Aug 03, 2025

WTF Is POS? Everything You Need to Know About Point of Sale Systems

You know you need a way to take payments—no mystery there. And when you hear “POS system,” you probably picture that old-school cash register: big buttons, a buzzing receipt printer, and the classic ka-ching of the drawer popping open. It’s familiar, sure (if you’re over 30)—but it’s also outdated.

The right POS system for your business is one that does way more than just ring up sales. With so many options available today—traditional registers, cloud-based systems, mobile POS setups, and even self-service kiosks—how do you know which one is right for your business? What features actually matter? And how do you avoid paying for things you don’t need?

POS system now and then

What is a POS System?

A POS (point of sale) system is the combination of software and hardware that businesses use to process customer transactions. At its simplest, it’s where sales happen—whether that’s at a retail checkout counter, a restaurant table, or a service appointment. But today’s POS systems do far more than just take payments.

A modern POS can help you:

Accept multiple payment types (cash, credit, mobile wallets)
Track sales and revenue in real time
Manage inventory and restock alerts
Automate accounting and tax reporting
Improve customer experience with loyalty tools and CRM features

The right system simplifies your day-to-day operations. The wrong one slows you down, costs too much, and frustrates both you and your customers.

What a POS System Looks Like Today

Early POS systems (we’re talking 1970s to early ’80s) were nothing more than glorified calculators with a cash drawer—they recorded sales, printed receipts, and not much else. Mid-to-late 80’s brought us electronic registers, those clunky gray boxes with tiny green digital screens that could finally process credit cards (slowly, over a dial-up connection). By the ’90s, businesses started using computer-based POS systems, which introduced inventory tracking and sales reports, making life a little easier for shop owners.

Your modern-day POS system can be anything from a sleek tablet to a fully automated self-checkout kiosk or even an AI-powered cloud system that runs your entire business. It doesn’t just take payments—it tracks inventory in real-time, lets customers check out on their own, syncs with your online store, manages staff schedules and even uses AI to predict your best-selling items.

But here’s the thing: not all POS systems are built the same. If you want your POS to actually make an impact, it has to be configured for the way you do business.

different types of pos

Key Components of a POS System

All POS systems can take payments, but that’s only one piece of the puzzle. They also track sales, manage inventory, sync data, and keep everything running smoothly behind the scenes. The hardware is what customers see: card readers, cash drawers, and barcode scanners. The software is what keeps it all running: tracking sales, managing inventory, and syncing everything in real-time.

POS Hardware (the body of the system)

You know when a button sticks, the touchscreen lags, or the card reader needs a dozen tries to work? That’s bad hardware. A good POS system keeps those little hiccups to a minimum, making transactions smooth and quick. The POS hardware includes all the physical devices you need to accept payments and manage transactions. Here’s what goes into it:

1. POS terminal

This is your main POS device—where orders are entered, payments are processed, and transactions happen. It can be:

A touchscreen tablet (like an iPad) running POS software
A traditional desktop computer
A handheld mobile device for businesses that take payments on the go

Useful for: Restaurants, retail stores, service-based businesses, mobile vendors

2. Cash register or cash drawer

Even in the world of digital payments, cash isn’t dead. If your business accepts cash, you’ll need a secure cash drawer that:

Connects to your POS system
Opens automatically when a cash transaction is made
Keeps bills and coins organized
Locks securely to prevent theft

Useful for: Retail stores, restaurants, businesses with frequent cash transactions

3. Receipt printer

Despite the increasing popularity of digital receipts, many customers still prefer printed receipts. Your POS system can connect to a thermal printer that:

Prints fast, ink-free receipts (thermal technology = no messy ink cartridges)
Customizes receipts with your business logo and contact info
Provides a paper trail for cash transactions and refunds

Useful for: Brick-and-mortar businesses, restaurants, service providers

4. Barcode scanner

If your business sells products, a barcode scanner is a must for speed and accuracy. Instead of manually entering product codes (and risking mistakes), a scanner instantly pulls up the item, price, and inventory details.

Speeds up checkout times
Prevents pricing errors
Automatically updates stock levels

Useful for: Retail stores, grocery stores, inventory-heavy businesses

5. Card reader & payment terminal (tap, chip, swipe)

Today’s customers expect fast, flexible payment options—so a good POS system should include a card reader that accepts:

Chip & PIN
Contactless tap payments (Apply Pay, Google Pay, etc.)
Traditional swipe transactions

Some POS setups have built-in card readers, while others connect via Bluetooth or USB.

