The way we manage our money is changing. The simple fact is that we’re no longer living in a cash-first world. So, if your business involves selling to people face-to-face, you may need a ‘point of sale’ or POS system. These allow customers to tap, insert or swipe their cards or phones, using more modern payment techniques to complete their transaction.
You can use a POS terminal for ‘card not present’ (CNP) transactions too, meaning they’re suitable for many types of business.
POS systems are made up of the physical hardware itself, which works in tandem with software applications that vary according to your business needs. We’ll run you through the basics to help you choose which system will work best for you.
What is a POS system?
A POS system is the device or technology that enables you to take a customer’s payment for goods or services at the ‘point of sale’. This can be in a physical store or anywhere else you are working. Generally speaking, a POS system will comprise a physical card machine or card reader, and the software working behind the scenes to facilitate payments.
The meaning of POS in retail is the part of the customer journey where a transaction is completed. Historically, that meant traditional cash registers and manual imprinters. Until relatively recently, these were generally the only POS systems around to take payments for goods and services.
But today, modern POS till systems are being increasingly utilised in shops, supermarkets, restaurants, salons and more. These are connected to POS software that allows for a faster payment method. This adoption of computerised systems has taken us a long way from cash-only till transactions.
As well as handling payments, a modern POS till system can now support key business functions, such as:
- email receipts.
- Informing pricing strategy.
- Supporting brand loyalty programmes.
You can host your POS system at your premises. Or they can be run as a cloud-based system that can be accessed from anywhere. The latest systems are run by EPOS, or electronic point of sale, which gives you access to a wealth of modern tech to support your business.
What is the difference between POS and EPOS?
EPOS (Electronic Point of Sale) systems generally do the same as POS systems however EPOS works primarily on the Internet, storing information securely in the cloud. Another important between POS and EPOS systems is the level of integration each system offers. EPOS systems are typically more integrated than POS systems and offer features such as inventory management and customer loyalty programs. The POS usually works offline without integrating with other systems, while the EPOS usually works online with an Internet connection.
What does a POS system do?
Naturally, the main function of a POS system is to take and process payments. Modern POS machines are designed to take electronic payments in addition to cash.
For example, you can take payments with major cards and smartphone apps, including:
- Major cards – Visa, MasterCard, AMEX.
- Contactless payments.
- Chip-and-Pin payments.
- Apple Pay.
- Google Pay.
However, a modern POS system can do so much more than take basic payments. It may also help you cut down on admin and paperwork to run your business more efficiently.
POS systems may help you to:
- Manage inventory: A simple way to monitor stock and get real-time information on availability. Keep customers happy by providing what they want, when and where they want it.
- Improve sales: When a POS system records transactions, it creates a detailed record of what you’re selling. You can use this to track popular products, successful members of the sales team and cycles of demand. Having easy access to this level of information could help you make better decisions about the next weeks, months and years for your business.
- Manage customer data: Your POS system could help you understand what customers really want. And help to inform you of how to reward them. Get to know your customers with order histories, customer profiles and loyalty programmes.
- Adapt to business needs: As your business grows and your needs change, your POS system should be able to adapt and grow with you.
How do POS devices work?
Whether you’re using a handheld POS machine or an all-in-one terminal, most POS devices work in a similar way:
- Customer takes product to the till or asks to pay
Your customer decides they want to buy a product. They bring it to your till or, if you don’t have a till, notify you that they want to pay for the item or service. - You scan the product barcode or enter the amount manually
If you have a POS till system with a barcode scanner, you can scan the barcode and it’ll bring up the price. If you’re using a handheld terminal without a scanner, you can simply enter the price manually. - POS system calculates the price and VAT
Once you’ve scanned the product, the POS system will bring up the price to pay, minus any VAT (clever, huh?). It may also be able to automatically update your inventory to say you have one fewer of this product. - You take the customer’s payment
You now tell the customer the price and they pay for the goods or services. Depending on the type of POS till or system you have, they may pay by cash, contactless or Chip-and-Pin. Or even with a tap of their smartphone against your card reader. When paying by card, your POS technology serves as the go-between between you and the customer’s bank, so the latter can authorise the payment. - The sale is made – it’s official
Once the customer has made the payment, it registers on your system. If they’ve paid by card or app, it may take a moment for the customer’s bank to authorise payment. Once payment is confirmed, your POS till will print a receipt, which you’ll generally hand to the customer along with their purchase. The funds will then be transferred from the customer’s account to yours.
