A Point Of Sale system (POS), is a combination of software and hardware used to centralize business operations. A good POS system can manage sales, inventory, employees, customer marketing, and more, allowing a store manager or restaurant owner to easily keep track of all their daily and quarterly tasks.
Businesses with a POS will quickly recoup the costs thanks to revenue saved in the streamlining process. If you run a small business or manage a large one, the most important thing you either need to install or update is your POS system. Read on to find out more or use our free tool to compare POS costs today.
What is a POS System?
Simply put, it’s the “Point of Sale” in a store, meaning the point at which a consumer hands over money and gains ownership of the products they want to purchase.
Physically, that location is at the checkout line, and “POS” might refer to a mechanical solution like a cash register. But when people use the term to refer to an industry, they’re usually talking about the digital version: the software that a cashier uses to track and log their sales.
POS system software and hardware are integral for any modern sales business, from a major retail chain to a tiny food truck, for two main reasons. First, it’s an inventory service: A POS can keep track of the total goods in a store. Second, it controls sales: By recording every item sold and penny received, the system can ensure the store owners won’t lose items or revenue to mistakes or malfeasance.
A POS system can offer plenty of other benefits to make any store’s daily tasks far easier, but it’s the sales and inventory features that truly make it the backbone of a business.
What is POS System Hardware?
Every POS system needs a software and a hardware component. The software is typically provided by a specialist vendor and designed to be compatible with most hardware solutions. Compatible hardware can either be purchased from the same provider, or bought separately from commercial retailers. Only rarely will a system depend on provider-specific hardware elements that won’t be available anywhere else.
Five basic POS hardware components are strongly recommended for any physical store. Today’s typical shopper might not know anything about the systems they use for shopping, but they'll be familiar with these:
- Credit card reader
- Register screen
- Receipt printer
- Barcode scanner
- Cash drawer
It’s worth noting that these components can be condensed. A mobile card reader might even do all five tasks. It could plug directly into an iPad or phone, and send digital receipts while accepting virtual cash. For this type of business, a barcode scanner might not be needed, as items could be recorded manually.
POS systems can operate using two different main software options: On-premise software and cloud-based software.
On-premise POS software isn't connected to the internet. It keeps all the information on a closed system within the store, and must be maintained by the store manager or an IT employee.
Cloud-based POS software relies on the internet in order to work. They are SaaS, or Software as a Service, which means that store managers must pay a set fee, usually monthly, in order to use a cloud-based service. The upside is that any bug fixes or updates are the responsibility of your provider, not the store manager. Plus, your information is always backed up, and can be accessed from anywhere.
If you're curious about some of the top POS software providers, take a look at the table below or you can take a look at our best POS systems for restaurants, retail businesses, or iPad-based systems.
Tech.co rating for retail
Score out of 5 based on Tech.co's independent market research.
Tech.co's verdict to help you identify the most suitable choice for your retail business
The typical lowest starting price. The lowest price available for your business will depend on your needs.
Is there a version of the software made specifically for iPad use?
Is there a version of the software made specifically for Android tablet use?
BEST RETAIL POS
BEST FREE POS
Best Retail POS
Best free POS System
Best value POS system
Best for customer relationship management
Best for small franchises
Best for integrating ecommerce
Best for those looking to expand from online-only operations
Large or growing businesses wanting an easy set up
Businesses with large, barcoded inventories
$99 per month
Free (but transaction fees apply)
$29 per month
$29 per month
$39 per month
Works with loads of third-party periperals
Sold by Square, separately or bundled. Works with most leading brands and has a great free trial.
Available through third-party vendors
Offers a preconfigured POS terminal with an iPad and tablet stand, a router, a printer, and a cash drawer.
Works with loads of hardware options
Sold by Shopify, but also works with iPads and Android tablets
Sells everything from full cash stations to mobile card readers
Works with lots of third-party peripherals
Sold by Lightspeed. NOT compatible with weighing scales.
Additional Features of POS Systems
While inventory and sales are essential features of a POS system, the modern iteration comes with plenty of additional abilities, all aimed at making a store owner’s life easier.
Sales and Inventory
First, the basics. Any POS should include an ability to track sales, registering that every item has been sold for the correct price and recording the amount of that item that remains in the inventory. At the end of each day, the system will have an accurate count of the store’s revenue during that period.
Another common feature is employee tracking. Employees should be able to log in and out, letting the system know who is responsible for which sales. As an added benefit, this feature allows managers to track the hours each employee works.
If you regularly shop at Starbucks or Safeway, you probably carry their loyalty card around wherever you go. It’s a great move for a business: It turns regular customers into brand advocates while saving them money at the same time. And for it to work, the cashiers will need a way to easily input the savings that the customer will be getting for each trip. With a loyalty program included in the POS, a cashier can quickly enter a phone number or scan a card in order to add up the savings.
Like the loyalty program, a gift card option can help attract and retain customers, but it also needs to be available as an option through the store's POS vendor, in order to be accepted.
A mobile app isn't essential, but almost all big brands will be sure to incorporate one. Any store owners operating on the move, from food trucks to Farmer’s Market stalls, will need a mobile-friendly POS.
POS systems can track data that might otherwise be forgotten, compiling it into reports that deliver insights. With the right details about typical customer behaviors, sales information, or employee habits, a store manager can improve store efficiency, ultimately boosting their bottom line.
In addition to all the above features, different industries may require specialized features. The best example is the restaurant industry. A restaurant POS system definition incorporates features that can inform the kitchen which orders to begin preparing, and has a more detailed inventory that tracks each individual ingredient required to make the meals that are purchased.
