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What Is a POS System?


What is a POS System?

A point of sale or POS system is the place where a customer makes a transaction for any products or services they purchase in your store. 
This therefore means that when any payment is completed by a customer, they will be completing a point of sale transaction.

How does a POS system work?

A POS system can perform a number of tasks, making it possible to take payments quickly as well as record and store data for later reference. It is composed of both hardware and software that works in coordination to effectively process transactions when the purchases are made. 

POS software can refer to a number of forms of technology that can be used to facilitate payments. This can include anything from iPads, cash registers, computers and anything else that can conduct a financial transaction. 

There are two key types of POS software, on-premise and cloud-based. 

With on-premise software, the merchant will have to be present to take a payment with equipment such as a payment terminal. For cloud-based POS software, merchants can take payments when they are not directly face to face with customers. This means that payments can be taken online, an option that is becoming increasingly popular due to limitations in contact from the outbreak of COVID-19. 

POS Terminals are available in two forms. These are either portable or fixed countertop devices and can be used to take payments on the go or at a stationary location, depending on the requirement of the business. 

Types of POS Systems

Three are three main types of POS systems. These are: 

  • Cloud-based systems or ePOS systems - An ePOS or electronic point of sale system is a popular choice for businesses of all sizes as they can help capture and store transactional data on all sales and products. This can allow businesses to track and monitor performance on one or even several locations. ePOS systems can be integrated with numerous devices, including computers, touch-screen devices, barcode scanners and payment terminals to provide a smooth, unified service. 

  • Locally installed POS - A locally installed POS system can be connected directly via a server that is located in the premises of your building. This information will then be stored on a closed, internal network, which can be more expensive due to licensing fees and cost of hardware. 

  • Omni-Channel POS - This form of POS uses a hardwired local connection on which the system will operate. This then is connected to the cloud where all your data is stored and can be accessed as wished. 

Each POS solution certainly has its own benefits and can be used in a variety of ways. This versatile way of collecting payments can be tailored and implemented depending on each business’ needs. 

Components of a POS Systems

Each POS system has its own specific components that can be used interchangeably depending on the business’ requirements. These include: 

  • Barcode scanner - This is an optical scanner that can read any printed barcodes and decode the data in the barcode. This information is then transferred to an electronic device. 

  • Cash drawer - Also known as a cash register, this is an important part of any POS system as businesses can store cash, cheques, and any other items. It normally can be triggered after the receipt has been printed to allow the merchant to add cash and withdraw change if needed. 

  • POS terminal - A POS terminal can come in either portable or fixed forms and are used to take payments through cards or electronic devices. 

  • Receipt printer - Printing receipts are an essential part of the payment process as it offers the business and the customer a written proof of payment. This can then be referred to at a later date during a returns or exchange process. 

  • Label printer - Label printers are ideal for businesses that sell products as they can print anything from barcodes to price tags. 

Types of POS Terminals

There are several types of POS terminals, also known as PDQ machines available for businesses to use currently. These are: 

  • Countertop Card Machine - These terminals can be used at any fixed point within a business premises. They require a socket and ethernet connection to function. This form of POS is ideal if you know that you will be taking payments at a stationary location. 

  • Portable Card Machine - This form of POS is perfect for businesses that need to take payment whilst on the go. A portable card machine can take all forms of payment whilst running on either GPRS or 3G. 

  • Mobile Card Machine - This POS solution is ideal for businesses that have no fixed location as they work anywhere in the country that has a mobile network connection. 

Interested in learning more about POS terminals? Why not take a look at our article on “Which credit card swiper is right for me?”.

A POS system has a number of benefits for both merchants and customers. By integrating your system, you can take payments quickly and more efficiently, which means that customers can benefit from speedy service and faster queuing times. 

You can also accumulate, store and access data efficiently. This includes product inventories and sales transactions which can then be translated into reports that can be reviewed at any time. Businesses with multiple store locations can also keep track of staff usage of POS systems. 

What POS is right for you?

Deciding whether a POS system is right for your business can be a difficult question to answer. We suggest asking yourself the following questions:

  • Do you accept cash payments? - If so, then a POS system may be right for you. Any businesses that accept face to face payments will use cash registers and electronic devices. This can be managed by a POS or ePOS system. 

  • Do you need to accept payments from anywhere on your premises? - If you will be taking payments on-premises, you may benefit from either a POS or ePOS system. Depending on your business requirements, you can choose to incorporate fixed, portable or both types of POS terminals to take payments. 

  • Do you have access to the internet? - If you have access to the internet, you may want to consider incorporating POS terminals into your store. These can be connected by ethernet cables, allowing your staff to take payments from any fixed location in your store. Alternatively, you can choose a portable terminal that can run entirely on mobile connection. 


Understanding POS systems can be confusing, especially if you are totally new to the concept. We at Opayo are one of the country’s most respected payment service providers. Our speciality is helping businesses of all sizes grow and accept payments efficiently. 

For more help and advice, you can contact the Opayo team online or on 0800 078 3195. We offer a 24/7 service for all businesses based in the UK, with advice all year round. Alternatively, you can download our ebook for further information.