Dec 29, 20216 min read

What Is a POS System? A Complete Guide to Point of Sale

Whether you sell online, in person, or both, having an efficient point of sale (POS) system can help you run your business smoothly by unifying all your sales, business operations and marketing initiatives in one place.

Running an eCommerce business often means you have your hand in a number of tasks ranging from inventory management to marketing, to preparing monthly sales reports. An advanced POS system can save you time—especially if you have both an online store and a brick-and-mortar location—while giving small business owners the opportunity to grow.

The meaning behind the term: point of sale (POS)

A point of sale, or point of purchase (POP), refers to the ‘point’ where a customer makes a purchase and the payment is processed. The point of sale can occur when customers approach your store counter, arrive at an online checkout, or pick an item from your booth at a pop-up location or festival.

What is a POS transaction?

Essentially, each time a customer buys a product or service, they’re completing a point of sale transaction. This is the moment when you officially make a sale. A digital or printed receipt is created, and you ship or hand your customer the items they’ve just bought.

So, what exactly is a POS system?

In the past, a 'POS system' used to refer to the cash register at a store. Today, modern POS systems are entirely digital, which means you can check out a customer wherever you are.

Simply put, a POS system calculates the price of an item, including any sales tax, and then updates your inventory count to show that the item has sold. However, advanced POS systems go well beyond this to serve as the central hub of a business that handles many essential tasks: sales, inventory and customer management, reporting, price adjustments and so much more.

Keep in mind, there are many kinds of systems out there. Understanding what a POS system is—its software and hardware components, as well as what it’s capable of—will help you make an informed buying decision that meets your specific needs.

How does a POS system work?

A POS system uses a combination of hardware and software to automatically sync and track all your sales, inventory, payments, and more, whether you sell in person, sell online or both.

Typical hardware components include:

Cash register
POS terminal such as a monitor, iPad, Android tablet or app on mobile
Barcode scanner
Credit card reader
Cash drawer
Receipt printer

POS software is what keeps track of all your transactions in one place and, depending on the POS system you choose, can include the features listed in the next section.

Together, the software and hardware form a powerful tool that enables your business to conduct daily operations with greater proficiency, saving you time and offering you insights into customer behavior, helping you to predict trends.

Key features to look out for

When selecting a POS system that’s right for your business, it’s important to look at which software features and capabilities are included. Here’s a rundown of key features that may be offered in a POS system that can help you narrow your search, depending on your business needs.

Payment processing: Payment processing is a core function of a POS system. Each time a customer makes a purchase, your POS system processes the transaction. There are a number of different payment solutions a POS system might accept, such as cash, secure online payments through your eCommerce site, magstripe credit cards (cards that you swipe), chip cards, contactless payments (e.g., Google Pay or Apple Pay), and card-not-present transactions, which happen when you have to manually enter a customer’s credit card information. This also occurs when a customer enters their payment details while checking out online.
Data entry: POS systems can minimize the time you spend entering product and customer data. When purchasing a POS system, you can usually import your data en masse. This allows you to quickly find your product catalog or customer database.
Inventory management: One of the most important functions of a POS system is keeping track of all your products, across your sales channels (in-store and online) so you know when it’s time to order specific products. Your POS system should allow you to scan and count products digitally, identify pieces of inventory with a unique serial number, manage your stock according to product variations (size, color), track inventory levels across locations, consolidate purchases and orders in one place, and more. Some POS solutions provide alerts when inventory items get low so any time you might run out of stock, your system automatically notifies you.
Sales reporting: Running reports is a must-have feature, as they give a quick look into how much you’re selling and earning, and allow you to make better business decisions.

Most POS systems let you view your sales and run reports. However, it’s important to note that systems differ in the kind of data that can be accessed and the level of detail that you get. Ideally, your POS system can generate detailed sales reports (based on total cost of items sold, net profit and more) and provide snapshots and charts on how your business is doing. You should also be able to automatically transfer these reports into other accounting software.

Customer management & marketing: A POS should have a customer relationship management (CRM) tool to track all your customer data. It should let you keep track of customers’ purchase history, capture customer information such as name, age, birthday, phone number and email address, and use email marketing to reach customers. Tracking customer purchases can help you design personalized marketing strategies. More advanced systems can even create built-in loyalty programs. Wix has native CRM solution, integrates with Wix POS seamlessly to collect email addresses at checkout or to offer loyalty points for in-store purchases (as well as online ones) with the right Wix App Market integration.
Employee reporting & management: Team management software lets you know when your employees are working and how they’re performing. Your POS system should enable you to add employees, create and modify schedules, track weekly/overtime hours and analyze performance. This information can help you set sales targets and inform your employee coaching. Your team can also use the POS system to clock in and out, and some types of software can grant permissions so employees can get access to certain tasks.
Receipts & order history: Receipts make processing refunds easier, as they allow you to have a digital or paper trail connected to an order. However, POS systems go beyond printing or generating receipts. All purchased items are deducted from the inventory and recorded in sales reports. Any discounts or markdowns should show up on reports and your customer management system. This data helps you build more effective business strategies in the future.
Cloud & mobile: A cloud-based POS system stores information on the cloud. Cloud-based systems typically don’t record much information on your terminal device. Instead, all data is stored in the cloud and synchronized across multiple terminals. A main advantage of cloud software is that it eliminates the need for costly onsite servers and typically comes in the form of an app on mobile, iPad or Android tablet (see our guide on POS system costs for more info).

Which POS system is right for you?

In the past, a POS system in your brick-and-mortar store wasn’t necessarily unified with your eCommerce website. This made business operations like tracking inventory, understanding customer behavior, and managing store credits and returns more complex. Today, modern POS systems integrate your entire business, whether you sell online, in person or both. You can pick and choose the perfect combination of hardware and software that suits your business needs as well as considering the POS system cost. For example, if you have a retail business where you sell in a brick-and-mortar location and accept payments on your eCommerce site, you’ll want to select a retail POS system that integrates all your sales in one place. If you also sell occasionally at pop-ups and events, you can opt for a mobile POS system, which conveniently turns your mobile phone into your personal point of sale, allowing you to accept credit card payments on the go. If you have an eCommerce business on Wix and also sell in person, Wix POS lets you manage all your sales from one place. It offers a fully integrated hardware and software system, smooth checkout, fully synced inventory, and more. To get started with Wix POS and learn about the features available, visit Wix POS.

Sarit Steinfeld

Marketing Writer, Wix eCommerce

Sarit is a marketing writer at Wix eCommerce, with a passion for helping online businesses. She’s a Toronto native, an avid reader, blogger and foodie.