Types of POS hardware
Along with the software to manage your POS, retail till systems are often combined with other hardware. These can differ greatly, because the needs of a small restaurant will differ to those of a chain of retail stores, for example. But the basic components will remain the same for most POS systems, and might include:
- POS terminal: The heart of the system. On your POS terminal you can take debit or credit card payments from customers.
- Cash drawer: If you still accept cash payments, a cash drawer lets you collect cash and give change.
- Receipt printer: With some POS terminals – such as the Clover Flex – a receipt printer can be connected wirelessly or via USB to the terminal. Alternatively, your credit card terminal may print its own receipts.
- Barcode scanner: Use a handheld barcode scanner to scan items so they can be entered into the system. This also automatically keeps tabs on your inventory, either wirelessly or via USB.
Other POS hardware includes label printers and scales, if you sell products by weight. You might need these when you’re getting started or as your business grows, which is where a flexible and scalable approach to POS can be invaluable.
What type of businesses can benefit POS system?
If you run a business that takes payments from customers for your goods or services, you may well benefit from a POS system.
Bricks-and-mortar businesses
You may have an independent store selling expertly curated menswear. Or you could be a newly qualified hair stylist ready to launch your own salon. Either way, with a POS terminal and system software you can take speedy payments for your selvedge denim or stylish cuts.
Perhaps you’ve had a career change, and fulfilled your lifelong dream of opening a cosy café. How about being head chef/proprietor of a growing gastropub or bohemian bistro? With an all-in-one POS system, you can take payments at the terminal or the table.
Businesses on the go
It’s important to say that POS systems aren’t only for bricks-and-mortar businesses. Many enable you to take payments from pretty much anywhere.
For example, you may be a tattoo artist working at conventions all over the world – from Los Angeles to Leeds. Or a skilled creator of handmade wooden toys selling at craft fairs. Street food, too, is another example, making it easier to take payments for your perfect pad Thai.
If you’re a tradesperson working on the move, such as a plumber or electrician, a POS system can also help you take payments when you visit someone’s house to carry out work, so you don’t have to go through long invoicing processes.
Benefits of a POS system
Whether you run a retail store or restaurant, there are many benefits to having a POS system. Here are just a few.
Take payments for goods and services
The main benefit of POS is to get paid for what you’re selling or providing. Whether you have a POS till or use one of the many handheld POS devices available, these systems are a straightforward way to take payments in an easier and more flexible way.
Accept contactless and mobile payments
Some 56% of people are using less cash as they prefer cashless payment methods, according to the Bank of England1. Being able to accept payments via contactless cards and phone apps is a crucial benefit of any POS machine.
Save time on maths
With a POS system, you can forget about doing the sums. Whether a handheld POS machine or an all-in-one, it can calculate the costs of multiple items, minus the VAT, and even apply discounts. So, you can focus on being the best chef, hair stylist or curator of quirky homewares without the distraction of maths.
Provide proof of purchase
This may sound too basic a point, but may be worth noting for people taking their first steps with a street food stand or crafting business. Without a receipt – printed or digital – there’s no proof a transaction has taken place. That makes it difficult to deal with refunds or exchanges, and can leave a black hole in the records of your fledgling small business.
Track stock inventory
With more advanced POS till systems connected to EPOS software, you’re also able to manage your inventory in real time. So, each time you sell an item, it updates the inventory to let you know how much stock you have.
Learn from sales reports
Easily see how much money you have taken that day or week by pulling sales reports from certain POS devices. When viewed alongside your inventory, this can provide invaluable insights in the early days of your retail business.
Our business guides
Whether you’re starting out, or are ready to expand, taking the time to get the basics right could be a foundation for successful business growth.
On Tyl Talks we’ve put together some articles and guides to help you get off the ground or step up to the next level. From getting your banking basics right to creating a robust business plan, we’ve got the lowdown for you:
Disclaimer
This has been prepared by Tyl by NatWest for informational purposes only and should not be treated as advice or a recommendation. There may be other considerations relevant to you and your business so you should undertake your own independent research.
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