Point of sale
The point of sale (POS) or point of purchase (POP) is the time and place where a retail transaction is completed. At the point of sale, the merchant would calculate the amount owed by the customer and indicate the amount, and may prepare an invoice for the customer (which may be a cash register printout), and indicate the options for the customer to make payment. It is also the point at which a customer makes a payment to the merchant in exchange for goods or after provision of a service. After receiving payment, the merchant may issue a receipt for the transaction, which is usually printed, but is increasingly being dispensed with or sent electronically.
To be able to calculate the amount owed by a customer, the merchant may use any of a variety of aids available, such as weighing scales, bar code scanners, electronic and manual cash registers. To make a payment EFTPOS terminals, touch screens and a variety of other hardware and software options are available.
The point of sale is often referred to as the point of service because it is not just a point of sale but also a point of return or customer order. Additionally, today POS software may include additional features to cater for different functionality, such as inventory management, CRM, financials, warehousing, etc.
Businesses are increasingly adopting POS systems and one of the most obvious and compelling reasons is that a POS system does away with the need for price tags. Selling prices are linked to the product code of an item when adding stock, so the cashier merely needs to scan this code to process a sale. If there is a price change, this can also be easily done through the inventory window. Other advantages include ability to implement various types of discounts, a loyalty scheme for customers and more efficient stock control.
- 1 Terminology
- 2 History
- 3 User Interface Design
- 4 Cloud-based (post-2000s)
- 5 Retail industry
- 6 Hospitality industry
- 7 Accounting forensics
- 8 Security
- 9 See also
- 10 References
- 11 External links
Retailers and marketers will often refer to the area around the checkout instead as the point of purchase (POP) when they are discussing it from the retailer's perspective. This is particularly the case when planning and designing the area as well as when considering a marketing strategy and offers.
Some point of sale vendors refer to their POS system as "Retail Management System" which is actually a more appropriate term given that this software is no longer just about processing sales but comes with many other capabilities such as inventory management, membership system, supplier record, bookkeeping, issuing of purchase orders, quotations and stock transfers, barcode label creation, sale reporting and in some cases remote outlets networking or linkage, to name some major ones.
Nevertheless, it is the term POS system rather than Retail Management System that is in vogue among both end-users and vendors.
Software before the 1990s
Early electronic cash registers (ECR) were controlled with proprietary software and were limited in function and communications capability. In August 1973 IBM released the IBM 3650 and 3660 store systems that were, in essence, a mainframe computer used as a store controller that could control up to 128 IBM 3653/3663 point of sale registers. This system was the first commercial use of client-server technology, peer-to-peer communications, local area network (LAN) simultaneous backup, and remote initialization. By mid-1974, it was installed in Pathmark stores in New Jersey and Dillard's department stores.
One of the first microprocessor-controlled cash register systems was built by William Brobeck and Associates in 1974, for McDonald's Restaurants. It used the Intel 8008, a very early microprocessor. Each station in the restaurant had its own device which displayed the entire order for a customer—for example:  Vanilla Shake,  Large Fries,  BigMac—using numeric keys and a button for every menu item. By pressing the [Grill] button, a second or third order could be worked on while the first transaction was in progress. When the customer was ready to pay, the [Total] button would calculate the bill, including sales tax for almost any jurisdiction in the United States. This made it accurate for McDonald's and very convenient for the servers and provided the restaurant owner with a check on the amount that should be in the cash drawers. Up to eight devices were connected to one of two interconnected computers so that printed reports, prices, and taxes could be handled from any desired device by putting it into Manager Mode. In addition to the error-correcting memory, accuracy was enhanced by having three copies of all important data with many numbers stored only as multiples of 3. Should one computer fail, the other could handle the entire store.
In 1986, Gene Mosher introduced the first graphical point of sale software featuring a touchscreen interface under the ViewTouch trademark on the 16-bit Atari 520ST color computer. It featured a color touchscreen widget-driven interface that allowed configuration of widgets representing menu items without low level programming. The ViewTouch point of sale software was first demonstrated in public at Fall Comdex, 1986, in Las Vegas Nevada to large crowds visiting the Atari Computer booth. This was the first commercially available POS system with a widget-driven color graphic touch screen interface and was installed in several restaurants in the USA and Canada.
Modern software (post-1990s)
In 1992, Martin Goodwin and Bob Henry created the first point of sale software that could run on the Microsoft Windows platform named IT Retail. Since then a wide range of POS applications have been developed on platforms such as Windows and Unix. The availability of local processing power, local data storage, networking, and graphical user interface made it possible to develop flexible and highly functional POS systems. Cost of such systems has also declined, as all the components can now be purchased off-the-shelf.
In fact as far as the computer is concerned, off-the-shelf versions are usually newer and hence more powerful than those proprietary POS terminals provided by POS vendors and more RAM can also be easily added if needed. Furthermore, touchscreen tablets and laptops - both Windows or Android types - are readily available in the market. And they are also more portable than traditional POS terminals. The only advantage of the latter has is usually because they are built to withstand rough handling, food and drink spillages; however this is not a concern for non F & B businesses.