Useful for: Any business accepting in-person credit/debit card payments

6. Kitchen display system

Instead of handwritten tickets or shouting orders, a kitchen display system (KDS) sends orders straight to the kitchen digitally.

Improves accuracy (no more messy handwriting)
Tracks wait times so staff can prioritize orders
Syncs with the POS terminal to update inventory in real-time

Useful for: Restaurants, cafes, food trucks, quick-service eateries

7. Customer-facing display

Some businesses use dual-screen displays or separate customer-facing screens for transparency and self-checkout so customers can:

Review their order before paying
See pricing & discounts in real time
Enter their email for digital receipts or loyalty rewards

Useful for: Retail stores, self-service kiosks, restaurants with counter service

POS Software

POS hardware is useless without the right software – the brain of the system. The POS software is what makes everything run—it processes transactions, manages inventory, tracks customers, and generates reports.

Here’s what a good POS software system should include:

1. Sales & Transaction Processing

At its core, POS software needs to process sales quickly and securely. It should:

Accept multiple payment methods (cash, card, mobile payments, online invoices)
Handle discounts, refunds, and store credits
Work both online and offline (so you can keep selling even if the internet goes down)

Useful for: Every business—this is the core function of any POS system

2. Inventory Management

Good POS software tracks inventory in real time, so you always know what’s in stock and what needs restocking.

Auto-updates when items are sold
Sends low-stock alerts before you run out
Syncs with online stores for businesses selling both in-store and online

Useful for: Retail stores, restaurants, warehouses, e-commerce businesses

3. Customer Relationship Management (CRM & loyalty programs)

A great POS system doesn’t just track sales—it tracks customers, too. With built-in CRM tools, you can:

Store customer purchase history for personalized recommendations
Set up loyalty programs to keep customers coming back
Send email or text promotions based on what customers buy

Useful for: Businesses that rely on repeat customers—retail, salons, restaurants, gyms

4. Employee Management & Permissions

If you have employees, your POS system should help you manage shifts, track sales by employee, and set role-based permissions (so cashiers can’t access manager-only functions).

Clock-in/clock-out tracking
Sales performance reports by employee
Restricted access for refunds, discounts, and voided transactions

Useful for: Any business with staff handling sales

5. Reporting and analytics

A smart POS system helps you track business performance and keep on top of what’s working and what’s not, with:

Daily, weekly, and monthly sales reports
Best-selling product insights
Peak sales hours & staffing recommendations

Some advanced systems even use AI-powered analytics to predict trends and optimize pricing strategies.

Useful for: Any business looking to grow smarter and scale efficiently

6. Integrations

No one likes entering data manually when there’s no need. Your POS software should connect with the other tools you use, like:

Accounting software (QuickBooks, Xero, etc.)
E-commerce platforms (Shopify, WooCommerce, etc.)
Marketing & loyalty programs (email lists, SMS promotions)
Payroll & scheduling tools

Useful for: Businesses that want seamless automation across multiple systems

With the right mix of hardware and software, your POS system keeps your business organized, efficient, and ready to grow.

Top POS System for Your Business: A Quick Comparison

The best POS system for you depends on what you sell, how you run your business, and what features you actually need. Here’s a side-by-side look at some top options to help you figure out which one fits best.

POS System	Best For	Hardware Options	Standout Feature	Subscription?	Ease of Use
Lightspeed	Retail	iPad, desktop, custom terminals	Advanced inventory management	✅	Moderate learning curve
Clover	Restaurants	All-in-one POS terminal, mobile countertop	Highly customizable setup	❌	User-friendly & customizable
Shopify	E-commerce	iPad, mobile, desktop	Seamless e-commerce integration	✅	Simple for e-commerce users
Square	Small businesses	Mobile card readers, register kits	Simple, no-contract pricing	❌	Very easy for beginners
Toast	Full-service restaurants	POS tablets, kitchen display systems	Restaurant-specific tools	✅	Designed for restaurant workflows

How Does a POS System Work?

A POS system might seem pretty straightforward—customer orders, payment is taken, transaction complete. But behind the scenes, it’s a carefully coordinated system of hardware, software, and data syncing that ensures speed, accuracy, and efficiency at checkout.

