Point of Sale (POS): A Beginner's Guide

 If you're running your own business, whether it's online or in a physical store, it can be both rewarding and challenging. Keeping things go smoothly takes a ton of effort, energy, and a lot of juggling of things such as sales, staff, salaries, attracting new customers, and keeping the loyal ones happy. One important aspect you can't forget is the payment process. You probably already know about POS systems, and having the right point of sale products is crucial.

What’s POS?

source: hubspot.net

A POS, short for point of sale, is a system that helps businesses handle the payments and keep track of sales. It's a digital cash register that calculates orders, accepts payments, manages stock levels, analyzes buying patterns, generates invoices, and gathers marketing insights.
POS systems can be countertop devices or apps that allow people or businesses to accept payments through connected gadgets such as smartphones. Whether you have a physical setup in a traditional store or a checkout option for an online shop, the POS is the key for problem-free transactions.

How Does It Work?

Point of sale products usually rely on barcode scanning that helps them determine the total price of an order, process payments, and record transactions. The software gathers essential information, such as item names and quantities. When a customer uses cash, they will insert the bills or coins into a machine. 

On the other hand, when they pay with a card, they'd swipe, insert or tap it on the reader. In that case, the POS connects the customer's bank (sometimes it may require a PIN) and will check if they have available funds to finish the transaction. If they do, the POS will confirm the payment. Online retailers also use POS systems to manage and track sales. Shoppers just click on the checkout button and enter their payment info.

There are two important advancements, EMV chip technology and Near Field Communication (NFC), will increase the security for POS terminals by reducing the risk of fraud. These systems are designed to read encrypted card data and can identify and reject counterfeit cards. They also allow for wireless payments from contactless cards or mobile devices, making sure that card information isn’t stored on the merchant's system.

Benefits of Use

POS software systems make retail activities super easy by automating the tasks and keeping tabs on crucial sales information. This way you get an electronic cash register paired with software that organizes data from daily transactions. Retailers can amp up their capabilities by adding a network of data-capture tools like card readers and barcode scanners.

With various software features, retailers can keep an eye on pricing accuracy, inventory shifts, total revenue, and sales trends. By using tech to track this data, retailers can spot pricing errors or cash flow issues that might hurt profits or disrupt sales. POS systems that keep track of inventory and buying habits can help retailers dodge customer service headaches, like running out of stock, and fine-tune their purchasing and marketing strategies based on what consumers want.

Marketing and Innovation

When shoppers are at the checkout, they often use POS terminals to finalize their purchases. But for marketers, these points of sale (POS) are crucial because they can trigger impulse buys, especially for items displayed near the register. These items are specially made to catch the buyer's eye, and when they're close to the register, it's simply easy for people grab something extra.
This is why it's important where the POS systems is placed. For example, department stores mostly set up POSs for various product sections such as clothing, appliances or electronics. Also, many retailers have their POSs run loyalty programs that reward regular customers with points or discounts.

How Does a POS System Work in a Small Business?

POSs help businesses process customer payments and track their sales. It may sound simple, but the setup can vary based on whether the business works online, has a physical store, or both. Traditionally, a point-of-sale system referred to the cash register in a brick-and-mortar store. Nowadays, with many businesses going digital, POS systems are primarily online, allowing owners to complete transactions from anywhere. All that's needed is a POS app and devices like smartphones or tablets that connect to the internet.
• When a customer wants to buy something, they can do so directly in a physical store if one exists. The sales associate will scan the item's barcode to find the price. Some systems even let sellers use their device's camera to scan items. For online shops, this process occurs when customers finish adding products to their cart and hit the checkout button.
• The POS system calculates the total cost, including taxes, and updates the inventory to reflect the sale.
• Next, the customer makes the payment. They can pay with credit or debit cards, tap, gift cards, or loyalty points. The customer's bank will then authorize the transaction.
• Once the payment is done, the sale is complete. The seller generates digital receipt which allows the business to ship or hand over the purchased items to the customer.