If you own a small business, you will need a system that facilitates your business transactions. The best way to do this is to have a Point of Sale (POS) software. A POS system is the software and hardware that allows businesses to make sales in a hassle-free way.

There are various types of POS system software that are easily available in the market today. Moreover, it is always preferred for the business organization to hire the best software development companies to develop their POS software and not individual developers. It avoids unnecessary hassles in running the software smoothly.

In this article, we will have a detailed look at what the POS system is and its various types as well. In addition, we will also take a look at the distinct characteristics of the point-of-sale software.

What is a POS System?

what is POS System


POS system is a place where the customers make the payment for the products or services they avail of at the store.  If we say that POS software serves as a central point for your business, it will not be an overstatement.  It is the hub for everything, be it payment processing, inventory and customer management, etc.

With the inclusion of the latest technologies like Big Data analytics, Artificial Intelligence, the periphery of POS systems software has gone beyond just credit card processing. Now it is helping the business owners, retailers, etc. to incorporate contactless payment options through POS mobile, eCommerce integration capabilities, etc.

The impact of POS systems on small businesses has been immense over the years. During the dreaded global coronavirus pandemic, almost 66% of the retail leaders were not willing to leave their POS technology. This is because there are amazing benefits of POS systems for businesses. For example, the reporting features of the point-of-sale software have helped businesses increase their sales by a whopping 200%. This is why retailers and business organizations must be very specific while selecting their software development partner for developing POS system software.

How does Point Of Sale software work?

The basic purpose of a POS machine is to keep track of the sales and accept payment from the customers. But the real question is, what does a Point of Sale system do? Well, it actually works in this order:

  • Customer deciding to buy a service or a product: For physical stores, the customers can scan the items using the camera on the device. On the other hand, the customers add the items in their cart and press the checkout button for the online stores.
  • POS system calculates the price: The POS machine updates everything, including the taxes and gives the final price to the customers. Moreover, for the retailers, it also updates the count of the item being sold in the inventory as well.
  • Payment procedure: The customer then pays the final amount and finishes the purchase process. The payment is done through debit/credit cards, using loyalty points, tap cards, etc. Moreover, the customers can also use the prepaid services rendered by Apple Pay, etc. Here the amount to be paid will be directly debited from the customer’s account.
  • Final Transaction: This is a point where the retailer or the business owner finally makes a sale as the point of sale transaction is finalized. After this, a payment receipt is created and the item is either shipped or handed over to the customer.

Different types of POS system


The POS systems are broadly categorized into five types, they are:

  1. On-site terminal POS Systems
  2. Online POS System
  3. Mobile POS system
  4. Cloud based Terminal POS systems
  5. Self-service Kiosk

Let’s understand the types one-by-one in detail.

1. On-site terminal POS Systems

This POS machine includes all the software and hardware needed by the retailer or the business owner for the point of sale. In this system, everything is on-site. Moreover, the software is kept on the server which is located in the business facility.

The on-site terminal POS systems are a big step-up from the regular analog systems, but it still has some flaws. Here are some of the downsides of the POS system

Very high upfront cost: On-terminal POS system software has a very high upfront cost which can range up to thousands of dollars. The system doesn’t have an ongoing subscription fee.

Lack of mobility: To view the analytics reports, you have to be on-site on the terminal POS system. Moreover, due to the lack of mobility, it is difficult to make any changes.

Zero customer support: The on-premise point of sale software system doesn’t have any provision of either customer support or software updates. Although you can call the company for maintenance and service, it will be an extra burden on your pocket.

2. Online POS System

The online POS system works similarly to the mobile POS systems (which we will discuss later). The online POS software renders the software while the retailers or the business owners use their own hardware. This type of POS system is immensely suitable for low volume businesses only. Some of the high-flying benefits of online POS systems are:

Low cost: If you already have hardware for your business, an online POS system becomes very cost-effective. This is because then you will only be required to pay for the software.