Meanwhile, a salon POS system needs to be able to track appointments months into the future, while a system designed for use in a bar doesn’t require any unique features, but needs to run incredibly quickly to keep customers happy. You’ll need to know your industry’s needs.
A favorite of small-time vendors everywhere, this company offers free POS apps. In addition, they sell the all-in-one hardware component you’ll need to run their app.
Square is one of the few names in on the market systems that the average consumer is likely to have heard of, as their large presence in the industry makes it likely you've purchased an item or ten through their service.
Square excels for restaurant and retail businesses alike with its brilliantly easy-to-use platform and versatility. Most importantly, Square charges no monthly fees. Instead, you pay a small percentage of the fee you receive for every transaction you make, meaning you won't start paying until you start selling.
- Free to get started
- Slick and stylish hardware
- Serves businesses of all sizes and in all sectors
- Strong analytics, inventory, and third-party integrations
- Some necessary features for mid-sized businesses cost more
- 2.75% charge on non-card transactions
- Support options vary by plan
Vend is the best POS system for retail businesses on the market and it even offers a completely free version of its software.
Vend is one of the most fully-featured retail POS systems on the market, offering integrations with loads of payment processors, and accepting almost any kind of payment you can think of from cash to checks and contactless transactions.
It offers a very robust inventory feature and partners with Shopify and WooCommerce to manage online stores. Vend's pricing starts from $99 per month and it charges no transaction fees at all. This might make it cheaper than Square for some companies in the long run.
To learn more about Vend, check out our full review
- Suits businesses of all sizes
- Works with loads of third party hardware and software options
- 24/7 support
- Strong ecommerce integration
- Reporting on lower pricing tiers can lack detail
Clover is a great fit for companies that have started online and are looking to expand into physical brick-and-mortar locations.
However, Clover really shines when it comes to hardware. It offers its own range of products from full tills and registers to handheld payment terminals for bars or to help staff move around stores. It even has a mini card reader for on-the-go selling from food trucks or at markets.
It's important to consider the hardware you'll need to start selling with a full POS system — some providers (like Clover) require dedicated systems. Other providers, meanwhile, will let you get started with just an iPad.
- Great for companies that started online but need a physical presense
- Good range of hardware options
- Free trial
- Need pre-existing website unlike Shopify, for example
- Additional features cost extra and can become expensive
POS systems can be tailored to suit industries as specific as nail salons or coffee stands. However, just two types of industries are popular enough to stand out of the pack and warrant mentioning here.
Retail systems are designed for retail stores; physical locations selling products from a specific inventory. Clothes, pets, jewelry, sports and electronics stores all fall under this umbrella.
Check out our SpotOn review for more information on this provider
Restaurant systems are aimed at all types of restaurants: Quick service, cafes, bars, food trucks and fine dining establishments. In addition to itemized inventories that track both ingredients and completed meals, features specific to a restaurant POS include the ability to track which table has ordered which meal, and to allow servers to input orders from tablets while tableside.
Check out our top rated provider TouchBistro with an insight about features and prices.
Some POS systems are free or come at an exceptionally low cost, while offering basic functionality for smaller operations. Sadly, larger businesses will likely need to eschew free services in order to receive more complext features. Small businesses or hobbyists may opt for a cost-conscious system without the bells and whistles.
Centralizing all business operations into one system greatly boosts efficiency. With a POS System, all workers can quickly and easily move from task to task as prompted, while store managers will be notified with alerts when inventories need restocking or employees need to be scheduled. Naturally, the store's revenue will rise to match productivity.
When a customer walks into a store to face a sleek tablet with an appealing interface and trim card reader, they'll likely have a higher opinion than they would if facing a dusty cash register. The effects of the polished demeanor and appearance of a modern POS are tough to quantify, but do help shape customers' views.
Every POS system comes with its own added features, privacy settings, third-party integrations, and customizable templates. If a store manager wants to create their own daily report, auto-generated to meet their specifications, the right POS system can let them.
Speaking of reports, the data collection that a POS system makes possible can shed light on a business's weak spots or missed opportunities. Perhaps one employee is under-performing, or customers enjoy one type or color of product above another. Months or years of data collected can reveal insights that allow managers to execute at a level beyond their own instincts.
Messaging capabilities can allow for rapid communication from within the POS software itself, helping cashiers talk to each other or alert a floor manager, or a restaurant kitchen interact easily with servers. The result? A well-oiled machine of a store that saves thousands by avoiding costly miscommunication.
Many of the best POS systems can collect email addresses when sending receipts, building a ready-made email marketing list. Customers who might have otherwise forgotten about your store or restaurant can be turned into regular customers with a few coupons or gift cards — which, coincidentally, are both additional features supported by top POS systems.
How To Choose a POS for Your Business
If you’ve gotten this far in the article, you now have basic knowledge of the POS system definition, the value this type of system offers, and what features you should expect from one. You just need to find the best one for your specific business.
Try writing out a list of the features your business needs. Then, once you have the list, look at the top suppliers to find the best fit. Here are a few questions to consider:
- Will on-premise or cloud-based software be more appropriate for your working conditions?
- Are the basic features enough, or will you need something a bit more advanced?
- What payment processors must the POS be able to use?
- Are any unique hardware elements you'll need (such as a self-service checkout)?
- What price range are you comfortable with?
Don’t worry about fully understanding the system immediately: Focus on understanding the features it offers instead. You might not know how to use a touchscreen cash register, but the setup from a high-quality provider should be intuitive, and many suppliers offer online tutorials explaining the process.
If you're ready to start looking into which POS system is right for your business, fill out our quick and easy form to get bespoke quotes from leading suppliers. You'll be under no obligations to get started with any of the providers, and it'll only take a few minutes.
Frequently Asked Questions
We answer the internet's most asked questions about POS systems.
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