Point of Sale: What Is it and Why Is it Important?

Want to run a successful retail business but aren’t sure what you need? Find out what a point of sale is, how it works, and why you need one. 

One of the most important and practical decisions that you can make as a business owner is how to handle your payments. Thankfully, today, you have a variety of options, such as point of sale (POS) systems, that offer much more than just a handwritten ledger and a drawer in which to store your cash. 

POS systems offer a variety of features and capabilities that help you stay on top of everything from inventory to customers and promotions, allowing you to scale your business and offer your customers a superior experience. 

In this article, you’ll learn everything you need to know about point of sale systems, including what they are, why they matter, what they offer you, and how you can choose the best one for your business needs.

What Is a Point of Sale System? – POS Meaning

Point of Sale: What Is it and Why Is it Important?

Point of sale” is a term used to refer to the place where a customer completes his/her transaction and pays for a good or service. A point of sale system is the technology that you use to enable the transaction. While, in theory, this term could apply to a variety of tools from a notepad to a calculator, these days it usually refers to a more sophisticated machine that combines hardware and software to enable the sale of goods and services. 

There is a wide range of POS systems available on the market today including mobile systems, POS apps, touch-screen systems, cloud POS systems, and more. Each business will choose the POS system that is compatible with their needs (sometimes more than one is necessary!). 

Today, the most advanced POS systems offer a variety of helpful features from cashless payments to employee management to marketing and loyalty programs. Let’s put it this way: a good POS system is an invaluable part of your retail processes.


How a POS System Works

Point of Sale: What Is it and Why Is it Important?

So, how does a POS system work? The process is rather simple, with the POS guiding the transaction from beginning to end in a user-friendly way. 

First, the customer selects the product or service they want to purchase. This can be selected in the POS system by scanning a barcode or by choosing from a menu of options. It can also be done in the store, as a customer physically selects a product or asks a salesperson for advice. The salesperson can then select the item in the POS system, whether it be at the check out counter or on the go with a mobile POS system. Once the item is selected in the POS system, the system prices the item, tallies a total, adds sales tax, tips and/or coupons and discounts if relevant, and gives a final total.

The customer then pays their total with a variety of payment options ranging from cash to cashless choices like credit cards, contactless payments like ApplePay, and even cryptocurrencies.

Finally, the POS system completes the transaction, printing a detailed receipt or sending a digital receipt, and storing information about the transaction for later use by the merchant. Later on, this data can be used for a variety of purposes including accounting, inventory tracking, and marketing insights. 

Ask us about our POS solutions


Types of Point of Sale Systems

Point of Sale: What Is it and Why Is it Important?

Point of sale systems are useful for a variety of businesses. Often, there are POS systems designed specifically for different industries, although some are able to work for multiple purposes. Below, we’ve put together a list of the different types of POS systems you may find and their unique capabilities. 

Retail POS

The first type of point of sale system is one made for retail environments, such as grocery stores, convenience stores, clothing stores, etc. On top of the usual POS system features, these systems may also include any of the following capabilities:

  • Inventory and product management
  • Employee management
  • Employee commissions
  • Gift cards
  • Purchase orders
  • Customer promotions
  • Layaway
  • Color and size matrix
  • Digital scales for weighing items
  • Barcode scanners for scanning items

A good retail POS should also include multi-store capability, credit card transactions (cashless processing), customer reporting, sales reports, vendor reporting, and inventory stock levels. 


Salon & Spa POS

The next type of POS system is one created for salons and spas. This type is actually useful for a variety of businesses from nail and hair salons to barber shops, tattoo and piercing parlors, pet groomers, fitness clubs, massage parlors, and so on, as they all require similar capabilities. These include:

  • Appointment calendar
  • Appointment reminders
  • Customer database 
  • Retail functionality
  • Inventory management
  • Employee scheduling
  • Employee management


Restaurant POS

Restaurants and other food retailers such as food trucks, cafes, takeaways, and micro markets all require their own specific set of POS system capabilities. Here is a list of just some of the features you can find in the best restaurant POS systems:

  • Sending orders to the kitchen
  • Tracking inventory and food usage
  • Payroll
  • Employee scheduling
  • Recommended pricing
  • Online ordering
  • Loyalty programs
  • Menu performance

With these features, a great restaurant POS system will not only help you manage payments but also assist in a multitude of other processes in your business.