Remote Access: It is easier to access the online POS system as it is a cloud-based POS system. So, if you wish to change the settings or access the data, you can remotely access it.

Potential mobility: If you use a tablet or a laptop instead of a desktop, the online POS system can be potentially mobile as well.

3. Mobile POS system

As the name suggests, the mobile POS system also known as mPOS uses mobile devices like smartphones or tablets. Unlike the terminal POS, the mPOS system is a sub-category of cloud-based POS systems as they also operate in the cloud-based universe.

Mobile POS systems are very popular as the value of mPOS is expected to grow 30% annually. Some of the leading advantages of Mobile POS are as follows:

Low cost: The software of the mobile POS system has a low monthly subscription. Moreover, it charges minimal fees for payment processing.

High mobility: The retailers and business owners can use the mobile POS software system on the go as the system has high mobility. Due to its wide accessibility, this system is very much popular among small business owners, street food vendors, etc.

4. Cloud-based Terminal POS systems

This POS software system is similar to the on-site terminal. But here, the only difference being it has internet access and also uses cloud-based storage. The software for the cloud-based point of sale system is installed in the remote data centers of the POS company.

The terminal of the cloud-based POS system is connected to the internet and it will run only the POS software. This eliminates the possibility of employees using the cloud-based terminal as their personal computer.

Below are some of the notable advantages of the cloud-based point of sale terminal system:

  • Customer Support: The cloud-based terminal allows automatic updates that help in rendering robust customer services. 
  • Affordable:Unlike other cloud-based systems, there is no need to pay a large amount of money upfront in this POS system. The cloud-based POS system allows a monthly subscription instead.
  • Remote access: The business owners in this POS system can access the software tools from anywhere. The only prerequisite is that the device must be connected to the internet.
  • Updates: The system renders the permissions to the POS companies to update their software automatically from any remote location.

5. Self-service Kiosk

This type of POS system is gaining much popularity as it facilitates the self-checkout process. A self-service kiosk is better for larger businesses that have the space for them. This can prove to be a cost-saving method for the business as well. But it certainly is not the best option for small-scale businesses.

The benefits of POS system for businesses

Benefits of POS software for Businesses


The POS system can bring a myriad of benefits to their businesses.  We have listed some of the top advantages of the POS system software for your benefit.

Better Sales Strategies

A profound point of sale software allows access to real-time data related to the customers’ buying habits. Thus, it allows retailers and business owners to devise new sales and marketing strategies according to the changing trends. Moreover, it saves a lot of time as the entire process is automated.

Data insights will also help the business to evolve with time and be more open to innovations.

Quick Payments

The other business advantage of a point-of-sale system is that it makes the process of payments faster. The POS system gives a plethora of options to the customers as they can either pay by cash, credit/debit card, one-tap payment, contactless payment, and many more. However, the invoice can be printed or sent to the customers directly via their registered phone number or email.

The POS machine will significantly reduce the waiting time of the customers. Moreover, since it takes care of the mundane work, it allows the employees to be more efficient.

Enhance overall customer and employee experience

There is no doubt about the fact that POS system software can be an asset to your business. It renders an amazing customer experience as the POS system allows faster completion of their transaction.

Along with the consumers, it plays a pivotal role in enhancing the employee experience as well. It offers features such as cross-selling to the consumers and lures them to buy more products from the platform or offline store. Thus, it helps the employees to maintain their sales target. Moreover, it allows the business organization to approach their customers through multi-channels and offer them a better shopping experience.

Better Security

In a POS system, the data remains more secured from unknown intrusions. Experienced software developers build systems that offer double authentication and minimize any kind of malicious activities.

Moreover, with a cloud-based point of sale system, the data backup process is also done in a synchronized order.

24*7 access to data

With the excessive usage of cloud-based point of sales systems, retailers and business organizations have 24*7 access to data. In addition, compared to the POS system installed on-site, the cloud-based system is at little risk as far as data loss is concerned. Also, since the data is stored in a cloud-based system, it is better protected from natural disasters such as fires or floods.

