system helps increase efficiency. Instead of manually keeping track of hours, you can have workers swipe a card or punch in a code to clock in or out, making it easy to track their hourly wages down to the minute. Also, if employees work on commission, you can quickly identify the top-performing employees.
Advantages of a POS System
Depending on the software features, retailers can track pricing accuracy, inventory changes, gross revenue, and sales patterns. Using integrated technology to track data helps retailers catch discrepancies in pricing or cash flow that could lead to profit loss or interrupt sales. POS systems that monitor inventory and buying trends can help retailers avoid customer service issues, such as out-of-stock sales, and tailor purchasing and marketing to consumer behavior.
The complexity of the POS system
Different customers have different expectations within each trade. The reporting functionality alone is subject to so many demands, especially from those in the retail/wholesale industry. To cite special requirements, some business's goods may include perishables and hence the inventory system must be capable of prompting the admin and cashier on expiring or expired products. Some retail businesses require the system to store credit for their customers, credit which can be used subsequently to pay for goods. A few companies expect the POS system to behave like a full-fledged inventory management system, including the ability to provide FIFO (First In First Out) and LIFO (Last In First Out), reports of their goods for accounting and tax purposes.
In the hospitality industry, POS system capabilities can also diverge significantly. For instance, a restaurant is typically concerned about how the sale window functions: whether it has functionality such as creating item buttons, various discounts, adding a service charge, holding of receipts, queuing, table service as well as takeaways, merging and splitting of a receipt. These capabilities may be insufficient for a spa or slimming center which would require, in addition, a scheduling window with historical records of customers' attendance and their special requirements.
A POS system can be made to serve different purposes to different end users depending on their business processes. Often an off-the-shelf POS system is inadequate for customers. Some customization is required, and this is why a POS system can become very complex.Pay-device can be your choice.We support OEM/ODM service that can provide the designed according to customer's requirement on the product appearance, specific function and the structure.
Types of POS Hardware
In most cases,POS systems require hardware support.However,now hardware is unnecessary for some businesses that operate online.
Here are some optional POS hardware:
1. Credit and debit card readers
2. POS terminals
3. Customer displays
4. Kitchen displays
5. cash drawers
Types of POS Software
On-premises POS system software: Sometimes known as a legacy system, this software is only accessible on the POS terminal where it’s installed. It facilitates payment processing, logs sales and labor information, and preferably syncs with accounting software. This solution often works for small businesses that prioritize in-store sales and have one POS terminal.
Cloud-based POS system software: This type of POS software syncs information from multiple POS terminals and typically offers mobile and desktop access. Cloud POS systems offer greater flexibility and may be the better solution for online businesses, mobile businesses or those with multiple terminals or locations.
Each choice has its own advantages and disadvantages.Maybe most people think cloud-based POS system software is better than the On-premises POS system software,but businesses also need to consider the budget.Cloud POS systems are more flexible,but at the same time,pay attention to the security of data.No matter the size,security is very important for a company.
ARTICLE SOURCES
1.https://www.investopedia.com/terms/p/point-of-sale.asp#toc-benefits-of-pos-systems
2. https://en.wikipedia.org/wiki/Point_of_sale
3. https://www.nerdwallet.com/article/small-business/what-is-a-pos-system