The Different Types of POS Systems

by Ellis Davidson; Updated September 26, 2017

Computerized point-of-sale (POS) systems provide a retail business with the ability to monitor sales and control inventory in real time, by using checkout registers to categorize sales as they occur. They are typically run on standard computer hardware, connecting with specialized peripherals to speed the sales process.

The Facts

The oldest, simplest POS system is the cash register, but there are many limitations to only monitoring cash flow. POS systems leverage the ability of databases and specialized data entry to instantly categorize sales by type, taxation status and inventory impact. They may integrate with marketing systems to allow immediate upsell to customers, recommending impulse purchases at the register based on current and past purchase history.

Significance

A standardized POS back-end process allows for multiple vendors to use a variety of POS systems to improve customer interaction and lower costs. For example, the ubiquitous Universal Product Code bar code on products allows a scanner to instantly pull pricing and discount data, which is much faster than manual methods of applying price tags and searching for them at the register. Integrated value chain businesses, such as Wal-Mart, connect their POS data directly to manufacturers, which is part of the leverage that allows them to undercut the pricing of their competitors.

Hardware and Software

There are two broad categories of POS systems: the hardware and software combination used and the target business segment of the POS system. Most POS software runs on commodity computer hardware, but is differentiated by the accessories that are applied to each system. Data entry can be done with a standard keyboard (inexpensive, but prone to data entry errors and slow use), electronic scanners, a touch-screen LCD or a wireless hand-held device carried by the sales staff (e.g., a waiter). Information distribution required to make the sale (e.g., transmitting an order to the kitchen) can be done with specialized software or paper receipt printers. Finally, the purchase itself can be processed with integrated credit card readers or a computerized cash drawer.

Market Segment Targeting

POS systems also differentiate themselves through their target markets: the sales needs of a retail business differ greatly from those of a restaurant or a hotel. These differences are handled through specialized software for each market segment, which minimizes complexity by only displaying relevant business information to each employee and manager in the business operation.

Features

POS systems are as varied as database software, but compete on key universally required features. A nontechnical manager should be able to set the menu or product mix and modify pricing to suit business needs. Cash flow monitoring should integrate with accounting back-end software, credit card merchant systems and tax reporting. The user interface should be modifiable so that it is straightforward enough to use for entry-level, inexperienced help. Consider the McDonald's POS register, designed to allow part-time, inexperienced staff to handle a transaction off a complex menu in under a minute.

About the Author

Ellis Davidson has been a self-employed Internet and technology consultant, entrepreneur and author since 1993. He has written a book about self-employment for recent college graduates and is a regular contributor to "Macworld" and the TidBITS technology newsletter. He is completing a book on self-employment options during a recession. Davidson holds a Bachelor of Arts in American civilization from the University of Pennsylvania.