The key requirements that must be met by modern POS systems include high and consistent operating speed, reliability, ease of use, remote supportability, low cost, and rich functionality. Retailers can reasonably expect to acquire such systems (including hardware) for about $4000 US (as of 2009) per checkout lane.
Reliability depends not completely on the developer but at times on the compatibility between a database and an OS version. For example, MS Access database used very widely for POS systems is known to fail for Windows 7 and higher versions and no solution has been offered by Microsoft. However through community support a registry tweak solution has been found by a developer for this.
That such a serious compatibility bug has emerged for MS Access database is shocking even to veteran developers using Windows, some of whom may not be able find the solution. Businesses using POS systems with MS Access database were caught off-guard when they upgrade from Windows XP to a newer version of the OS. As a result, their business were seriously disrupted but some suspecting it had something to do with OS upgrade took the initiative to quickly downgrade back to Windows XP.
POS systems are by far one of the most complex of software because of the features that are required by different end-users. Many if not most POS systems are really a suite of software that includes sale, inventory, add stock, vendor record, membership and reporting modules. Sometimes you will find also purchase ordering, stock transferring, quotation issuing, barcode creating, bookkeeping or even accounting capabilities included. Furthermore, each of these modules are interlinked if they are to serve their practical purpose and to maximize their usability.
For instance, the sale window is immediately updated on a new member entry through the membership window because of this interlinking. Similarly when a sale transaction is made, any purchase by a member is on record for the membership window to report providing information like payment type, goods purchased, date of purchase, points accumulated. Another example is when goods are sold the report window is able to generate an account of the balance stock, of the performance of goods from various vendors, and sometimes for more comprehensive analysis need to present these in ascending or descending order for different fields - like selling price, balance, average cost, quantity sold, description and department. Highly complex programming is involved not to mention the kind of computer resources to be considered for generating such extensive analyses.
POS systems are designed not only to serve the retail, wholesale and hospitality industries as historically is the case. Nowadays POS systems are also used in goods and property leasing businesses, equipment repair shops, healthcare management, ticketing offices such as cinemas and sports facilities and many other operations where capabilities such as the following are required: processing monetary transactions, allocation and scheduling of facilities, keeping record and scheduling services rendered to customers, tracking of goods and processes (repair or manufacture), invoicing and tracking of debts and outstanding payments.
Within each trade different customers have different expectations. The reporting functionality alone is subject to so many demands especially from those in the retail/wholesale industry. Just to cite special requirements, for some businesses goods may include perishables and hence the inventory system must be capable of prompting the admin and cashier on expiring or expired products. Some retail businesses require the system to store credit for their customers, credit which can be used subsequently to pay for goods. Some companies even expect the POS system to behave like a full-fledged inventory management system, including the ability to provide even FIFO (First In First Out) and LIFO (Last In First Out) reports of their goods for accounting and tax purpose.
In the hospitality industry, POS system capabilities can also diverge significantly. For instance while a restaurant is typically concerned about how the sale window functions, whether it has functionality such as for creating item buttons, for various discounts, for adding a service charge, for holding of receipts, for queuing, for table service as well as for takeaways, merging and splitting of a receipt, these capabilities may yet be insufficient for a spa or slimming center which would require in addition a scheduling window with historical records of customers' attendance and their special requirements.
The complexity of a mature POS system even extends to remote networking or interlinking between remote outlets and the HQ such that updating both ways is possible. Some POS systems even offer the linking of web-based orders to their sale window. Even when local networking is only required such as in the case of a high-traffic business like a supermarket there is already the challenge for the developer to keep most if not every of their POS stations always running. And this puts high demand not just on software coding but also designing the whole system covering how individual stations and the network work together, and a special consideration for the performance capability and usage of databases.
With regards to databases, POS systems are very demanding on their performance because of numerous submissions and retrievals of data - required for correct sequencing the receipt number, checking up on various discounts, membership, calculating subtotal, so forth - just to process a single sale transaction. The immediacy required of the system on the sale window such as may be observed at a checkout counter in a supermarket also cannot be compromised. This places much stress on certain enterprise databases if there are just several tens of thousands of sale records in the database. Enterprise database Ms SQL for example has been known to freeze up (including the OS) completely for many minutes under such conditions showing a "Timeout Expired" error message. Even a lighter database like Ms Access will slow to a crawl over time if the problem of database bloating is not foreseen and managed by the system automatically. Therefore, the need to do extensive testing, debugging and improvisation of solutions to preempt failure of a database before commercialization further complicates the development.
With the rise of POS system hacking which an Internet search will readily confirm, developers nowadays have to think also about the security aspect of the system, thus compounding the complexity of a POS system. In 2015 alone the POS systems of two major hotels, Mandarin Oriental and Hilton were compromised by hackers allowing them to steal credit card information of their guests.
It may be said that a POS system can be made to serve different things to different end-users depending on their unique business processes. In fact quite often an off-the-self POS system is inadequate for customers; some customization is required and this is why a POS system can become very complex.
Because of the complexity, therefore do not be surprised as a user if there are many bugs and errors encountered in POS systems as a search on 'pos system reviews bugs' would reveal.
At the same time the fact that a POS system typically can cost thousands of dollars just for a software license alone just goes to show what work - extensive software coding, debugging and testing, integration with database, hardware and networking requirements - has been invested by the developer.
