What is Point of Sale (What is POS)?


Point 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.


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Editorial Team

PointOfSale.com is a leading industry news site for the point of sale and payments industry. We are also the go-to resource for small business owners that want expert tips and inspiration on how to run a successful business. Collectively, our team of experts has decades of POS, payments, and small business experience.