Definition of POS
Point of sale corresponds to the location where the transaction occurs – this may be physical or virtual. Legacy POS systems were on the market premises – an on-site server was used in a specific store with the help of one’s desktop, cash register, barcode scanner and the like. But with the advent of the internet and the cloud, mobility increased. A mobile POS system allows the retailers to manage their entire business from any device, at any point of time. The accounts are settled at the end of the day, as pre-decided by the merchant. The amount is credited the following day after deducting charges.
Purpose of POS
There are three main objectives of a POS system – managing one’s business inventory, automation of accounting and collection of customer data.
Components of the POS System
- POS Terminal – a POS terminal is a computerised replacement of a cash register which can process credit and debit cards. The customer has to enter the PIN to complete the transaction.
- Monitor – the monitor is where the sales staff views sales information as a transaction is in progress.
- Barcode scanner – retrieves the pricing information.
- Magnetic stripe readers (MSR) and PIN Pads – these are used to get credit or debit card information to process sales.
What are the benefits of POS?
It helps streamline retail operations by automating the process. Retailers have the option of tracking price, inventory changes, revenue and sales accurately. One can control operations remotely. Eliminates inconsistencies and helps the merchant manage inventory and promotions with ease. The end user or customer needn’t pay charges for swiping his or her card at the POS terminal. But the merchant is required to pay the issuer bank through the Merchant Discount Rate (MDR). The MDR that is paid is distributed among the issuer bank, acquirer bank (i.e. the bank that installs POS) and payment gateway.
What are the problems connected with POS systems?
It is not completely free from cyberattacks. Data can be hacked using the POS vendor. Software bugs and errors, compatibility and connectivity issues.