POS systems are also very demanding in terms of accuracy given that monetary transaction is constantly involved not only via the sale window but also at the backend through the receiving and inputting of goods into the inventory. Calculations involved are not always straightforward. For example, on the sale window if there are quantity discount, promotional discount, mix and match discount, manually inputted receipt discount, membership discount, service charge, surcharge, delivery charge and sale tax (GST or VAT) involved they are not always known in advance but only after all the goods in a sale receipt have been processed. The complexity of programming involved just for these aspects of the sale processes can only be imagined especially when no error in calculation can be allowed.
A POS system in some retail/wholesale businesses is often attempted to be used as inventory management system which is a highly complex software by itself not to mention that inventory management is a full-time job which many businesses are not really prepared to undertake.
Anyway when a user wants to find out how his products are performing the POS system must be able to provide a comprehensive report of not only the sales but also the balance quantity, profit margin, so forth.
Other requirements include that the system must have functionality for membership discount and points accumulation/usage, quantity and promotional discounts, mix and match offers, cash rounding up, invoice/delivery-order issuance with outstanding amount. It should enable a user to adjust the inventory of each product based on physical count, track expiry of perishable goods, change pricing, provide audit trail when modification of inventory records are performed, be capable of multiple outlet functionality, control of stocks from HQ, doubling as an invoicing system, just to name some.
It is clear that POS system is a term that implies a wide range of capabilities depending on the end-user requirements. POS system review websites cannot be expected to cover most let alone all the features; in fact unless one is a developer himself it is unrealistic to expect the reviewer to know all the nuts and bolts of a POS system. For instance a POS system might work smoothly on a test database during review but not when the database grows significantly in size over months of usage. And this is only one among many hidden critical functionality issues of a POS system.
Although POS systems based on the sale window interface alone all appear to be similar it is really under the hood that end-users come to know by and by whether the software functionality they required not only are available but working properly. The latter is cited because POS systems are notorious for many bugs and errors. For this reason for those looking to purchase a POS system, perhaps one of the best routes to a prudent purchase decision is to find out from other users in a similar trade about their experience with various POS systems. Given the complexity of the software even this fact-finding process takes much effort but it is far better than ending up with a system that you will live to regret for years.
Another way is to ask for a demo installation of the POS system from a vendor so that you can test out the functionality. However, because of the complexity of the software it is not likely that you may get to test out the features comprehensively enough.
Another alternative is to consider engaging an expert in POS systems to source for a suitable one. However experts in this field are not easy to find. Nevertheless, if found investing in such consultation is very critical especially when your business is large and highly dependent on acquiring the right system. This implies not just in terms of technical functionality of the system but also in terms of licensing issues such as whether your company can acquire the source code to ensure that future development of the software is not dependent on the survival of the original developer.
Given these challenges, large companies should consider seriously developing their own proprietary POS systems from ground up. Although this also implies the need for continual maintenance of the system by a tech department, the budget allocated for this can be worth it given the gain in internal control and assurance of technical support. Technical support for POS systems in particular has always surfaced as a very serious issue for end-users if user comments at POS system review sites are anything to go by. This is because for one thing there is a large knowledge gap between the call center and the actual developers of a POS system.
Should a company opt for a POS system completely developed in-house, this is not a project that can be expected to be completed in a matter of months. The lead time can be measured in terms of years after factoring in the work of exhaustive testing, debugging, modifications and improvements. This caveat of course applies to an enterprise-level POS system - one for a large inventory, multi-outlet inventory and purchasing management, auto-reordering, CRM and accounting features - which is worth putting the company resources into developing.
Hardware interface standardization (post-1980s)
Vendors and retailers are working to standardize development of computerized POS systems and simplify interconnecting POS devices. Two such initiatives are OPOS and JavaPOS, both of which conform to the UnifiedPOS standard led by The National Retail Foundation.
OPOS (OLE for POS) was the first commonly adopted standard and was created by Microsoft, NCR Corporation, Epson and Fujitsu-ICL. OPOS is a COM-based interface compatible with all COM-enabled programming languages for Microsoft Windows. OPOS was first released in 1996. JavaPOS was developed by Sun Microsystems, IBM, and NCR Corporation in 1997 and first released in 1999. JavaPOS is for Java what OPOS is for Windows, and thus largely platform independent.
There are several communication ways POS systems use to control peripherals such as:
- Logic Controls \ BemaTech
- Epson Esc/POS
- UTC Standard
- UTC Enhanced
- ICD 2002
- CD 5220
- ADM 787/788
There are also nearly as many proprietary protocols as there are companies making POS peripherals. Most POS peripherals, such as displays and printers, support several of these command protocols in order to work with many different brands of POS terminals and computers.
There are some issues about POS hardware that need to be addressed. POS receipt printers are of particular concern as they seem to be lagging behind office printers technologically in certain essential aspects.
Typically after installation of the driver the POS receipt printer is not immediately usable because a virtual port for the printer on the Printers window would still has to be selected for it to work. It is not clear why this must be done for receipt printers when office printers have become plug and play devices.
In one case, a slightly lower-end receipt printer even has to be ridiculously re-initialized manually during every bootup of the computer for it to work. This appears to be a self-defeating business tactic by the manufacturer to coerce customers to purchase their more expensive printers.
