How does a POS or EPOS system work?

 Curious about how point of sale systems work? This guide walks you through the entire process

 

The process of ringing up sales looks simple enough to the casual observer: the customer hands an item to the cashier who then scans the barcode and then taps a few keys at the register. The cashier tells the customer the total amount due, which prods the shopper to pay so they can take their products home.

It’s a simple and (usually) quick process, but what many people don’t realize is that there’s a lot going on behind the scenes of every point of sale transaction. 

If you’re curious to learn how everything works, keep reading. 

This post will shed light on the ins and outs point of sale (POS) systems and how they work. 

Let’s get started. 

What is a POS system? 

A POS system — sometimes referred to as ePOS system — is exactly what it sounds like: it’s the system that enables the point of sale process to take place. When we say “EPOS system” we’re referring to the hardware and software that allow cashiers to ring up sales. 

While many consider “POS” and “ePOS” as the same thing, in some countries like the UK, the two terms have an important distinction: “POS” systems are traditional cash registers while “ePOS” are their electronic counterparts. The term “POS” seems to be more popular in countries like the US and Australia, while “ePOS” is more widely used in the UK. 

Which brings us to our next point...

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POS systems vs. cash registers 

Think of cash registers as the analog version of modern POS systems (or ePOS systems if you’re in the UK). The former is a device whose main purpose is to ring up sales, while the latter is an integrated system that not only facilitates the checkout process, but also helps you manage your catalog, market to your customers, and run your business as a whole. 

Cash registers focus on just sales. They don’t sync with your inventory system, provide you with any reports, or “talk” to your other business apps. A POS system, on the other hand, has more business management capabilities and can also connect with other platforms that you’re using in your business. 

Key components of a POS system 

We can’t talk about how POS systems work without first discussing its components. Generally, POS systems are composed of two tightly connected parts: hardware and software.

The hardware covers the equipment or devices used to carry out the checkout process. They include:

·         POS display

·         Barcode scanner 

·         Receipt printer 

·         Payment terminal 

·         Cash drawer 

Not all POS systems will have every single device above. If you send out email receipts for example, then you don’t need a receipt printer. If you only accept credit card payments or do business on-the-go, then a cash drawer isn’t necessary. 

The two must-haves in any POS system are the display and payment terminal. 

The software is the program that’s running your POS. The look, feel, and functionality of your POS software will vary from one provider to another, but most modern systems will have the following features:

·         Sale screen

·         Inventory management

·         Customer relationship management 

·         Reporting and analytics 

On-premise vs. cloud-based

POS software can also be classified as either being cloud-based or on-premise (on-site). The former can be accessed over the internet, while the latter is hosted locally on your own server or computer. 

Cloud-based point of sale systems usually work through a SaaS (Software as a Service) model, and providers charge a subscription fee for the software. On-premise POS systems are installed on your computer, and you typically have to pay for the software upfront or pay a licensing fee. 

Many are opting for cloud-based software because they’re more accessible and scalable. With cloud-based solutions, you can access the software from any device as long as you have an internet connection, making it easy to check in on business.

Updates happen automatically, and you simply have to download the latest version of the software.

With on-premise software, the solution “lives” in your device or server, so you’re in charge of  maintaining and updating the software. Businesses that prefer to have their data on-site are usually the ones that choose on-premises software.