Let’s walk through how a modern POS system works step by step.

Step 1: Order or item entry

The process starts the moment a product or service is entered into the system. Depending on the type of business, this can happen in different ways:

Retail stores – A barcode is scanned, pulling up the item, price, and stock level.
Restaurants & cafés – A server selects menu items from a touchscreen or enters a custom order.
Service-based businesses – A receptionist books an appointment and adds services to the sale.

At this point, the POS software tracks what’s being sold and adjusts inventory in real-time.

Example: A customer at a coffee shop orders a latte and a croissant. The cashier taps the items on the POS screen, and the system instantly updates inventory, showing how many croissants are left.

Step 2: Price calculation and promotions

The POS system automatically applies pricing rules, including:

Base price of the product or service
Discounts, loyalty points, or special promotions
Taxes and service fees based on location

The system ensures accurate pricing without manual calculations.

Example: The coffee shop is running a “Buy 1 Latte, Get 50% Off a Pastry” promotion. The POS system applies the discount automatically, adjusting the total price before checkout.

Step 3: Payment processing

Once the total is confirmed, the POS system moves to payment collection. Modern POS systems accept multiple payment types, including:

✅ Credit & debit cards (chip, swipe, or tap)
✅ Mobile wallets (Apple Pay, Google Pay)
✅ Cash (POS tracks how much is in the register)
✅ Gift cards & store credit
✅ Buy Now, Pay Later options (like Afterpay or Klarna)

For businesses using mobile POS terminals, payments can be processed anywhere in the store, at the table, or even outside.

Example: The coffee shop customer taps their phone on the POS card reader to pay via Apple Pay. The transaction is approved within seconds.

Step 4: Receipt generation and order confirmation

Once the payment is completed, the POS system generates a receipt, which can be:

Printed via a receipt printer
Emailed or texted to the customer
Sent through the store’s mobile app (if integrated)

For restaurants or businesses with order fulfillment, the order is now sent to the necessary departments.

Example: After payment, the POS system sends the order to the barista’s display screen at the coffee machine and to another station in the kitchen, so they can both start preparing the latte and croissant immediately.

Step 5: Inventory and sales update

A modern POS system automatically updates stock levels and records the sale in real-time. This helps businesses:

Track best-selling items
Reorder stock when supplies run low
Prevent overselling for e-commerce stores

Example: The system now shows 19 croissants left in stock. If the count drops below 5, it triggers a reorder alert for the manager.

Step 6: Data sync and business insights

At the end of the day, all transactions sync with back-end analytics and reporting tools. This allows business owners to:

See daily sales totals
Track peak hours & best-selling items
Monitor staff performance
Analyze trends for better business decisions

Example: At closing, the café owner checks the POS dashboard and sees that lattes were the top seller today, making up 40% of total revenue.

Types of POS Systems (Retail, Mobile, Restaurant, etc.)

Not every business needs the same type of POS system. A food truck doesn’t operate like a clothing boutique, and a salon doesn’t need the same setup as a bar. The right POS system should fit your business model, customer flow, and work environment.

Here’s a breakdown of the most common types of POS systems by use case:

1. Retail POS Systems

Best for: Clothing stores, electronics shops, bookstores, and multi-location retailers.

A retail POS tracks product inventory, syncs with your online store, and provides real-time updates on what’s selling. It helps you avoid stockouts and streamlines checkout with barcode scanning and fast payment processing.

Features to expect:

Barcode scanner and product lookup
Real-time inventory updates
Integration with e-commerce platforms
Customer profiles and purchase history

✅ Works for: Brick-and-mortar retail, pop-up shops, seasonal businesses, and high-volume stores.

2. Restaurant & Café POS Systems

Best for: Full-service restaurants, cafés, food trucks, and quick-service spots.

These systems handle food orders, tips, and kitchen coordination. Mobile ordering, kitchen displays, and table mapping help streamline operations during busy hours.

Features to expect:

Menu customization
Kitchen Display System (KDS)
Tableside ordering via tablets
Split checks, tipping, and modifiers

✅ Works for: Fine dining, quick-serve restaurants, coffee shops, and fast casual.

3. Mobile POS Systems

Best for: Food trucks, delivery drivers, market vendors, field service pros.

A mobile POS runs on a smartphone or tablet, allowing you to accept payments from anywhere. It’s ideal for businesses on the move or those without a traditional counter.

