Point of sale (POS): Understanding POS systems

A point of sale system is the specialised technology businesses use to calculate what a customer owes and provide options for payment. It combines software that manages transaction details with hardware used to accept payments, such as a terminal or tablet.

In a modern fintech environment, a POS system does more than support checkout. It can connect with your backend systems, often through a POS API (Application Programming Interface), to track inventory, collect customer data for loyalty programmes, and generate financial reports. This means that when a shopper buys an item in store, stock levels can be updated automatically across your website and other physical locations.

While POS systems are commonly associated with retail stores, they are also widely used across hospitality. Restaurant point of sale software, for example, can manage table orders, kitchen communications, and split bills, while hotel point of sale systems support room charges, dining, and guest transactions across multiple touchpoints.

A point of sale system connects a business's storefront with a payment processor and financial networks to authorise and complete a transaction. The process starts when a customer decides to make a purchase and ends when the funds are scheduled for settlement.

POS transactions typically consist of the following steps:

1. The business scans the product barcode or selects the service through the POS software.

2. The POS system calculates the total price, including any applicable taxes or discounts.

3. The customer chooses their preferred payment method, such as a credit card or mobile wallet.

4. The POS hardware captures the payment details and sends them securely to the payment processor.

5. The payment processor requests authorisation from the card network and issuing bank.

6. Once approved, the POS system records the sale, updates inventory, and generates a digital or paper receipt.

After the transaction is complete, the payment processor moves the funds from the customer's account to the business's bank account.

Modern POS systems rely on both physical hardware and digital software to work effectively in retail and hospitality environments. Together, these components help provide shoppers with a fast and reliable checkout experience.

Hardware components often include:

• Payment terminals that read card chips, NFC signals for mobile wallets, or magnetic stripes.

• Tablets that staff can use to manage sales and view product information.

• Receipt printers that provide customers with a physical record of their purchase.

• Cash drawers for the secure storage of physical currency.

Software components include:

• Payment processing: The technology that securely handles sensitive transaction data.

• Inventory management: Features that monitor stock levels in real time.

• Customer relationship management (CRM): Tools that store shopper preferences and purchase history.

Choosing the right POS means considering your industry requirements, transaction volumes, and future growth plans. Look for a system that is flexible enough to scale as your business expands into new markets, locations, or sales channels.

When evaluating a POS system, consider:

Software integration 

Make sure your POS connects with existing accounting, inventory, and ERP software so data stays consistent across your operations.

Available payment methods 

Select a system that supports a broad range of payment options, including local payment methods such as eftpos, mobile wallets, and international cards, so shoppers can pay in the ways they prefer.

Hardware and software reliability 

Choose a solution with strong uptime and reliable connectivity to minimise the risk of lost sales during busy periods or technical outages.

Data security and compliance 

The system should meet global PCI standards and use encryption to protect sensitive customer information and help reduce fraud risk.

Scalability and global reach 

If international expansion is part of your growth plans, choose a POS provider that offers local acquiring and support across multiple countries to make expansion simpler.

Payment devices

The POS system you choose should support the payment devices your business needs, such as:

• Tap to Pay: Tap to Pay allows shoppers to make contactless purchases by tapping their card, phone, or compatible smartwatch. It offers a simple and convenient way to pay without requiring traditional external payment hardware.

• Mobile POS: A mobile point of sale (mPOS) is a wireless payment device that lets you process payments away from a fixed checkout. Staff can move around and accept payments wherever customers are ready to buy.

• Countertop: Compact, fixed-location terminals provide a reliable option for checkout desks. Designed for high-volume environments, these devices can include features such as built-in printers and customer-facing displays.

• Unattended: Customisable solutions for self-service businesses allow customers to pay without staff assistance. These terminals can be embedded into kiosks, vending machines, or parking meters to provide secure checkout in automated environments.

Core features

Beyond the hardware, the capabilities of POS software can also help reduce manual tasks. Look for a provider that offers features such as:

• Store and Forward (offline processing): Continue accepting payments during a temporary internet outage. Store and Forward securely stores encrypted transaction data and forwards it for authorisation once connectivity is restored.

• Reconciliation: Look for automated reconciliation, which matches bank deposits with sales records. This can help keep financial data accurate while reducing time spent on manual accounting.

• Giving (charity donations): Enable round-up or fixed-amount donation prompts directly on the payment terminal, giving customers an easy way to support good causes during checkout.

Considering these factors can help you select a platform that supports your day-to-day operations while giving you the flexibility to add new locations and sales channels as your business grows.

Read next: Virtual terminals: Benefits & use cases

A unified POS system brings online and in-person sales together by processing transactions through a single platform. This helps remove channel silos and creates a more consistent experience for shoppers, however they choose to pay.

Bringing points of sale onto one platform can also give you a clearer view of your business. You can understand how products perform across locations, identify shopping patterns, and use those insights to inform inventory decisions. Keeping payment data in one place can also make financial reconciliation simpler.

Check out our unified commerce guide to explore the benefits in more detail.

With Adyen, you get access to a range of fully certified in-person payment solutions, with flexible options designed to suit different business models. Choose from payment devices including:

• Tap to Pay: Accept contactless payments using compatible devices.

• Mobile: Flexible devices that let you accept payments across retail environments, restaurants, and pop-up locations.

• Countertop: Compact, fixed-location terminals such as the P400 for reliable checkout experiences.

• Unattended: Customisable payment solutions for self-service environments.

Drive growth with Unified Commerce

Adyen's Unified Commerce payment solution helps omnichannel retailers connect shopping experiences across channels while improving operational efficiency through a robust and dependable platform.

Rather than managing multiple payment providers, businesses can connect channels and operations through one platform. This provides deeper insights into customer behaviour and helps businesses create flexible cross-channel experiences.

Get in touch to learn more about how our unified platform can help you manage your payments and data.

• A POS system combines the software and hardware needed to manage in-person transactions and business data.

• Modern systems can keep inventory and customer information connected across sales channels in real time.

• Processing a transaction involves several parties, including the payment processor, card networks, and banks.

• Unified platforms can simplify reporting and help create a more connected shopper experience.