What is a POS System: Cost, Features & Providers
By Meaghan Brophy on May 9, 2019 |
Point-of-sale (POS) systems handle the entire checkout process, from bar code scanning to
payment processing. They also include backend management features, such as inventory and
analytics. Restaurants and retailers can manage all aspects of their business through their POS
system. What a POS system costs could be as low as $0 to $300 per month.
What Is a POS?
POS is the point of purchase in a retail store. It’s when and where a monetary transaction takes
place. The POS is typically the register, checkout counter, or cash wrap. POS systems are
software programs that manage purchases, returns, and exchanges.
The terminology is confusing because essentially the same phrase can refer to two different
things. In this article, POS systems refer to the software programs that enable the sale.
How a POS System Works
Modern POS systems take the place of cash registers. They are cloud-based software programs
that operate on tablets, desktop computers, or smartphones. They have a connected card reader
for accepting credit card payments. Retailers can add on extra hardware as needed, such as cash
drawers, bar code scanners, and thermal receipt printers, which are typically sold separately.
Although POS systems take the place of traditional cash registers, they have much greater
functionality.
1. Sales & Checkout
A POS system creates a quick and seamless checkout experience for your customers and store
associates. At checkout, staff can add items easily to a sale via bar code scan or touchscreen
entry. Totaling the sale happens instantly and coupons, loyalty points, or other discounts can
be applied at the touch of a button.
During the checkout process, POS systems can also be used to collect customer contact
information, create profiles to store purchase history, sign up for email marketing, or enroll in
loyalty programs. POS systems allow retailers to easily use the checkout process to gather
contact and sales data to serve customers better.
2. Credit Card Processing
POS systems automatically connect credit card transactions to your checkout process. This
simplifies and speeds up your checkout procedures and end-of-day reconciliation tasks. Unlike
a typical credit card terminal and cash register setup, with a POS system, you don’t run a
separate end-of-day charge report and reconcile tickets to sales. It’s already done for you.
POS systems also make it easy to accept credit cards wherever you make a sale. You can
connect card readers to smartphones and tablets for mobile sales, accept online payments via
your website or enter phoned-in payments using your POS system’s virtual terminal. All of this
is above and beyond what you can do with a basic credit card terminal and cash register setup.
3. Inventory Management
Inventory features are one of the top reasons that businesses adopt a POS system. Virtually
every POS system on the market stores key product data such as supplier information and
wholesale cost; regular, sale and discount prices for items; variables, such as size or color; and
current stock quantities. The best POS system also offers advanced inventory features that
helps you manage purchase orders, track parts for assembly products and makes intrastore
stock transfers.
Some POS systems also include features to help manage online orders and organize inventory
such as creating shipping labels and bar codes you can print with a bar code label printer. Most
POS systems also integrate your inventory data with various ecommerce platforms to automate
real-time stock updates between your POS system and online sales channels. If you need to
track inventory anywhere, a POS will improve the process.
4. Centralized Multichannel Sales
A POS can connect your in-store and online sales activities in one convenient, centralized
system. Many POS systems integrate with a number of online sales platforms and sync your
sales, payments, customers and even inventory counts between your in-store system and online
sales channels. Some POS systems, like Lightspeed, offer dedicated ecommerce solutions.
5. Customer Management
POS systems let you record customer contact information and track every purchase down to
the fine details. You’ll know what items each customer purchased, how much they paid, what
payment method they used, and even if the items were returned at a later date.
Customer data is immensely helpful in overall sales management, but it also plays another
important role by helping you fine-tune marketing efforts. Knowing who purchases what, who
your most frequent shoppers are, and who the biggest spenders are, helping you craft targeted
marketing campaigns. Without a POS system, targeting buyers based on their purchasing
history is nearly impossible.
6. Sales Data Tracking
POS systems track every sale in detail, which gives you a wealth of data. Even the most basic
sales reports tell you which items are your top sellers and slowest movers. These retail data
analytics help you make informed purchasing decisions.
Sales tracking also helps you pinpoint and predict seasonal upticks in certain categories or
overall sales so you can plan your inventory and staffing to meet your busy cycles. Many POS
systems let you track sales by employee for commissions or internal rewards programs.
Lightspeed has one of the most sophisticated reporting tools on the market. Lightspeed
Analytics breaks down data into three categories: Sales and Inventory, Employees and
Performance, and Customers and Marketing. Each of these categories has a dashboard with
visuals to offer high-level insights at a glance and tools for breaking down or organizing data
any way you want.
7. Employee Management
POS systems offer a variety of employee management tools. Almost every POS system
includes features to setup multiple employee logins to track activity and set permission levels.
Some POS systems also include features for time tracking, scheduling, and commission
tracking.
For added fees, you can access or integrate a complete payroll management within your POS
so that your time tracking and payroll tools are all in one automated system. Some POS systems
like Square offer this feature directly, while other POS systems offer this solution through thirdparty integrations, such as Lightspeed and Push Operations.
8. Marketing Integrations
Many POS systems offer marketing solutions to put your customer data into action. Email
marketing campaigns are the most popular marketing tool, but some POS systems also offer
solutions for selling on social media platforms like Facebook and Instagram.
Using a POS system makes building an email list and keeping it updated a breeze. No more
managing contact lists or spreadsheets manually. When you’re ready to send marketing emails
with promotions, you can use your customers’ order histories to target customers most likely
to respond. Tying your order history to email campaigns helps you create far more effective
campaigns.
9. Loyalty Programs
Customer loyalty programs take marketing a step further than email marketing by giving your
customers an ongoing reason to frequent your store. Loyalty programs work a number of ways.
You can use one to build points toward free gifts or discounts or to offer members special treats
like early-buy events, coupons or appreciation days. However you set yours up, it’s all managed
easily in most POS systems.
Lightspeed offers a proprietary solution called Lightspeed Loyalty, which connects directly
with Lightspeed POS. Lightspeed Loyalty is a targeted rewards program that includes a
branded customer-facing app to track points and rewards. Retailers can create custom
automated short message service (SMS) and email campaigns, and then track customer
spending as a result of the promotion.
POS System Providers & Costs
There are many POS systems on the market. Most POS systems have the same basic features:
inventory management, customer tracking, and sales data. However, there are POS systems
designed for just about every type of retail and restaurant business. Some POS systems are free
while others cost more than $100 per month.
Types of POS Systems
There are POS systems specifically designed for every type of retail and restaurant business,
such as boutiques, specialty shops, sit down restaurants, and cafes. Here are some of the types
of POS systems and their unique features:
 Retail POS systems: Have features for managing retail inventory, purchase orders, and
customer data
 Restaurant POS systems: Have features to manage seating plans and turnover times,
recipe management, and ingredient tracking
 Cafe & coffee shop POS: Simple interface to quickly process orders
 Grocery POS: Have scale integrations for ringing up produce and loose food items
 Mobile POS: For market vendors or service providers that need to take payments via
smartphone
About the Author
Meaghan Brophy is a staff writer for Fit Small Business specializing in retail. She has provided
content and guidance for indie retailers for years as the editor for Independent Retailer, a
RetailWire BrainTrust panelist, and speaker at trade shows such as the Independent Retailer
Conference and NY NOW. She has an M.S. in Publishing from Pace University.