Point-of-Sale Terminal
What Is a Point-of-Sale Terminal?
A point-of-sale (POS) terminal is a hardware system for processing card payments at retail locations. Software to peruse magnetic strips of credit and debit cards is embedded in the hardware. Portable devices (i.e., not terminals secured to a counter), either proprietary or third-party, as well as contactless capabilities for emerging forms of mobile payments, represent the next generation of POS systems.
How a Point-of-Sale Terminal Works
Whenever a credit card or debit card is used to pay for something, a conventional point-of-sale (POS) terminal first reads the magnetic strip to check for sufficient funds to transfer to the merchant, then makes the transfer. The sale transaction is recorded and a receipt is printed or sent to the buyer through email or message. Merchants can either buy or lease a POS terminal, contingent upon how they like to oversee cash flows. Buying a system involves higher upfront costs while leasing levels out regularly scheduled payments, however total lease payments might turn out to be in excess of a one-time purchase over the useful life of the system.
The current trend is away from traditional proprietary hardware and toward software-based POS systems that can be stacked into a tablet or other mobile gadget. To stay ahead of the curve, POS terminal makers are introducing their own versions of portable and mobile POS devices.
Such devices should be visible at busy retail stores and restaurants where owners are conscious of the way that customers generally could do without waiting around to pay for a product or feast. Price, function, and user-friendliness are important criteria for POS system purchasers. Critical in the becoming interconnected world is the security of the systems. Some high-profile hacks of customer data have happened through POS terminals that didn't have refreshed operating systems.
Point-of-Sale (POS) Terminal Pioneers
The first point of sale system was developed by the National Cash Register (NCR) — the company responsible for a majority of cash registers in the world today. The company integrated new technology, such as bar codes and scanners developed during the 1980s, to change over manual cash registers into mobile sale systems.
Square, Inc. has been a trend-setter in the PoS space in recent times. It presented hardware and software "to transform the checkout process and advance digital and mobile commerce by untethering sales from long lines and old-fashioned cash registers," as per the company in its Form S-1 filing.
Its systems interface straightforwardly with the payment card networks, lifting the burden of keeping up with compliance with rules and regulations of the payment industry off the shoulders of merchants. Business analytics in the company's POS systems is also another alluring feature. Notwithstanding, this is a field with generally low entry barriers — Square might have been the pioneer, however there are numerous competitors.
Highlights
- PoS terminals started out as manually-worked machines, transformed into mobile PoSes with bar codes and scanners, and presently are moving towards cloud-based PoS systems.
- A point-of-sale terminal is a hardware system for processing card payments at retail locations.
- NCR developed the first PoS system. In recent times, the market has developed to incorporate technology companies like Square.
