What Is POS?

September 11, 2018

8:49 am

What is POS? A POS, or Point Of Sale system, is a business solution that uses both software and hardware to centralize your operations. The right POS system can manage sales, inventory, employees, 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.

On This Page:

What is a POS System?

The basic POS system definition is simple: 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, or iPad that can take payments. 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, a POS 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 POS vendor and designed to be compatible with most hardware solutions, while the hardware can be separately purchased from commercial retailers. However, some POS systems may depend on proprietary hardware elements that won’t be available anywhere else.

shopkeep pos hardware

Five basic POS hardware components are either essential or strongly recommended for the POS at any physical store. Today’s typical shopper might not know the POS system definition, 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.

What is POS System Software?

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 POS service. The upside is that any bug fixes or updates are the responsibility of the POS provider, not the store manager. Plus, your information is always backed up, and can be accessed from anywhere.

Additional Features of POS Systems

The Lavu restaurant POS system

While inventory and sales are essential features of a POS system definition, the modern iteration comes with plenty of additional abilities, all aimed at making a store owner’s life easier.

Here are a few common features that a POS definition may include.

Sales and Inventory

First, the basics: Any POS definition 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 POS will have an accurate count of the store’s revenue during that period.

Labor Management

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.

Loyalty Programs

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.

Gift Cards

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 whatever POS system the store uses in order to be accepted.


A mobile app isn't essential to a POS definition, but almost all big POS software 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.

Industry-Specific Features

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 as far as months into the future, while a bar POS system 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.

Compare POS suppliers today with our simple and fast form

Who are the Top POS Suppliers?

While this isn’t a comprehensive list, it’s a fast at-a-glance look at the best POS vendors available today. Don’t know what to expect from a POS service and how to pick out the best one for your particular needs? Just check out a few options from this list and you’ll see the range of what the industry has to offer.

square POS demo

Square POS logo Square

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 POS 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.

Shopkeep POS logo ShopKeepShopkeep equipment

Cloud-based and designed for iPad use, this company’s POS system is a great choice for on-the-go storekeepers, and is frequently updated to future-proof against any additional payment innovations. The company provides a free guide to those who aren't sure which POS system is the best fit for them. They offer plenty of well-respected hardware options as well.

Lightspeed POS logo LightspeedLightspeed equipment

Lightspeed’s cloud-based POS is another top-tier system. It's particularly adept at handling the three most common POS-reliant industries, as it offers dedicated software options for retailers, ecommerce, and restaurants. The company also partners with a number of third-party integrations in order to offer a range of additional features beyond the basic POS abilities.

POS Systems by Industry

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 POS 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. has rounded up and reviewed the top ten best retail point of sale systems available today, if you need a snapshot of the competition.

Restaurant POS 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's guide to the top ten best pos systems for restaurants for the pros and cons of the top-tier options.

Some POS systems are free or come at an exceptionally low cost, while offering basic functionality for smaller operations. While not an “industry” per se, the size of a business can impact which POS system is best, and small business operators or hobbyists may opt for a cost-conscious system without the bells and whistles.

Tech.Co has collected and reviewed the top free POS software options. Click through for a detailed explanation of what abilities and restrictions to expect from this POS definition.

POS Benefits

Increased Productivity 

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 POS software 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.

Data-Driven Insights

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 by a POS system can reveal insights that allow managers to execute at a level beyond their own instincts.


POS messaging capabilities can allow for rapid communication from within the POS software itself, helping cashiers talk to each other or alert a floor manager, and can help the restaurant kitchen interact easily with servers. The result? A well-oiled machine of a store that saves thousands by avoiding costly miscommunication.

Marketing Campaigns

Many 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 features supported by many POS systems.

How To Choose a POS for Your Business

If you’ve gotten this far in the article, you likely have a basic knowledge of a POS system definition, the value this type of system offers and what features you should expect from one. Now you 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 POS suppliers to find the best fit. Here are a few questions to consider.

  • Which POS definition works best for you: On-premise or cloud-based software?
  • Are the basic features all you’ll need?
  • What payment processors must the POS be able to use?
  • Are any unique hardware elements needed, or just software?
  • 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 process for a high-quality POS should be intuitive, and the supplier tends to offer an online tutorial explaining the process.

You should now have a decent idea of what a POS system is and whether your business needs one. So 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.

Get bespoke POS system quotes from leading suppliers now

About our links is reader-supported. By clicking to compare, you’ll receive quotes from various suppliers, tailored to the needs of your business. If you enter into a contract with a provider, we may receive a payment for the introduction. This helps to provide free advice and reviews. It carries no additional cost to you, and doesn’t affect our editorial independence.

Did you like this article?

Get more delivered to your inbox just like it!

Sorry about that. Try these articles instead!

Adam is a writer at and has worked as a tech writer, blogger and copy editor for the last decade. He's also a Forbes Contributor on the publishing industry (and Digital Book World 2018 award finalist) and has appeared in publications including Popular Mechanics and IDG Connect. When not glued to TechMeme, he loves obsessing over 1970s sci-fi art.