Bar & Nightclub POS

While restaurant POS systems are often suitable for bars, there are also systems designed specifically for bars and nightclubs. These might include any of the following features:

  • Sending orders to the kitchen
  • Customer loyalty
  • Quick customer checkout

A mobile POS is particularly relevant here, because payments can be accepted on the spot.

Small Business POS

Finally, there is the catch-all category of POS systems designed to serve small businesses that may be on more of a budget. Often, these systems are designed to work with tablets in order to be as light, flexible, and cost-effective as possible. These mobile POS systems can be suitable as long as you are not processing a huge volume of transactions and speed is not your biggest concern. If you are a vendor, a pop-up shop, a boutique, or something of that nature, POS systems like these can be perfect for you.


Point of Sale System Features

Point of Sale: What Is it and Why Is it Important?

In addition to the industry-specific features offered by the different POS system types listed above, there are also some features that are relevant and helpful across the board. 

Inventory Tracking

By being involved in every sale you make, POS systems are inherently set up to be able to assist in inventory management by helping you track exactly which items you’ve sold on any given day. Most POS systems are able to help you manage your stock and notify you when you need to reorder products. 

Data Management

POS systems collect large amounts of very useful data that, when leveraged correctly, can help you boost the customer experience, identify new possibilities for revenue, and grow your business. The best POS systems can manage data, record transactions, share data across devices and locations, and keep everything secure.

Fulfillment Options

POS systems can help you stay competitive by offering a variety of fulfillment options for your customers including in-store pick-up, home delivery, and in-store returns for online purchases. This capability can allow you to diversify your revenue stream and offer better convenience to your customers.

Cashless Payment System

It’s no secret that cash use is on the decline: in 2020, cash accounted for only 19% of all payments. Today, customers expect to be able to complete a transaction with cashless payment, whether that be through traditional credit cards, contactless payments such as Apple Pay and wifi-enabled credit cards (especially important in light of the COVID-19 pandemic), or even cryptocurrency. POS systems offer secure cashless payment for your customers’ convenience and safety.

Customer Relationship Management 

In the process of recording customer information and tracking purchases, your POS system can help you with customer service and customer relationship management. It can help you get in touch with your customers ans serve them better, referencing data such as what they purchased, how much they paid, and whether or not they made a return.

Marketing Tools

Similarly, the very same customer information can be used as part of omnichannel marketing efforts. Some POS systems offer marketing tools such as building email lists, sending out promotional emails, selling on social media platforms such as Facebook and Instagram, and advertising to your in-store customers online. 

Employee Management

Many POS systems offer employee management, including scheduling, time tracking, and commissions features. Each employee can also have their own login with different permissions to help with security and tracking data such as how much money was made during a particular employee’s shift.

Loyalty Programs and Gift Cards

More advanced POS systems often offer the ability to create a built-in loyalty program that tracks customer purchase data and uses it to help them accumulate points that can be used toward discounts and other rewards. Gift card support, punch cards, campaigns, and links are also common POS features.

Detailed Receipts

Last but not least is the ability to offer detailed receipts and the option to either print them on paper or send them via email or text message. AI-powered digital receipts can help you gather data and better serve your customers. 

Ask us about our customer loyalty solutions

POS Systems vs. Cash Registers

You may be wondering what the difference between a POS system and a cash register is. While they serve some of the same functions, a POS system is a much more advanced machine. 

