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What Is POS?

September 11, 2018

8:49 am

So you run a business. Maybe you sell organic honey over the weekends, maybe you just inherited your dad’s gas station, and maybe you’re a manager in charge of bringing the local big-box store into the modern era.

Whatever the case, your business should run on the best systems for its needs. If you sell a product to your customers, the most important thing you either need to install or update is your POS system.

What is POS, and why is it so essential to businesses everywhere? This article offers the quick explanation, and also breaks down the software and hardware components of a POS system, the main features to expect, and a look at what questions can guide you to the POS that’s right for you. But whatever you do, don’t rely on Urban Dictionary to define the term.

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What Is a POS System?

The basic POS 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. But when people use the term to refer to an industry, they’re talking about the digital version: the software system 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.

Examples of the Shopkeep POS hardwarePOS System Software & Hardware You’ll Need

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.


POS systems can operate using two different main software options: On-premise software and cloud-based software.

On-premise POS systems aren’t connected to the internet. They keep 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 systems rely 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.


Five basic hardware components are either essential or strongly recommended for the POS at any physical store. These should all be familiar to today’s typical shopper.

  • 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.

Additional Features of POS Systems

The Lavu restaurant POS system

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

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

Sales and Inventory

First, the basics: Any POS should be able 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.


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 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.

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.

How To Choose a POS for Your Business

If you’ve gotten this far in the article, you likely have a basic knowledge of the value a POS 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.

  • Does on-premise or cloud-based software work best?
  • 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.

If you’re ready to start contacting POS systems, we can help you choose. You can quickly and simply compare POS systems and price quotes to find the best deal for your business: It takes two steps: One, fill out Tech.Co’s handy online quotes form, and two, that’s it, you’re already done.

Collect and compare quotes from a range of POS system providers in just a minute.


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Adam is a writer with an interest in a variety of mediums, from podcasts to comic books to video essays to novels to blogging — too many, basically. He's based out of Seattle, and remains a staunch defender of his state's slogan: "sayWA." In his spare time, he recommends articles about science fiction on Twitter, @AdamRRowe

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