What is Point of Sale (What is POS)?

iStock_000006334514XSmallPoint of Sale (or POS in its abbreviated form) is the phrase used to refer to the point—or location—where a sales transaction takes place, such as a checkout line or retail counter.   A Point of Sale System is the term used for the combination of computer hardware and software that oldcashregisteractually manages the sales transaction.  There are many benefits of using a point of sale system over a traditional cash register, since a computer is able to capture, store, share, and report data (such as sales, payment, or customer information).  A POS system saves time and duplication of work, and increases efficiency and accuracy in inventory, reporting, ordering, and providing excellent customer service.

The main industries where you would find POS systems being used are retail, service and hospitality (restaurants, hotels, hair & beauty).

There are many ways to evaluate a point of sale system.  Speed, cost, functionality, and ease of use are a few.  We consider the key requirement to be reliability, as a single lost transaction is unacceptable.

It is helpful to distinguish the forms that POS has gone through over the decades, from traditional point of sale developed in the 20th century, to the introduction of web-based and mobile point of sale in the 21st century.

Traditional POS

POSterminalTraditional computerized point of sale, which began in the 1970’s and came of age in the 90’s, uses a stationary checkoutcomputer with POS software installed, and peripherals such a bar code scanner and receipt printer.  Networking makes it possible for traditional POS to be used with multiple stations and multiple stores, syncing information across various locations making it easier to keep track of sales and inventory.  Components of a traditional POS system include:


Hardware:pin pad with credit card swipe

A computer (the main component of a traditional POS system).

Peripherals. This term refers to hardware devices that you add to the computer system.

Some peripherals help you use the computer itself (such as a mouse or keyboard).bar code scanner

Some peripherals are more specific to POS, they enable you to perform a sales transaction (cash drawers, bar code readers, receipt printers, credit card readers, pin pads, touch screens, etc.)


POS Prophet Systems General computer software, primarily, an Operating System (OS), such as Windows, Mac, or Linux, which makes it possible for people to use and interact with the computer.

POS software, helps you to manage your business and perform sales transactions.  It automatically collects and stores data about customers, sales, and inventory, and can use that data to create reports for taxes, sales analysis, etc.  The software is the most critical part of the POS system.

(Image provided by POS Prophet Systems)

*It is important to know that when putting together a Point of Sale system, the various hardware and software components must be compatible, or able to communicate with each other.  


Web-based POS



The first decade of the 21st century saw advancements in web-based POS software.  Web-based POS software can be accessed through the Internet from any computer with a connection and a browser.  You do not need to install it since it is hosted on secure servers that provide real-time backup.  One of the advantages of browser based point of sale is that it is operating system independent.  You can use it on an Apple Mac at one part of the store, and a Windows PC at another.  If you want to access your retail data from home at night, it can be done through your home computer or laptop.  Other advantages usually include automatic backups done by the company who hosts the system, and software updates automatically provided the same way. 


Mobile POS

The last few years have brought significant progress in mobile technology, such as smart phones, tablets, and other handheld devices that tabletbasically act as mobile computers.  Mobile technology, along with web-based software, has allowed for an evolution of Mobile POS, and is having a huge impact on the POS industry, even to the point of changing our understanding of what the “Point of Sale” is.

Craig Aberle, President of The Point of Sale News, comments,

“The definition of POS is certainly evolving – new tools are being developed that actually change the ‘point’ of sale.   Apple’s POS system allows a clerk to ring you out wherever you are in the store.  That’s a great feature.  No need to wait in line at the checkout counter.   In restaurants, the point of sale is moving to the table you are served at. With service companies everywhere, (like car rental agencies) the point of sale is right where you drop off the vehicle, and they inspect it and print a receipt from a portable device.  The places that transactions are processed cell phonewill continue to evolve as long as it is easier for the customer, drives revenue, and manageable.  The little credit card readers that get plugged into an Apple or Android phone are taking point of sale way out of the mall, and out of the store.   It’s now in the parking lot, in the field at a country fair, or right on the sidewalk. Merchants are no longer tethered to something that has to remain plugged into a wall.”  He concludes, “Today, I would define the ‘point of sale’ as anywhere that any transaction takes place.”

   If you came here asking “What is Point of Sale?” or “What is POS?” then hopefully this article has given you a proper introduction.  Please explore our website to find out more.  Be sure to check out the Learn section, as well our POS Software & Hardware sections.  Stay on top of news and case studies regarding POS for various industries.  We also provide an international list of POS resellers.

If you find our resources helpful, be sure to stay in touch through Facebook, Twitter, or RSS.  You can also subscribe to our free e-newsletter.


 How to Computerize Your Small Business. New York: John Wiley & Sons Publishers, Inc.  Aberle. (1995).

Wikipedia http://en.wikipedia.org/wiki/Point_of_sale

eBay: Point of Sale (POS) System Buying Guide  http://pages.ebay.com/buy/guides/point-of-sale-pos-system-buying-guide/

Written by