Some receipt printers restrict paper size setting to receipt sizes only, providing no option for large paper sizes like A4. Because of this when a POS system is being used also to generate and print A4-size documents like delivery orders the user has to remember to select A4 for paper size when printing - otherwise the printout would be messed up compressed into a receipt layout. If however A4 or letter paper size is available and then selected in the receipt printer setting, then there is no need for the user to change from receipt to A4 paper size when printing such large documents. At the same time, the receipts will still print properly because the layout is already programmed into the POS software. Clearly some manufacturers of receipt printers have not recognized that their omission of large paper size options has resulted in inefficiency for the end-user especially when A4 documents are being issued regularly.
Another curiosity is that in one case a receipt printer failed to work properly but only intermittently when used from another networked computer. The instruction manual belabors on IP addresses, ethernet cabling and other technicality to get it to work. It turned out after much troubleshooting by the POS vendor that the problem lies in the lack of the use of a Windows password by the user at the POS station computer. However the fact that two other brands of receipt printers have no issue with network printing for the same situation just goes to show that not all receipt printers are created equal. Receipt printers ought to work properly like office printers for network printing.
Furthermore, not every receipt printer in the market provides the functionality to open the cash drawer on demand through a button press on the sale window and not only when a sale receipt is printed. There are cases when a business such as a grocery shop would prefer not to issue receipts to customers who may litter the receipts all over the place but still would need to open the cash drawer for a sale without having to continually use the cash drawer key - which would be laborious - but with a touch of a button on the sale window. Apparently some printer manufacturers simplistically assume the cash drawer is only to be opened when a sale receipt is printed out.
For one widely used brand of receipt printer upon installation of its driver the icons of other printers and devices on the Printers window were removed. It is not clear why this is done because the POS system is sometimes used to also issue and print other documents through an office printer or through the PDF writer. Therefore, there is a need for other devices be it an office printer, fax or PDF writer to be available.
Some users have been flabbergasted to find themselves in such a situation and do not know what had caused the disappearance of other printers and devices icons from Printers window. Only by uninstalling that particular receipt printer driver will the other printers and devices reappear in the Printers window. This renders that receipt printer unsuitable when other devices need to be used.
Note also that some receipt printers may restrict the maximum length of the receipt such that a long receipt may be split into two or more printouts. This length limitation is really unnecessary for a sale receipt.
Unlike office printers, there are probably hardly any receipt printers that are capable of printing in rich text format which would otherwise render receipt more interesting with text formatting and images. In fact some less expensive or newly introduced receipt printers are not even capable printing a company logo at the top of the receipt.
Nowadays more and more businesses are opting for thermal printers instead of dot matrix printers because for the about the same price range thermal printers are faster than dot matrix ones. This is unless one goes for the higher-end dot matrix printers which may cost twice the price. Apart from this dot matrix requires more maintenance in terms of ribbon changing and stocking.
Because of such aforesaid issues, the selection of a receipt printer requires some consideration and research. There should also be more collaboration among receipt printer manufacturers, POS vendors and end-users on such practical issues, so as to make receipt printers as user-friendly as office printers.
As regard to customer display, traditionally a pole display is used to show the description and price of an item being scanned and the subtotal. This is a limiting functionality from the point of customer service and marketing when compared to the use of a second LCD monitor to show the full receipt, a photo of the product being scanned and to display some advertising message, slideshow or even video. This should be the new option for end-users and one that is not very difficult for the POS developer to implement. Yet surprisingly at some large supermarkets one can still see pole displays being used.
For speedy scanning of items in high-traffic business such as a grocery shop or a supermarket, an omni-directional barcode scanner plus a handheld scanner are recommended. Buyers of such scanners should however beware that counterfeit omni-directional scanners of established brands are nowadays being sold over the Internet for as low as one third or less of the real price but these counterfeits lack the sensitivity and powerful performance of the genuine products.
QR code scanners should be seriously considered by businesses that create their own product and service codes. A spa outlet for instance may want to issue membership cards to its customers with a QR code that can store far more information than ordinary barcodes and also in some non-English languages as well. When the QR code is scanned by the QR scanner, member ID, name, address, member category, privileges and other information stored in it can be extracted for the service staff to view and use.
Because in many instances much processing and printing are involved, a POS system requires high computer resources in terms of CPU and RAM. Buying a more compact computer with lower specification to save space or a lower-end one to save money can result in computer crashes and failure to print receipts, thus resulting in lost sales as the customer queue stalls because of these problems. Very cheap POS terminals from some third world countries selling on the Internet also carry a catch because their motherboards look like old laptop motherboards and indeed they come with laptop power plugs to power them. Some such POS terminals arrive broken even before they are used.
Probably one of the best choice to run a POS system is to buy a latest off-the-shelf touchscreen computer locally - with hardware specifications clearly documented - and then to request for more RAM to be added to boost its performance. A small LCD monitor as a customer display can then be plugged into it and fixed in position. If a POS terminal is bundled with the POS system, it is necessary to look at the hardware specifications to ensure that they meet your needs which in some cases may include generating highly complex perpetual reports after business hours that may freeze up even fairly powerful computers for minutes while doing so.
