What is a POS System? How to Choose the Right Type

In today’s digital era, businesses must adapt quickly to stay competitive. A Point of Sale (POS) system has become an essential tool that enhances operational efficiency. But do you truly understand what a POS system is and how it can benefit your business? Sixtygram, will take you through a comprehensive guide to POS systems, helping you understand their functionalities and providing tips on selecting the right one for your business needs.

What is a POS System?

A Point of Sale (POS) system is a technology used to process payments and record sales transactions in retail businesses. It consists of both hardware and software that work together to manage the entire sales process from calculating totals and accepting payments to issuing receipts, whether in paper form or as an electronic tax invoice (E-tax).

Modern POS systems are no longer limited to traditional cash registers. They now include mobile applications on smartphones and tablets, allowing businesses to accept payments quickly and conveniently. Whether for offline or online stores, POS systems can be seamlessly adapted to suit various business models.

How Does a POS System Work?

A POS system operates by integrating essential hardware and software components, including:

1. Card Reader: Processes payments via debit or credit cards.
2. Keyboard: Used to enter data or commands into the POS software.
3. Barcode Scanner: Speeds up product identification and inventory management.
4. Display Screen for Screen: Can be a computer monitor or tablet for managing transactions.
5. Cash Drawer: Securely stores cash payments.
6. POS Software: The brain of the system, handling sales processing, inventory management, and report generation. It allows users to turn the system on/off and enables easy hardware maintenance, similar to a computer’s CPU.
7. Customer Display Screen: Shows scanned items, total prices, and other purchase details in real time.

A POS system operates by first recording the items a customer purchases. It then calculates the total amount, processes the payment, and issues a receipt. For card payments, the system connects to the bank to verify and authorize the transaction before completing the sale.

8 Types of POS System (Current)

POS system some in various types, each designed to suit different business needs:

1. Desktop POS System: A desktop system ideal for large stores with high sales volumes. It typically features a monitor that allows both the staff and customers to view transactions in real time.
2. Handheld POS System: A portable system resembling a credit card swiper that enables staff to take orders and process payments anywhere within the store.
3. Phone POS System: Utilizes a standard mobile phone fitted with dedicated software as the primary payment device, making it well-suited for small businesses or vendors who are frequently on the move and change device operators often.
4. Tablet POS System: A tablet-based solution serving as the primary device. This POS format is highly flexible and user-friendly, thanks to its larger screen compared to the mobile format.
5. Self Service Kiosk: A system that allows customers to complete transactions independently, ideal for businesses looking to reduce front-of-house staffing costs.
6. Open-Source POS: A system built on open-source software that can be tailored to a business’s specific needs. This type of POS is purchased individually, enabling integration with almost any device to be further developed for highly specialized business operations.
7. Multichannel POS: Supports sales across multiple channels both physical stores and online allowing your business to operate through both e-commerce and brick-and-mortar systems. However, each channel typically operates independently with its own database and management system, which may lead to customers experiencing different interactions depending on the channel. Nonetheless, you will have access to comprehensive data once it is consolidated into a single database.
8. Omnichannel POS: This system is designed to elevate customer experience beyond conventional POS systems by seamlessly integrating all sales and service channels whether it be a physical store, website, mobile app, or social media. While typical POS systems are often confined to in-store sales with fragmented data, an Omnichannel POS employs a central system to aggregate and manage all information. This enables a clear overall view of the customer, ensuring continuous and efficient service regardless of the contact channel. From product research to post-sale service, customers enjoy a consistent experience throughout their purchasing journey, allowing businesses to better meet customer needs and foster long-term satisfaction.

What a POS ID?

POS ID is a unique identification number for a payment terminal capable of issuing tax invoices. It is essential for businesses that need to provide full tax invoices. To obtain a POS ID, the POS system must be registered with the Revenue Department.

The POS ID, a unique code identifying each POS terminal, also enables transaction tracking, inventory management, and sales reporting. This is particularly beneficial for businesses with multiple branches or sales points, as it allows them to pinpoint which data originates from which POS terminal. As a result, mid-sized business owners can efficiently monitor operations and make well-informed decisions with comprehensive data.

Key Points to Know About POS ID

• A POS ID is required for a POS system to issue tax invoices.
• Each POS terminal that issues tax invoices must be registered individually.
• The POS ID enables the Revenue Department to accurately monitor tax invoice issuance in compliance with legal regulations.

What is POS Refund?

POS Refund refers to the process of reimbursing customers through a POS system. It is typically used when a customer returns a product or cancels a purchase. A well-designed POS system should include this function to ensure efficient and transparent refund management.

Calculating POS Usage Fees

POS usage fees typically consist of:

• Monthly Fees: Charges for software usage.
• Transaction Fees: A percentage of each sale.
• Hardware Costs: Expenses for purchasing or renting equipment.
• Additional Service Fees: Costs for customer support, software upgrades, or other premium services.

Therefore, you should consider all these costs when selecting a POS system to ensure it is a worthwhile investment.

Evaluate Your Current POS System

If you’re considering switching POS systems, it’s essential to assess your current one. A good POS system should be able to quickly search for products in the database, accurately calculate sales and taxes, manage inventory in real-time, generate sales reports and analyze customer data and seamlessly integrate with your business’s accounting and financial systems without issues. We’ve provided a simple checklist for you to evaluate whether your current POS system meets the following criteria:

• Speed of Operation: How quickly does the system perform tasks?
• Ease of Use: Is the system easy for employees to operate?
• Reporting Capabilities: Does the system provide all the necessary information?
• Integration with Other Systems: Can it connect with accounting or other systems?
• Reliability: Does the system experience frequent connectivity issues?

Benefits of POS

1. Improved Efficiency: Reduces time spent on transactions and inventory management.
2. Reduced Errors: Automation helps minimize mistakes from manual data entry.
3. Insights: Provides valuable data for business decision-making.
4. Enhanced Customer Experience: Makes the payment process faster and smoother.
5. Better Inventory Management: Tracks stock in real-time.
6. Supports Various Payment Methods: Accepts cash, cards, and digital payments.

Drawbacks of Using POS

1. Investment Costs: Installation and maintenance may incur high expenses.
2. Dependence on Internet: Most POS systems require an internet connection.
3. Security Risks: They may become targets of cyberattacks.
4. Upgrade Costs: Regular system upgrades may be necessary to keep it up-to-date.
5. Employee Training: Time and effort are needed to train staff to use the system effectively.

Is POS Necessary?

A POS system is a vital tool for modern businesses, improving operational efficiency, reducing errors, and providing valuable data for business decisions. While there are some drawbacks, the benefits typically outweigh the investment. Choosing the right POS system for your business will help you stay competitive in a highly competitive market.