As you can tell by its name, a cash register’s capabilities are generally limited to handling cash. POS systems will most often also have the ability to handle cash transactions, but also enable cashless payments, which are often preferred by both customers and merchants for their convenience. POS systems are a mix of hardware and software that add many more capabilities to serve your business’ overall operations. 

Cash registers are simpler machines than POS systems and their price often reflects this by being more affordable. But while POS systems might be pricier and take a bit more time to get used to, they also offer many more features, have improved efficiency and accuracy, and are ultimately easier to use, enabling better, faster service.

Benefits of POS Systems

Point of Sale: What Is it and Why Is it Important?

POS systems offer a wide variety of benefits over more manual options such as cash registers. Not only do they improve customer experience, but they can also go a long way in helping you grow your business. Some of the most important benefits to note include:


  • Improved customer experience – With their speed, flexibility, seamlessness, lack of error, and ability to offer a variety of payment choices, POS systems help you provide top customer service and improve your customers’ experiences. 
  • Accuracy – The more you rely on human employees to manage transactions on their own, the more room for error you have. Whether they’re making mistakes tallying up totals, calculating change, or saving receipts, humans inevitably mess up every once in a while. POS systems, however, are able to offer much more accuracy.
  • Touchscreen – Whether you’re using a POS system that comes with its own monitor or connects to a mobile device that you already have, your POS can offer touchscreen capability that is very user-friendly.
  • Speed – Not only does the extra speed offered by POS systems help improve the customer experience, but it also allows you to finish more transactions in the same amount of time. This is especially useful for businesses that experience rush periods and high customer volume such as bars and busy restaurants.
  • More payment methods – By increasing the number of payment options (for example cashless systems such as EMV, Apple, or Google Pay) that you can offer, POS systems allow you to make more sales. Furthermore, they give you the choice to go completely cashless and save yourself the headache (and accounting risk) of having to count and handle cash.


Hardware Components of a POS System

We’ve spent a lot of time here reviewing the different capabilities of a POS system, but what does one look like physically? What do they include in terms of hardware? The following components are commonly included in most POS systems.


  • Monitor/terminal/tablet – The main part of your POS system will be a terminal or monitor. In some lighter POS systems, you’ll be able to connect your own tablet for this purpose. This piece of hardware is used to display the product database, as well as any other functions such as inventory reports, an employee clock-in interface, and so on.
  • Barcode scanner –  Barcode scanners offer an automated checkout by pulling up product information and prices for individual items and adding them to the checkout total.
  • Credit card reader – If you want to offer cashless transactions, which are generally viewed as a must these days, then you’ll want a POS system with a secure and EMV-compliant credit card reader.
  • Receipt printer – While many POS systems offer email and text receipts as an option, most still come with a receipt printer for customers who prefer them.
  • Cash drawer – Many POS systems allow you to go completely cashless, streamlining your checkout process. However, there are still a large number of them that do support cash interactions and come with cash drawers.
  • Scale – Optionally, your POS system can come with a scale to weigh items, which may be useful for retail environments like grocery stores. 

Ask us about our POS solutions


Different POS System Software Types

If you’ll allow us to get a bit tech-y for a moment, we’ll review the various types of software that different POS systems offer.

Cloud-based POS Systems

Many advanced POS systems run cloud-based software, meaning that data storage and processing happens in the cloud rather than on physical machines in your business. There are many benefits to cloud-based POS systems. First of all, they can often greatly reduce costs as they require much less computer processing power and storage space. You can also access your data from any device in any location. Finally, you can set your POS system’s software to update automatically so that it is always up-to-date, helping your business grow and eventually incorporating an omnichannel platform. It is important to note that this software type does require you to have fast, reliable internet.

On-premise POS Systems

Another option for POS system software is on-premise software which means that all of your data storage and processing happens on machines in your physical location. With this type of software, you’ll buy licenses and install the software on as many computers as you need. You’ll be required to keep the software updated manually and there may be a much larger upfront cost for the servers it’ll require to run your system. However, you won’t have to pay ongoing data hosting fees, as you’ll be storing everything yourself. 