Note that certain established POS vendors may supply their proprietary POS terminals that do not provide any USB ports for the user to save data. While this makes the POS system more secure from point of sale malware and viruses and thus from information theft like the stealing of credit card data stored in the system, it also represents a point of dissatisfaction for some end-users.
User Interface Design
Among more than a dozen windows in a mature POS system, the design of the sale window is the most important one for the user. It user interface is even more critical than those in other software like a billing application, a word editor or a spreadsheet program where speed is not so crucial for business performance.
For businesses at prime locations where real estate comes at a premium, it is common to see a queue of customers. The faster a sale is completed the shorter the queue and hence the more room available in a store for customers to shop around and employees to do their work. High-traffic operations like some grocery outlets and cafes must work fast at the sale counter. If there are popup windows here and there such as during payment processing even when it is paid in cash, it can slow the queue down significantly compared to using an ordinary cash register.
It can be very challenging for the developer to create a fast-operating let alone an appealing or cool interface for the sale window like a smartphone interface. As it is sometimes said by reviewers, the sale windows of POS systems often look rather ugly. One reason this is so is because of the numerous features required.
Although polishing up the sale windows in terms of colors used and improving the ergonomics is always possible, a cool and clean look may come at the expense of sacrificing numerous functions that are often wanted by end-users. Discounts of half a dozen kinds, service charge, surcharge, on-the-spot membership registration, hold receipt, easy split and merge checks and table service for F & B, split tender, manual entry of unrecorded item, comment entry, rounding adjustment for cash payment, layaway, switching to delivery order issuance, quick retrieval and refund of receipts and daily product summary, linking a sale person to a sale for subsequent calculation of his/her sale commission, all these count among such wanted capabilities. End-users never seem to run out of ingenuity when it comes to wanted features.
Not only are such features challenging to build into the system flawlessly, it is also difficult to fit all such features into the sale window neatly while ensuring that they are easy to use and with as few popup windows as possible. Every precious inch of the sale window is optimized for such use; yet for all the laborious work there is still a need to test out the user interface on different monitors set with different resolution. The two accompanying screenshots illustrate this point.
It may be surprising to realize that end-users can fuss even about having to click a left or right arrow on the sale window just to get to a particular category of products to display on item buttons. They may also critique that they have to enter the tender amount in a popup window thus slowing their work when it was quite straightforward previously when using an old cash register.
Aside from the need for a friendly user interface, POS systems with rich features though very useful are also not always easy to master and to use. If the user manuals of some such POS systems typically run into hundred of pages, this challenge is certainly something to be expected by the user. This challenge however can be made easier by narrowing the choice of a POS system by first examining how straightforward the often-used functions are on the sale window - which is the most frequently used window. It stands to reason that if one can get the hang of a rich-featured sale window in a matter of a few hours, that indicates the system can be shortlisted for a buying decision.
The advent of cloud computing has given birth to the possibility of POS systems to be deployed as software as a service, which can be accessed directly from the Internet, using any internet browser. Using the previous advances in the communication protocols for POS's control of hardware, cloud-based POS systems are independent from platform and operating system limitations. Cloud-based POS systems are also created to be compatible with a wide range of POS hardware and sometimes tablets such as Apple's IPad. Thus cloud-based POS also helped expand POS systems to mobile devices, such as tablet computers or smartphones. These devices can also act as barcode readers using a built-in camera and as payment terminals using built-in NFC technology or an external payment card reader. A number of POS companies built their software specifically to be cloud-based. For example, Epos Now's POS software has been cloud-based since it launched in 2011. Other businesses who launched pre-2000s have since adapted their software to adapt to evolving technology. Cybertill which is based in the UK, claims to be the world's first multichannel cloud-based POS system.
Cloud-based POS systems are different from traditional POS largely because user data, including sales and inventory, are not stored locally, but in a remote server. The POS system is also not run locally, so there is no installation required.
Depending on the pos vendor and the terms of contract, compared to traditional on-premises POS installation, the software is more likely to be continually updated by the developer with more useful features and better performance in terms of computer resources at the remote server and in terms of lesser bugs and errors.
Other advantages of a cloud-based POS are instant centralization of data (important especially to chain stores), ability to access data from anywhere there is internet connection, and lower start-up costs.
Cloud based POS requires an internet connection. For this reason it important to use a device which has its own 3G capability in case the device's primary internet goes down. First Data's Clover mini and mobile are examples of cloud based POS which have their own internet capability in the event that the primary internet fails.
In addition to being significantly less expensive than traditional legacy point of sale systems, the real strength of a cloud based point of sale system is that there are developers all over the world creating software applications for cloud based POS. Cloud based POS systems are often described as future proof as new applications are constantly being conceived and built.
A number of noted emerging cloud-based POS systems came on the scene less than a decade or even half a decade back. These systems are usually designed for restaurants, small and medium-sized retail operations with fairly simple sale processes as can be culled from POS system review sites like MerchantMaverick. It appears from such software reviews that enterprise-level cloud-based POS systems are currently lacking in the market.
