The point of sale, or POS, is the place and the moment where a customer pays you. It might be a checkout counter, a market stall, a phone in a delivery driver’s hand, or the cart on an online store. A POS system is the hardware and software that rings up that sale, takes the payment and records what was sold.
If you’ve ever paid at a supermarket, a café or an online store, you’ve already used one. A modern POS does more than the old cash register, too. It also keeps your stock counts up to date, prints or sends the receipt, and shows you your sales by day, product and cashier.
So, today, we’ll walk through how a POS system works, what’s inside one, and what to ask before you choose. Without further ado! Let’s start with the basics.
What Does POS Stand For?
POS stands for point of sale. You will sometimes see “point of purchase” used for the same idea. In cryptocurrency, “PoS” means proof of stake, which has nothing to do with shops.
How Does a POS System Work?
Every sale goes through the same four steps, whether it happens at a till, on a tablet or in an online store.
Step One: Add the items. The cashier scans a barcode, searches for the product or taps it on the screen. In an online store, the customer puts the items in a cart and clicks checkout.
Step Two: Price the sale. The system applies each price, any discount and the tax, and shows the total.
Step Three: Take the payment. The customer pays with cash, a card, a mobile wallet, or a mix of these.
Final Step: Record the sale and issue the receipt. The sale is saved, the stock count goes down by what was sold, and a receipt is printed or sent.
That last step is what separates a POS system from a cash register. Because every sale is saved in the same place, your reports and your stock figures are updated by the sale itself. Nobody has to type them in later.
POS Hardware & POS Software
A POS system has two halves. The hardware is what you touch at the counter, and the software decides what the system can do. Here’s a quick look at both.
POS System – Hardware vs Software
| POS Hardware | POS Software |
|---|---|
| Terminal – a computer, tablet or phone that runs the checkout screen. | Checkout Screen – search or scan items, apply discounts and tax, split a payment. |
| Barcode Scanner – reads the code on a product and pulls up its price and stock. | Inventory – stock counts, low-stock alerts, transfers between locations. |
| Receipt Printer – prints the customer’s receipt. | Payments – records cash, card and wallet payments, and refunds. |
| Cash Drawer – holds the cash and opens when a cash sale is made. | Reports – sales by day, product, cashier and payment method. |
| Card Reader – takes card payments. | Staff Accounts – who may sell, give discounts or issue refunds. |
| Customer Display & Label Printer – optional extras. | Customer Records – what each customer bought, and when. |
Besides, you don’t need all of it. A market stall may need only a phone and a card reader. A shop with a few hundred products usually wants a scanner, a receipt printer and a cash drawer as well. Remember that your business will decide what you require.
Do You Need Special Hardware or an Operating System?
It depends on the software. Some POS programs are installed on one operating system, such as Windows. Web-based ones run in a browser, so any device with a browser can be a till. However, check the software’s list of supported scanners, printers and card readers before you buy any hardware. You don’t want to end up with a printer it can’t use.
Three Ways to Get a POS System
There are three common ways to get one, and each has a different cost over time.
- Installed on a computer in the shop. The software and your data live on that machine. It is simple, but you carry the backups, and sales rung up on another device are usually not visible.
- Cloud (subscription). The vendor hosts it and you pay every month, often per register or per location. Setup is quick; the subscription runs for as long as you use it, and the vendor hosts your data.
- Self-hosted. You buy the software once and run it on your own server or hosting. You pay for the hosting and you’re responsible for backups, and you pay no monthly licence fee.
Which one is cheaper depends on how many years you keep it. We worked this through in what business software costs over five years.
Which POS System Suits Your Shop?
The checkout is much the same everywhere. The difference is in how you track what you sell. Please note that the list below is in no particular order. Pick the one that sounds like your business.
- General retail and clothing: barcodes, and one product sold in several sizes and colours. See retail POS and inventory software.
- Grocery and supermarkets: items sold by weight, with a scale connected to the till. See grocery POS software.
- Pharmacies: batch numbers and expiry dates. See pharmacy POS software.
- Mobile phone shops: serial or IMEI numbers for each unit, and repair jobs. See mobile shop POS software.
- Restaurants and cafés: orders sent to a kitchen display instead of a shop till. See restaurant POS software.
- Wholesale: large stock across warehouses. See wholesale inventory software.
Questions to Ask Before You Choose
Whichever way you go, ask these before you pay for anything:
- Does it keep selling when the internet goes down, and sync afterwards?
- Which scanners, printers and card readers does it support?
- Who holds your sales and customer data, and can you export it?
- What will it cost over three to five years, counting subscriptions, per-register fees and card processing fees, not just the first month?
- Can it handle a second location or warehouse when you grow?
- Which payment gateways does it support in your country? Ours are listed on the payment gateways page.
- Where do you get help when something breaks, and for how long?
Stocky POS – Our Self-Hosted POS & Inventory System
Full disclosure: we build Stocky POS at UI Lib, so read this section as ours. It’s a self-hosted point-of-sale and inventory system. You buy it once and run it on your own server, and the licence includes the source code, free updates for life and six months of support. Here’s what it covers:
- A touch-first register with barcode and camera scanning and split payments. It keeps selling offline and syncs when the connection returns.
- Stock across unlimited warehouses, with transfers, batch and expiry dates, and serial or IMEI numbers.
- It works with USB and Bluetooth barcode scanners, thermal receipt printers, cash drawers and digital weight scales. The camera scanner needs your site served over HTTPS.
- It runs on ordinary shared hosting; see the shared hosting page for the details.
Open the Stocky POS page for the live demo and current prices, or read how it works for a retail business.
Common Questions
What Is the Difference Between a POS System and a Cash Register?
A cash register records a sale and holds the cash. A POS system also takes card and wallet payments, tracks stock, keeps customer records and produces reports from the same sales.
What Is a POS Machine or POS Device?
It’s the terminal the sale is rung up on. That can be a purpose-built terminal, a tablet, a phone or a computer. In some countries, “POS machine” also means the handheld card reader a bank supplies. That one only takes card payments and doesn’t track stock.
Can a POS System Work Without the Internet?
Some can. They store the sales on the device and send them when the connection comes back. Others stop selling when the connection drops, so ask before you buy.
Do I Need a POS System for a Small Shop?
You can run a small shop without one. Moreover, it starts to pay for itself when you can no longer say how many of an item are in stock without counting, or when you have more than one till, one location or one person selling.
Wrapping Up
A POS system is simply the till, the stockroom and the sales report working from the same record. Start with the kind of shop you run and the hardware you already own, then use the questions above to compare your options. And if you’d like to see one working, the Stocky POS page has a live demo.