Features to expect:

Portable card readers
Offline mode for payments without Wi-Fi
Bluetooth receipt printers
Inventory tracking on the go

✅ Works for: Pop-ups, events, home service businesses, and small teams.

4. Appointment-Based & Membership POS Systems

Best for: Salons, spas, fitness studios, and wellness centers.

These POS systems focus on scheduling and recurring services. Customers can book appointments online, manage memberships, and pay deposits—all through one platform.

Features to expect:

Appointment booking and calendar view
Recurring billing and auto-renewals
CRM and customer history tracking
Employee shift and commission tracking

✅ Works for: Hair salons, massage therapists, fitness coaches, and wellness clinics.

5. E-commerce & Omnichannel POS Systems

Best for: Online sellers, subscription boxes, and businesses selling through social media.

These POS systems connect your physical store with your online store, keeping inventory, orders, and customer data in sync across all channels.

Features to expect:

Integration with Shopify, WooCommerce, and social shops
Centralized inventory for online and in-store sales
Multi-channel reporting and shipping tools
Automated tax and checkout settings by location

✅ Works for: Hybrid stores, online-first brands, and content creators who sell physical products.

6. Enterprise & Multi-Location POS Systems

Best for: Franchises, hotel chains, large retailers, and restaurants with multiple locations.

Enterprise systems centralize everything, including inventory, sales, HR, and pricing, across all locations from a single dashboard.

Features to expect:

Chain-wide reporting and control
Region-specific pricing and menu customization
Role-based access control
Real-time multi-location inventory sync

✅ Works for: Franchises, hotels, large retailers, and multi-venue businesses.

Pro Tip: Don’t just choose a POS based on your industry – choose based on your workflow. Ask: Do I need mobility? Real-time inventory? Scheduling tools? Start with your needs, then match the POS type to your business.

How to Get the Most Out of Your POS System

Now you’ve got the right POS system for your business—solid move. But are you actually using it to its full potential or just ringing up sales and calling it a day? Your POS is your secret weapon. Use it right, and it’ll do way more than just take payments. Here’s how to put it to work:

Let AI do the thinking. Your POS tracks sales patterns, predicts demand, and even suggests pricing adjustments. Take advantage of it.
Automate the busywork. Auto-reorders, scheduled discounts, loyalty points—set it up once and let it run.
Make checkout easy. Accept every payment method possible: tap-to-pay, QR codes, Venmo, you name it. Faster checkout = happier customers.
Use your data, don’t just collect it. Your POS tells you what’s selling, when, and to whom. Use that info to stock smarter, schedule better, and boost profits.
Sync it with everything. Accounting, e-commerce, delivery apps, email marketing—connect it all so your business runs like a machine.

POS Integrations: Connect Your Business Tools

Your POS system should be able to sync with the other business tools you’re using to keep everything running smoothly with less manual work. Here’s what to look for:

Payment processing & terminals: Connects your POS to credit card readers, mobile wallets, and contactless payments.
Bank account sync: Links your POS to your business bank account for automatic deposits and reconciliation
CRM (Customer relationship management): Stores customer data, purchase history, and preferences
Dashboards & reporting Gives real-time insights into sales, inventory, and employee performance
E-Commerce & online sales: Syncs with your online store, marketplaces, and social media sales channels
Accounting & payroll: Automates sales tracking, tax calculations, and payroll processing

The Bottom Line: Find the Right POS for Your Business

The best POS system isn’t just about features—it’s about finding one that fits how you work. Here are some solid options based on your business type:

Restaurants & Cafés – If you need tableside ordering, kitchen display integration, and restaurant-specific tools, check out Toast and TouchBistro.
Retail Stores – For real-time inventory tracking, multi-location support, and smooth checkout, consider Lightspeed, Square, or Korona POS.
E-Commerce & Omnichannel – Selling both online and in-store? GoDaddy, Shopify POS (integrated with Shopify) make syncing sales seamless.
Service-Based Businesses – If you run a salon, auto shop, or appointment-based service, Clover and Epos Now offer great scheduling and customer management tools.
Enterprise & Multi-Location Businesses – For franchises, hotels, or large-scale operations, you’ll want something powerful like Oracle Netsuite, Epicor, or Worldpay.
Mobile & Small Businesses – Need something simple and affordable? SumUp and Helcim are both great for taking payments on the go.