By "enterprise-level" is usually meant that the inventory should be capable of handling a large numbers of records ranging from tens to few hundred thousands even. Such will be the case for grocery stores and supermarkets respectively. It can also mean that the system - software and cloud server resource wise - must be capable of generating reports such as analytics of sale against inventory for both a single and multiple outlets that are interlinked for administration by the headquarter of the business operation.
POS vendors of such cloud based systems should also have a strong contingency plan for the breakdown of their remote server such as represented by failover server support. However, sometimes even a major data center can fail completely, such as in a fire. On-premises installations are therefore sometimes seen alongside cloud-based implementation to preempt such incidents, especially for businesses with very high traffic. However the on-premises installations may not have the most up-to-date inventory and membership information.
For such contingency, a more innovative though highly complex approach for the developer is to have a trimmed down version of the POS system installed on the cashier computer at the outlet. On a daily basis the latest inventory and membership information from the remote server is automatically updated into the local database. Thus should the remote server fail, the cashier can switch over to the local sale window without disrupting sales. When the remote server is restored and the cashier switches over to the cloud system, the locally processed sale records are then automatically submitted to the remote system, thus maintaining the integrity of the remote database.
Although cloud-based POS systems save the end-user startup cost and technical challenges in maintaining an otherwise on-premises installation, there is a risk that should the cloud-based vendor close down it may result in more immediate termination of services for the end-user compared to the case of a traditional full on-premises POS system where it can still run without the vendor.
Another consideration is that a cloud-based POS system actually exposes business data to service providers - the hosting service company and the POS vendor which have access to both the application and database. The importance of securing critical business information such as supplier names, top selling items, customer relationship processes cannot be underestimated given that sometimes the few key success factors or trade secrets of a business are actually accessible through the POS system. This security and privacy concern is an ongoing issue in cloud computing.
The retail industry is one of the predominant users of POS terminals.
A retail point of sale system typically includes a cash register (which in recent times comprises a computer, monitor, cash drawer, receipt printer, customer display and a barcode scanner) and the majority of retail POS systems also include a debit/credit card reader. It can also include a conveyor belt, weight scale, integrated credit card processing system, a signature capture device and a customer pin pad device. While the system may include a keyboard and mouse, more and more POS monitors use touch-screen technology for ease of use, and a computer is built into the monitor chassis for what is referred to as an all-in-one unit. All-in-one POS units liberate counter space for the retailer. The POS system software can typically handle a myriad of customer based functions such as sales, returns, exchanges, layaways, gift cards, gift registries, customer loyalty programs, promotions, discounts and much more. POS software can also allow for functions such as pre-planned promotional sales, manufacturer coupon validation, foreign currency handling and multiple payment types.
The POS unit handles the sales to the consumer but it is only one part of the entire POS system used in a retail business. "Back-office" computers typically handle other functions of the POS system such as inventory control, purchasing, receiving and transferring of products to and from other locations. Other typical functions of a POS system are: store sales information for enabling customer returns, reporting purposes, sales trends and cost/price/profit analysis. Customer information may be stored for receivables management, marketing purposes and specific buying analysis. Many retail POS systems include an accounting interface that "feeds" sales and cost of goods information to independent accounting applications.
A multiple point of sale system used by big retailers like supermarkets and department stores has a far more demanding database and software architecture than that of a single station seen in small retail outlets. A supermarket with high traffic cannot afford a systemic failure, hence each point of sale station should not only be very robust both in terms of software, database and hardware specifications but also designed in such a way as to prevent causing a systemic failure - such as may happen through the use of a single central database for operations.
At the same time updating between multiple stations and the backend administrative computer should be capable of being efficiently performed, so that on one hand either at the start of the day or at any time each station will have the latest inventory to process all items for sale, while on the other hand at the end of the day the backend administrative computer can be updated in terms of all sale records.
This gets even more complicated when there is a membership system requiring real-time two-way updating of membership points between sale stations and the backend administrative computer.
Retail operations such as hardware stores (lumber yards), electronic stores and so-called multifaceted superstores need specialized additional features compared to other stores. POS software in these cases handles special orders, purchase orders, repair orders, service and rental programs as well as typical point of sale functions. Rugged hardware is required for point of sale systems used in outdoor environments. Wireless devices, battery powered devices, all-in-one units, and Internet-ready machines are typical in this industry.
Recently new applications have been introduced, enabling POS transactions to be conducted using mobile phones and tablets. According to a recent study, mobile POS (mPOS) terminals are expected to replace the contemporary payment techniques because of various features including mobility, upfront low cost investment and better user experience. Convenience of conducting remote financial transactions is expected to augment the demand from small and medium businesses for mPOS.
In the mid-2000s, the blind community in the United States engaged in structured negotiations to ensure that retail point of sale devices had tactile keypads. Without keys that can be felt, a blind person cannot independently enter her or his PIN. In the mid-2000s retailers began using "flat screen" or "signature capture" devices that eliminated tactile keypads. Blind people were forced to share their confidential PIN with store clerks in order to use their debit and other PIN-based cards. The blind community reached agreement with Walmart, Target, CVS and eight other retailers that required real keys so blind people could use the devices.