Time-saving

POS system for small businesses and large businesses is a boon as it saves a lot of their time. As mentioned above, it streamlines inventory management, orders, purchasing, etc., and performs various functions automatically.

Moreover, the software has all the ingredients to assist the retailers in different management tasks and reduce their overall workload as well.

Cost-reduction

A point-of-sale system plays a huge role in cutting down the overall operational cost. According to a study conducted by Intuit Market Research, a retailer that has revenues of more than $300,000 can reduce the cost and save almost $30,000 (10%) with a POS system.

Moreover, the business organization can redistribute in other business activities and increase their ROI even more with the money saved.

Advance Reports

Creating manual reports is a tedious task and is very error-prone. It also becomes difficult to organize these reports and get complete information to understand the state of the business. Now, with a POS system, the reports are automatically created for several aspects of the business.

With advanced reports, data analysis becomes simpler and helps businesses and retailers make better decisions.

Technical support

Several point-of-sale software is capable of rendering technical and technological support. Technical and technological support is essential. But the business organization needs to be careful while choosing their POS solutions service provider because, there are many service providers who offer many services, but do not actually provide them.

Technical and technological support is essential to keep the POS systems functioning at the peak of their performance.

Also Read 8 Software Development Models: What Businesses Need to Know?

The Key Features of the POS Software you need to know

features of POS software

For a POS system to work efficiently, it needs to have the following key features:

Billing and order processing

This is basic functionality that a point of sale software should have. . The POS system software must be able to process the bills and accept payment through different payment modes.

In addition, it should be able to generate order invoice and send to the end customer via multiple channels.

Cross channel returns management

A POS returns management module has features such as facilitating replacements and refunds and also accepting cross-channel results.  A POS system should be able to do multiple returns for one sale at different times. Along with that, the point of sale software must capture other details like the shopkeeper’s name, the reason behind the return of the item, and other remarks.

Sales monitoring and reporting

If the point of sale system cannot generate robust reports, it is of no use. The system must report hourly, daily, weekly, monthly, and yearly according to the business requirement. Continuous reporting will ensure that the merchants have a proper idea of areas where the company is improving and where it needs a revamp.            

In addition, the advanced POS reporting module has features such as:

  • Information related to stock management
  • Demands of the product based on the season
  • Business forecast based on sales trends

Inventory and Stock management

The inventory management module of the POS system must provide complete accountability at the store levels all the time. In addition, the POS software must make stock adjustments and capture the reason behind the stock adjustments.

The inventory management of the software must provide:

  • Information about inbound and outbound inventory
  • View of ‘lot-wise’ inventory
  • Transaction history about the in, out and within movements

Employee management

Don’t be surprised, it is true. Yes, POS system software has an employee management module that helps the business organization in many ways. It helps them manage the employee hours, sales performance, staffing levels, etc. to track the employees’ productivity.

In addition, business firms can track employee activity by linking it with every transaction. This will aid immensely in separating the good from the bad and take needed actions to improve the productivity of the bad performers.

Loyalty programs and gift cards

Good POS software allows the business organization to track the customer loyalty incentives.  Also, the POS system needs to manage the ever-increasing the ever-increasing sales of gift cards every year.

Customer relationship and experience

In a point of sale system, the customer data and the customer’s purchase history get stored. Thus, business organizations can use it to render more personalized services to customers. In addition, the data is beneficial for advertising and provides insights into the needs and requirements of the customers.

Closing Thoughts

With time and the advancement of technology, the point-of-sale software has gone way beyond just processing sales. Feature-rich POS system software enhances the efficiency of the employees. It also renders important insights to improve the overall business productivity. If you are looking to build customized POS software for your business share your project requirements with us; and we can help you to find the right software development company to build your own POS software. Thus, business organizations should not waste time and switch to POS systems as early as possible.