Point of Sale (POS): Full Form, Meaning, and How It Works

Learn about the different types of POS systems, their features and benefits to find the right retail technology solution for your business needs.
Point of Sale (POS): Full Form, Meaning, and How It Works
4 min
24-Feb-2024

Swiping cards has become second nature. But do you know what happens behind the scenes when you use your credit card? Let's explore the world of POS systems and how they enable seamless retail transactions.

What is a POS?

Ever wondered about POS full form? The full form of POS in banking is ‘point of sale’. What is ‘point of sale’? Point of Sale (POS) refers to the location where retail transactions take place. When you hear POS, think of cash registers or self-checkout stations. These are physical devices that process payments and record sales data.

But POS is more than just a fancy cash register. Modern POS systems are software-driven and allow businesses to do way more than just ring up sales. POS software provides robust reporting on inventory levels, sales trends, customer data, and employee performance. It's an indispensable tool for most brick-and-mortar retailers today.

Ecommerce stores have virtual POS systems to handle online checkout and payments. Just like their physical counterparts, these POS platforms offer analytics and administrative functions to help online businesses operate efficiently. Whether it's an in-store terminal or online checkout page, the point of sale is where magic happens - that final step where a sale is consummated.

Understanding POS systems is key for marketers and retailers. POS data provides visibility into what, when, and how customers buy. This powerful insight informs everything from store layouts to promotional campaigns. By optimising the POS process, businesses create better experiences that drive revenue and customer loyalty.

How does POS work?

A digital tool used at checkout counters, a POS system processes your store purchases. First, it scans the items or inputs their codes. It then calculates the total cost, including any taxes and fees. Next, it processes your payment, whether you’re using card or cash, and whether you’re shopping online or in-store. Finally, it generates a receipt, marking the completion of your transaction.

But POS systems aren’t just for payments. They also help businesses manage inventory, track sales, collect customer data, and oversee staff. So, they’re quite the multitaskers in the retail world.

Benefits of POS systems

Benefit

Description

Saves Managerial Time

POS systems integrate with payroll, scheduling, accounting and other business software to eliminate hours of administrative work.

Improves Customer Experience

POS systems keep businesses current with emerging customer trends and preferences, enhancing service quality.

Engages Customers

POS software updates ensure businesses can engage customers on a personal level.

Offers Ecommerce Capabilities

POS systems provide omnichannel sales capabilities for both online and offline transactions.

Streamlines Operations

Automating inventory, order fulfilment, and other tasks simplifies operations across channels. POS systems include electronic cash registers, software to track daily purchases, card readers, barcode scanners, and other data capture devices.

Integrates with Business Software

POS systems connect with existing business platforms to create a complete solution.

Provides Real-Time Data

Monitor sales, inventory and other metrics in real time for data-driven decisions. Retailers can track pricing accuracy, inventory changes, revenue, and sales patterns.

Builds Customer Loyalty

CRM tools in POS systems help businesses build lasting customer relationships.

Supports Omnichannel Sales

Robust POS platforms enable seamless sales across online, in-store and mobile channels.

Enhances Vendor Management

Some POS systems have built-in tools to optimise supplier relationships.


Types of POS

There are several kinds of POS systems. Here are some of them:

  • Mobile POS: These systems run on smartphones and tablets for payment processing and basic functions like managing inventory and customer data. Ideal for businesses on the go. Ideal for businesses on the go, such as food trucks, pop-up shops, or home service providers. They often integrate with card readers and printers, offering flexibility and convenience. Mobile POS systems also enable staff to process payments anywhere in the store, reducing queues and enhancing customer experience.
  • Tablet POS: Tablet-based systems are gaining popularity for their low upfront costs. They handle complex inventory and employee time tracking. These systems offer a user-friendly interface, making training easier. Many tablet POS solutions offer industry-specific features, such as table management for restaurants or appointment scheduling for salons. They can also integrate with customer-facing displays for a more engaging checkout experience.
  • Terminal POS: Traditional countertop systems for scanning barcodes, ringing up sales, calculating totals and taxes, and processing payments. They are robust, designed for high-volume transactions, and often include peripheral devices like cash drawers, receipt printers, and customer displays. Terminal POS systems are common in retail stores, supermarkets, and restaurants, offering reliability and the ability to handle complex transactions.
  • Cloud-Based POS: Offers cloud data access, hardware versatility, sales and payment processing, inventory and order management, analytics and reporting. Cloud-based systems provide real-time data synchronization across multiple locations, remote management capabilities, and automatic software updates. They reduce the need for on-premises servers, offer scalability, and provide resilience against local hardware failures.
  • Legacy POS: Provides strong data security without needing internet connectivity. Can scan, calculate totals and discounts, and process payments. These systems are often preferred in industries with strict security requirements or in areas with unreliable internet. They typically run on proprietary hardware and software, offering stability and control. However, they may lack modern features like remote management or integrated e-commerce.
  • Self-Service Kiosks: Standalone devices that allow customers to complete transactions independently. They are increasingly used in fast-food restaurants, cinemas, and retail stores to reduce wait times and staff workload. Advanced kiosks offer features like product customization, loyalty program integration, and multiple language support. They can also collect valuable customer data for personalized marketing.
  • Open-Source POS: Offers source code customization flexibility. Businesses can modify the software to fit their unique needs, integrate with other systems, or add new features. This can lead to significant cost savings on licensing fees. However, it requires in-house technical expertise or hiring developers. Open-source POS is popular among tech-savvy businesses or those with very specific requirements.
  • Multichannel POS: Enables sales across different platforms like in-store, online, and mobile. These systems provide a unified view of inventory, orders, and customer data across all sales channels. They support features like buy online, pick up in-store (BOPIS), or reserve online, purchase in-store. Multichannel POS systems are crucial for businesses adopting an omnichannel strategy, ensuring consistent customer experience and efficient operations.

The specific features vary, so consider your business needs when choosing a POS system.

The point of sale is a crucial touchpoint between businesses and customers. As consumer expectations and technologies continue to evolve, POS systems must keep pace. The right POS solution streamlines operations, provides valuable insights, and enables memorable customer experiences.

With the variety of POS types and features available, retailers can find the perfect match for their business goals and processes. Key considerations include sales channels, inventory size, data analytics needs, and budget. Partnering with an experienced POS provider ensures you get a customised system with maximum uptime and support.

At its best, a POS system helps merchants optimise profitability while building lasting customer relationships. By transforming transactions into opportunities for engagement and growth, POS technology empowers businesses to focus on what matters most – delighting their customers. The future looks bright for innovative POS systems that combine an exceptional in-store experience with robust back-end functionality.

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Frequently asked questions

What is POS transaction?

A POS (Point of Sale) transaction refers to a purchase made through a point-of-sale terminal, like a credit card swipe machine at a retail store.

What is the full form of total POS?

The full form of POS is Point of Sale. “Total POS” usually refers to the total amount of transactions processed through POS terminals.

What is POS on bank account?

POS on a bank account refers to transactions that have been made using a debit or credit card at a Point of Sale terminal.

What are POS charges in bank?

POS charges in a bank refer to the fees charged by the bank for using the POS service. This could include transaction fees for purchases made through POS terminals.

What is the full form of POS in computer?

The full form of POS is Point of Sale, referring to a physical location where a transaction occurs. In computer systms, it’s typically the hardware and software components that are used to process sales transactions.

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