Early stores typically kept merchandise behind a counter; staff would fetch items for customers to prevent the opportunity for theft, and sales would be made at the same counter. Self-service grocery stores like Piggly Wiggly in 1916 allowed customers to fetch their own items, and pass the point of sale on the way to the exit. Many stores have a number of cash registers for checkout, possibly now including self checkout. This requires customers to guess which line will move the fastest, if they want to minimize their wait times; they are often frustrated to be wrong or be stuck behind another customer who encounters a problem or who takes a long time to check out. Some stores use a single, much longer but faster-moving line, that is served by multiple registers, which produces the same average wait time, but reduces the frustration and variance in wait time from person to person. Regardless of the configuration, checkout lines usually pass by impulse buy items to grab the attention of otherwise idle customers.
Hospitality point of sale systems are computerized systems incorporating registers, computers and peripheral equipment, usually on a computer network to be used in restaurants, hair salons or hotels. Like other point of sale systems, these systems keep track of sales, labor and payroll, and can generate records used in accounting and bookkeeping. They may be accessed remotely by restaurant corporate offices, troubleshooters and other authorized parties.
Point of sale systems have revolutionized the restaurant industry, particularly in the fast food sector. In the most recent technologies, registers are computers, sometimes with touch screens like iPad POS. The registers connect to a server, often referred to as a "store controller" or a "central control unit". Printers and monitors are also found on the network. Additionally, remote servers can connect to store networks and monitor sales and other store data.
Typical restaurant POS software is able to create and print guest checks, print orders to kitchens and bars for preparation, process credit cards and other payment cards, and run reports. In addition, some systems implement wireless pagers and electronic signature-capture devices.
In the fast food industry, displays may be at the front counter, or configured for drive-through or walk-through cashiering and order taking. Front counter registers allow taking and serving orders at the same terminal, while drive-through registers allow orders to be taken at one or more drive-through windows, to be cashiered and served at another. In addition to registers, drive-through and kitchen displays are used to view orders. Once orders appear they may be deleted or recalled by the touch interface or by bump bars. Drive-through systems are often enhanced by the use of drive-through wireless (or headset) intercoms. The efficiency of such systems has decreased service times and increased efficiency of orders.
Another innovation in technology for the restaurant industry is wireless POS. Many restaurants with high volume use wireless handheld POS to collect orders which are sent to a server. The server sends required information to the kitchen in real time. Wireless systems consist of drive-through microphones and speakers (often one speaker will serve both purposes), which are wired to a "base station" or "center module." This, in turn, will broadcast to headsets. Headsets may be an all-in-one headset or one connected to a belt pack.
In hotels, POS software allows for transfer of meal charges from dining room to guest room with a button or two. It may also need to be integrated with property management software.
Newer, more sophisticated systems are getting away from the central database "file server" type system and going to what is called a "cluster database". This eliminates any crashing or system downtime that can be associated with the back office file server. This technology allows 100% of the information to not only be stored, but also pulled from the local terminal, thus eliminating the need to rely on a separate server for the system to operate.
Tablet POS systems popular for retail solutions are now available for the restaurant industry. Initially these systems were not sophisticated and many of the early systems did not support a remote printer in the kitchen. Tablet systems today are being used in all types of restaurants including table service operations. Most tablet systems upload all information to the Internet so managers and owners can view reports from anywhere with a password and Internet connection. Smartphone Internet access has made alerts and reports from the POS very accessible. Tablets have helped create the Mobile POS system, and Mobile POS applications also include payments, loyalty, online ordering, table side ordering by staff and table top ordering by customers. Regarding the payments, mobile POS can accept all kinds of payment methods from contactless cards, EMV chip-enabled cards, and mobile NFC enabled cards. Mobile POS (AKA mPOS) is growing quickly with new developers entering the market almost on a daily basis. An updated list of developers is maintained and available for downloading at no charge.
With the proliferation of low-priced touchscreen tablet computers, more and more restaurants have implemented self-ordering through tablet POS placed permanently on every table. Customers can browse through the menu on the tablet and place their orders which are then sent to the kitchen. This apparently improves service and saves manpower on the part of the restaurant. However this depends on how intelligently the system has been programmed to be.
As a case in point, some self-ordering systems not requiring staff assistance may not properly recognize a subsequent order from the same customer at a table. As a result, the customer is left waiting and wondering why his second order of food and drink is not being served.
Another example of how intelligent the system can be, is whether an order that has been placed but not yet been processed by the kitchen can be modified by the customer through the tablet POS. For such an unprocessed order the customer should be given the option to easily retrieve his order and modify it on the tablet POS. But when his order is being processed this function should then be automatically disabled.
Self-ordering systems are not always free completely from intervention by the staff and for some good reasons. For example, some restaurants require that items selected by the customers be attended to and can only be placed by the waiter who has the password required to do so. This prevents fake orders - such as may be entered by playful kids - and subsequent dispute on the items ordered. If alcoholic drinks are ordered, it also becomes necessary for the waiter to first verify the age of the customer before sending the order.
The technical specifications for implementing such self-ordering system are more demanding than a single cashier-controlled POS station. On the software and hardware side each tablet on a customer table has to be networked to the cashier POS station and the kitchen computer so that both are continually updated on orders placed. The common database that serves this network must also be capable of serving many concurrent users - cashier, customers, kitchen and perhaps even a drink bar.
