A point of sale system, or POS for short, is an electronic device used in a retail store to monitor and track sales. A POS system can be as simple as a cash drawer connected to a single computer terminal or as complex as a multi-station networked computer system with touch screens and printers at each check-out station. Most POS systems are connected to cash registers, receipt printers, touch screens or other input devices that allow sales-floor personnel to ring up sales.
POS systems, in conjunction with a barcode scanner, can also be used to track inventory and generate purchase orders based on the current inventory status. POS systems typically include software for accounting functions including payroll tracking, revenue management and inventory tracking.
The History of Point of Sale Systems
The first point-of-sale systems were developed in the 1960s when supermarkets began to shift from a manual system, with each product having its own clerk who retrieves the products from store shelves, to an automated system where products are stored behind a counter or in a store room and retrieved when the cashier requests them. To track inventory, they used carbon paper to manually change the number on the register for each item scanned.
In 1969, Don Wetzel from Anker Data Systems in Sunnyvale California invented a computer terminal that quickly recorded sales transactions into a digital format that could be sorted by product and time of sale, creating a daily inventory number. After Anker Data Systems merged with Pertec Computer Corporation in the mid 1970’s, the computer terminal became known as the 4040 and was used in retail stores around the world.
In 1972, David S. Whitmer founded Metavante Corporation – now part of NCR Corporation – in Milwaukee, Wisconsin. In 1978 Metavante introduced the first point-of-sale system to print paper receipts.
In 1981 IBM introduced its 468X/468H POS terminal that was implemented in many retail locations across North America, including Walmart. The IBM 468X/468H terminal became an industry standard for over 20 years.
In 1996, Ingenico introduced the first contactless/wireless POS terminal. Today, Ingenico is a global leader in payment terminals and electronic payments for retail transactions with millions of terminals installed around the world
How Point of Sale Works?
The most common type of point-of-sale system consists of three components:
(1) Computer terminal or cash register that includes the keypad for entering sales data, buttons or touch screen for selecting items to be sold, buttons for performing various functions such as total sale, tax on sale and voiding sale transactions. A magnetic strip reader is usually attached to the cash register so customers can swipe their credit cards through it when making a purchase.
(2) A cash drawer that is either attached to the terminal or sits on the counter below it and opens automatically when sale transaction is completed.
(3) One or more printers for printing receipts, store records and reports such as daily sales report and inventory report.
Point of Sale (POS) System Advantages
The main advantage of using a POS system is that sales-floor personnel can ring up sales transactions quickly without having to wait for the product to be delivered from the storeroom or back room. When point of sale systems are connected to barcode scanners, they can also track inventory and generate purchase orders based on the current inventory status. POS systems can also monitor utility usage by individual cash register/terminal which allows the business owner to control operational cost.
POS Systems in Businesses
POS systems are widely used in retail stores, restaurants, bars and other businesses where ringing up sales is the primary function of the cashier. Each transaction record produced by a POS system contains the sales details such as description and price of items sold, sales tax on sale and total amount of sale. A POS system can also print out a receipt for each transaction, saving it to a batch file so store personnel can use the information later to reconcile cash register tape with physical inventory.
- Retailers: Retail stores use POS systems to record sales transactions, maintain customer data and specifications for each product that is sold in the store. Sales-floor personnel can use POS systems to look up customer information such as purchase history via a barcode scanner. They are also used to track inventory levels of various products kept in stock by determining which items are selling fast and need to be reordered and which items are not selling and need to be marked down.
- Restaurants: Restaurants use POS systems not only for billing customers but also for tracking orders, managing employee payroll and monitoring food and supply usage. A restaurant manager can look up customer information via a barcode scanner to determine who had ordered what items on the menu. The restaurant manager can also check the amount of food left in stock and reorder items before they run out.
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