Mobile POS Systems

Another software option that is worth considering for smaller businesses is mobile POS systems, which connect with your mobile device. These are usually a type of cloud-based POS system that simply uses your own smart device as a screen rather than coming with a monitor of their own. The biggest advantage of this software type is its mobility, which allows you to take your POS system on the go with you to trade shows or different pop-up locations. 

Multichannel POS Systems

Finally, there are multichannel POS systems that offer integration with other software and services like your website, online shop, social media accounts, third-party marketplaces, and so on. This could be useful if a majority of your sales occur through one of these types of platforms and not at your physical business location.

How to Choose the Best POS System


As you’ve most likely gathered from the above information, there is no shortage of options to choose from when it comes to different POS system offerings. So how can you decide which one you want to invest in? Here are a few factors we recommend thinking about.

  • Needs – The first and most important point to keep in mind when choosing a POS system is what your business’s particular needs are. Do you require something light and fast or do you prefer to have a feature-rich system that might require more hardware? Are you focused on selling products or are you in the service industry? Understanding what it is that you want from your POS system is a crucial step in choosing the right one for you. 
  • Budget – Of course, you’ll also have to consider your budget. In certain situations, you may not be able to afford to pay for all of the features you wish to have. Setting a clear budget ahead of time will help you be realistic when picking out your POS system. However, remember that POS systems are intuitive and easy to learn how to use, meaning that training staff will be much easier.
  • Customer service – POS systems have a learning curve when you’re first getting used to them, and it’s only natural for various issues to come up throughout your time using yours. That’s why it’s recommended to choose a POS system that comes with robust, responsive customer service to help you with any problems that might arise.
  • Features – Above, we’ve listed a variety of features that POS systems might offer. If there are any that you read about and feel are must-haves for you, don’t forget to double-check that the POS system you choose offers them before you commit to it. 

Ask us about our POS solutions


Getting Started With a POS System

Once you have chosen your POS system, there are a few steps you’ll have to take before you’re able to incorporate it into your day-to-day. Here is the process that you can expect to go through.

Setup Your POS

First, you’ll have to set up all of the hardware and software components of your POS system. Most are quite user-friendly and come with clear instructions and support or service to help you get everything up and running. Don’t take shortcuts here; this step is crucial to make sure that everything works properly and you don’t have technical issues. 

Program Your POS

Each POS system requires a process of programming in your business’s details including menu, product, inventory, rewards programs, employees, and so on. Some POS companies will help you with this part for free or for an additional fee. Otherwise, you can do it all yourself. This will take a while, however, so make sure to plan for this time. 

Merchant Services

To get yourself set up with the ability to accept credit card payments, you’ll need to sign up for an account with a merchant services provider, which is required to accept cashless payments from your customers. Many POS systems offer merchant account integration to make it easier for you, or you might have to use a third party.


Finally, you’ll have to learn how to use your POS system and train all of your employees to do the same. Many POS system companies help with this process whether it be in person or through training videos. The good news is that most POS systems are very user-friendly and aren’t too hard to get started with.


POS – Take the Next Step to a Better, Cashless Business

Congratulations – you now officially know everything you need to know about POS systems and why they matter! Armed with this information, you’re ready to choose the POS system that will best serve you and help you grow your business. 

There’s no better place to start than with Nayax, an award-winning, integrated POS solution made with today’s top technology. Whatever your industry, Nayax’s POS systems can help you offer a superior customer experience while gathering valuable insights to help you increase your revenue and stay one step ahead of your competition. Get in touch

Let’s Chat.

Tell us about your business & how we can help you grow.

Fill out the form in below and we’ll be in touch shortly.

action / 9 - action, cancel, close, delete, exit, remove, x icon
action / 9 - action, cancel, close, delete, exit, remove, x icon
action / 9 - action, cancel, close, delete, exit, remove, x icon
action / 9 - action, cancel, close, delete, exit, remove, x icon