What is a point of sale system?
JP Arnaud-Marquez
·November 9, 2023
If you run a retail business — whether ecommerce, brick-and-mortar, or a combination of both — a good point of sale (POS) system is crucial for helping you process transactions efficiently.
While your point of sale system can be as simple as an old-school cash register, today’s retail businesses have the opportunity to take advantage of technology integrations that give them complete visibility into their sales data and how it impacts their business operations. In this article, we’ll look at what you should be looking for in a best-in-class POS system.
What is a POS system?
A point of sale (POS) system refers to the location — whether virtual or in-person — where a customer processes payment for their purchase, and the business collects any sales tax due and provides the customer with a receipt.
A POS system can require a physical attendant to facilitate the transaction — such as a cashier in a store or a waiter in a restaurant — or the customer may be able to complete the transaction via self-service, such as at a self-pay checkout stand at a supermarket, a self-ordering restaurant kiosk, or an online POS terminal on a website.
At its most basic, a POS system should collect data around what items the customer purchased; how much it costs; how much sales tax is due; and how the customer paid (cash, card, check, etc.).
However, modern POS systems offer a far more robust array of features that can help you manage your entire business operations from start to finish, whether using them online, on-premises, or in a hybrid model.
Types of POS systems
Let’s consider some of the POS system options that make sense for today’s retail businesses.
- An ecommerce payment gateway
If your business sells online, it’s important to set up an ecommerce payment gateway for online ordering, where customers can securely make payments for their purchases. Depending on the payment processing technology you choose, you may direct them to pay via a third-party provider, such as PayPal or ApplePay, or you might give them the option to input their credit card or debit card details directly to an embedded payment gateway on your ecommerce platform. No matter what method you choose, make sure that your solution is securely encrypted, fast, and has seamless integrations with the other tools you use for streamlined reporting. If you also sell products in person, it’s also important that your ecommerce technology integrates data with your on-premises POS for a holistic look at your sales data. - A mobile POS
A mobile point of sale solution uses a payment processor like Toast or Square to process transactions on the retailer’s mobile device or iPad from any location where they have an internet connection. This type of point of sale system is practical and easy for merchants who move between locations frequently, such as farmers’ market vendors, food truck owners, and pop-up shop retailers. It can also be a great tool for restaurants and cafes, enabling wait staff to cash their customers out right at their tables, without making them wait to run their credit cards at a terminal. - A POS countertop terminal
POS countertop terminals may be paired with receipt printers, barcode scanners, and other hardware at the checkout counter. They may include a cash register as well as a credit card reader, as well as other forms of payment technology such as ApplePay. Typically, these checkout stations are operated by cashiers, but self-pay kiosks (explained below) can also fall into this category. - Self-pay kiosks
Self-pay kiosks represent a form of point of sale terminal that’s increasingly common at retail stores and supermarkets, offering a streamlined contactless payment solution for customers. They offer barcode scanners where the customer can scan each item individually and process the payment on their own, eliminating the need for customer support with most transactions. They typically provide credit card readers, and can print receipts or give customers the option to get their receipts via email.
Key features in a POS system
It’s a crowded market when it comes to choosing a POS system — so to narrow down the field, focus on a few key POS features:
- Price
Your initial investment may range from $0 for free options that work with your existing mobile device, to several thousands of dollars — as well as ongoing costs for subscription-based pricing and your payment processing fees. Pricing can vary depending on factors such as your hardware needs, your industry, how many locations you serve, and your integrations and add-ons. Don’t focus on finding the lowest priced option — focus on finding the POS that will demonstrate the most value to your business for the price. - Payment options
We’ve already moved to a largely cashless society — and soon, we may be card-less, too. Make sure that your POS system offers your customers the flexibility to pay the way they prefer to, whether that’s by using ApplePay or another mobile pay solution, a gift card balance, a credit or debit card, or other digital options like PayPal and Venmo. You can choose a POS system that offers in-house payment processing, or choose one that’s compatible with a variety of external payment processors, giving you more flexibility in switching services over time if needed. - Third-party integrations
Your point of sale solution should offer streamlined integrations to connect with your business operations data, including inventory management, employee management, and customer data from your CRM. By integrating with your customer loyalty program, for instance, you’ll be able to help your customers track rewards right at the register, offering them discounts and incentives every time they qualify for a new reward based on their purchase activity. And by integrating with your inventory management system, you can set conditions to automatically reorder products when they fall below a certain level, saving you time and manual labor on the back end. - Data reporting
Your POS system shouldn’t just help you process transactions — it should give you the data insights to understand how your business is doing. Robust POS systems provide dashboards where merchants can view data such as their most popular products, average spend per customer, and most popular time of day to make a purchase. You can then use these sales reporting insights to help you optimize your business by updating your inventory, changing your hours, or offering specials to drive new business. - Scalability
Make sure that your POS system is built for your type of business — not just where you are now, but where you hope to be years down the line. If you plan to sell only via ecommerce forever, then you’ll probably be fine with a POS system that doesn’t offer on-premises options. But if you plan to open a few retail locations alongside your ecommerce offerings, or host pop-up events, you’ll want to choose a robust point of sale solution that integrates data from ecommerce transactions as well as on-premises sales, helping you easily track inventory across multiple locations, both online and offline.
A point of sale solution for returns
Finally, while all of this has focused on identifying the right POS system for processing transactions, let’s not forget about finding the right technology to help you manage the post-purchase process.
You also need a robust point of sale tool that can help you track and manage returns that start online and end in your retail locations. Using Loop POS, your shoppers can skip packaging returns and printing labels, instead taking their returned items directly to one of your stores for restocking. Loop POS can refund the customer’s payment back to their method of purchase or be converted into exchange credit, which they can use to shop either on your ecommerce store or in your retail locations.
By inviting customers into your stores to process returns, you’ll make them more likely to consider other products, helping you retain revenue from returns. Delivering a streamlined returns process that encourages them to choose how they’d like to process returns — whether by shipping items back directly, or dropping them off at a retail location — provides a great customer experience that will help you grow customer loyalty.
Loop’s POS setup makes things simple on the back end, too: The tool syncs with your inventory management solution, making it easy to see what products are currently being returned so you have up-to-date data that helps you identify when to restock at certain locations.
Whether selling or accepting returns, your shoppers deserve a smooth, streamlined process — and with the right point of sale technology, it’s never been so easy to deliver.
Want to learn more about how Loop’s POS system can help you streamline returns? Get in touch for a demo.
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