What Is a POS System?

POS systems offer small-business owners a streamlined way to process payments, track sales, manage inventory, and more.

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Small businesses use POS (point-of-sale) systems to process payments quickly and securely. But POS systems offer a host of other benefits too. Let’s take a look at how POS systems can be used by small businesses to efficiently manage inventory, customer relationships, and sales data.

Table of contents

What is a POS system?

Business owners and employees use point-of-sale (POS) systems to handle the customer checkout process in stores, restaurants, and any other business conducting in-person sales. Most POS systems are located at the checkout counter, but an increasing number of small businesses use mobile POS systems to process payments from a tablet or smartphone.

POS systems consist of both software, like the program or app itself, and hardware, like a touchscreen computer, barcode scanner, and receipt printer.

Benefits of POS systems

Modern POS systems are ideal for restaurants, retail stores, salons, and other hospitality businesses, offering a secure, streamlined checkout process. But today’s POS systems do much more than process credit cards. They’re also used to evaluate sales, track inventory, create customer reward programs, and more. These features give small-business owners in practically any industry better control over inventory management, forecasting, customer relations, and sales.

Here are just a few of the many benefits POS systems offer small-business owners:

  • A streamlined checkout experience
  • Increased efficiency
  • Optimized inventory management
  • Customer insights
  • Increased accuracy (for payment processing, inventory tracking, etc)
  • Greater payment flexibility
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Software elements of a POS system

POS systems run on an operating system software, which can be hosted in the cloud or installed locally. There are a variety of POS system software options available to small-business owners today, ranging from the free Square POS mobile app to the pricier Revel Systems, known for its well-rounded customer relationship management (CRM) service.

Hardware elements of a POS system

Hardware is another essential component of every POS system. (Even a simple mobile POS system requires at least a smartphone and a card reader). Most POS systems include a touchscreen monitor, along with all of the devices required to scan products and complete payment transactions.

These are some of the most common hardware elements of a POS system:

  • Monitor, tablet, or smartphone
  • Credit card processor
  • Barcode scanner
  • Cash register
  • Receipt printer

Good POS system features

The features of a POS system vary depending on the company providing the service. Some POS systems are more minimalistic, while others provide a host of features to optimize inventory management, CRM, and more.

Here are some of the most helpful POS system features for small-business owners:

  • Payment processing
    • Split payments
    • Returns and refunds
  • Inventory management
    • Product lookup
    • Quick keys
    • Automatic inventory ordering
    • Inventory counts
  • Customer relationship management (CRM)
    • Customer purchase history
    • Loyalty programs
    • Promotions
  • Reporting and analytics
    • Employee metrics
    • Stock data
    • Customer reports

Top 5 POS systems for small-business owners

There are many intuitive, affordable POS systems for small-business owners. We’ve rounded up some of the best options for easy payment processing, inventory management, customer loyalty programs, and more.

1. Best all around: Square

Square POS is one of the best all-around options for small-business owners. It’s free to use, comes with a free mobile reader, and makes it easy to process payments anytime, anywhere.

2. Best for retail shops: Shopify

Shopify is the ideal POS system for retail shops. At just $9 a month, it’s affordable, robust, and highly customizable. The software can even be used for Facebook-only retail businesses, making it a great option for startups.

3. Best for CRM: Revel Systems

Compared to the other options on the list, Revel Systems comes with a hefty price tag ($99/month, plus $674 in starting fees). However, no other POS system can compare when it comes to customer relationship management, making it a popular choice for restaurants, bars, and coffee shops.

4. Best for inventory management: Lightspeed

Small-business owners looking for help with inventory management should turn to Lightspeed, a POS system that comes with product bundling, automated discounts, unit cost tracking, and other powerful tools that make it easy to track and control inventory.

5. Best for QuickBooks users: QuickBooks

QuickBooks POS system easily integrates with QuickBooks accounting software. It’s a good option for existing QuickBooks users who want a streamlined POS solution.

Ready for a better point-of-sale system?

Square is the best free point-of-sale system on the market. From invoicing to inventory tracking, Square gives you all the features you need to boost your POS experience.

The takeaway

POS systems are the modern standard for payment processing at retail stores, restaurants, and hospitality-based small businesses. Combining the power of cloud-based software and intuitive hardware, POS systems streamline the checkout experience and make it easier to track inventory and manage customer relationships.

Would you like to learn more about POS Systems? Check out Business.org for The Ultimate Guide to POS Systems.

Related reading

POS System FAQ

What is a POS system and its uses?

A point-of sale (POS) system is a place where a customer pays for goods or services, either in a brick-and-mortar location or online.

Small-business owners use this digital system for many purposes:

  • Calculating the price and sales tax
  • Updating inventory counts
  • Processing payments
  • Printing a receipt

What are examples of POS?

Both physical cash registers and online checkout interfaces are examples of POS systems. Many software companies offer POS system software, such as Shopify, Square POS, TouchBistro, and KORONA POS.

Is a POS system a software?

POS systems are a combination of both hardware and software. POS hardware includes any devices used to complete a payment (like a touchscreen monitor or credit card terminal), while POS system software refers to the operating system used to manage the transaction.

What does a POS system include?

A POS system includes operating system software, as well as any hardware needed to complete a sales transaction. Common POS system hardware devices include touchscreen monitors, barcode scanners, credit card terminals, cash drawers, and receipt printers.

Today’s small-business owners can also opt for a more streamlined mobile POS system by processing payments with a mobile device and card reader.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Brooke Kunz
Written by
Brooke Kunz
Brooke is a copywriter and artisan ice cream enthusiast dwelling in California's sunny Central Valley. She's happiest when hiking in the backcountry, baking an overly complex cake recipe, or reading an engrossing new memoir.
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