It is therefore to be noted by developers that some databases like popularly used Ms Access may have the specifications that it is capable of usage by multiple concurrent users. However under the stress of a POS system, they can fail miserably resulting in constant errors and corruption of data.
POS systems are often designed for a variety of clients, and can be programmed by the end users to suit their needs. Some large clients write their own specifications for vendors to implement. In some cases, POS systems are sold and supported by third-party distributors, while in other cases they are sold and supported directly by the vendor.
The selection of a restaurant POS system is critical to the restaurant's daily operation and is a major investment that the restaurant's management and staff must live with for many years. The restaurant POS system interfaces with all phases of the restaurant operation and with everyone that is involved with the restaurant including guests, suppliers, employees, managers and owners. The selection of a restaurant POS system is a complex process that should be undertaken by the restaurant owner and not delegated to an employee. The purchase process can be summarized into three steps: Design, Compare and Negotiate. The Design step requires research to determine which restaurant POS features are needed for the restaurant operation. With this information the restaurant owner or manager can Compare various restaurant POS solutions to determine which POS systems meet their requirements. The final step is to Negotiate the price, payment terms, included training, initial warranty and ongoing support costs.
POS systems record sales for business and tax purposes. Illegal software dubbed "zappers" can be used on POS devices to falsify these records with a view to evading the payment of taxes.
Despite the more advanced technology of a POS system as compared to a simple cash register, the POS system is still as vulnerable to employee theft through the sale window. A dishonest cashier at a retail outlet can collude with a friend who pretends to be just another customer. During checkout the cashier can bypass scanning certain items or enter a lower quantity for some items thus profiting thereby from the "free" goods.
The ability of a POS system to void a closed sale receipt for refund purpose without needing a password from an authorized superior also represents a security loophole. Even a function to issue a receipt with a negative amount which can be useful under certain circumstances, can be exploited by a cashier to easily lift money from the cash drawer.
In order to prevent such employee theft, it is crucial for a POS system to provide an admin window for the boss or administrator to generate and inspect a daily list of sale receipts, especially pertaining to the frequency of cancelled receipts before completion, refunded receipts and negative receipts. This is one effective way to alert the company to any suspicious activity - such as a high number of cancelled sales by a certain cashier - that may be going on and to take monitoring action.
To further deter employee theft the sale counter should also be equipped with a closed-circuit television camera pointed at the POS system to monitor and record all the activities.
At the backend, price and other changes like discounts to inventory items through the administration module should also be secured with passwords provided only to trusted administrators. Any changes made should also be logged and capable of being subsequently retrieved for inspection.
The sale records and inventory are highly important to the business because they provide very useful information to the company in terms of customer preferences, customer membership particulars, what are the top selling products, who are the vendors and what margins the company is getting from them, the company monthly total revenue and cost, just to name some.
It is therefore important that reports on these matters generated at the administrative backend be restricted only to trusted personnel. The database from which these reports are generated should also be secured via passwords or via encryption of data stored in the database so as to prevent them from being copied or tampered with.
Despite all such precautions and more, the POS system can never be entirely water tight in security from internal misuse if a clever but dishonest employee knows how to exploit many of its otherwise useful capabilities.
News reports on POS system hacking show that hackers are more interested in stealing credit card information than anything else. The ease and advantage offered by the ability of a POS system to integrate credit card processing thus has a downside. In 2011, hackers were able to steal credit card data from 80,000 customers because Subway's security and POS configuration standards for PCI Compliance - which governs credit card and debit card payment systems security - were "directly and blatantly disregarded" by Subway franchisees.
In June 2016, several hundred of Wendy's fast food restaurants had their POS systems hacked by an illegally installed malware. The report goes on to say that "the number of franchise restaurants impacted by these cybersecurity attacks is now expected to be considerably higher than the 300 restaurants already implicated" and that the "hackers made hundreds of thousands of fraudulent purchases on credit and debit cards issued by various financial institutions after breaching Wendy's computer systems late last year".
Again this exploit by hackers could only be made possible because payment cards were processed through the POS system allowing the malware to either intercept card data during processing or steal and transmit unencrypted card data that is stored in the system database.
In some countries credit and debit cards are only processed via payment terminals. Thus one may see quite a number of such terminals for different cards cluttering up a sale counter. This inconvenience is however offset by the fact that credit and debit card data is far less vulnerable to hackers, unlike when payment cards are processed through the POS system where security is contingent upon the actions taken by end-users and developers.
With the launch of mobile payment particularly Android Pay and Apple Pay both in 2015, it is expected that because of its greater convenience coupled with good security features, this would eventually eclipse other types of payment services - including the use of payment terminals. However, for mobile payment to go fully mainstream, mobile devices like smartphones that are NFC-enabled must first become universal. This would be a matter of several years from the time of this writing (2016) as more and more models of new smartphones are expected to become NFC-enabled for such a purpose. For instance iPhone 6 is fully NFC-enabled for mobile payment while iPhone 5 and older models are not. The aforesaid disastrous security risks connected with processing payment card usage through a POS system would then be greatly diminished.
- ISO 8583
- Point of sale companies category
- Point of sale display
- Payment terminal
- Self checkout
- Standard Interchange Language
- Back-office Software
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