
The point of sale (POS) or point of purchase (POP) is the time and place at which a retail transaction is completed. At the point of sale, the
merchant
A merchant is a person who trades in commodities produced by other people, especially one who trades with foreign countries. Historically, a merchant is anyone who is involved in business or trade. Merchants have operated for as long as indust ...
calculates the amount owed by the
customer
In sales, commerce, and economics, a customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product or an idea - obtained from a seller, vendor, or supplier via a financial transaction or exchange for ...
, indicates that amount, may prepare an
invoice
An invoice, bill or tab is a commerce, commercial document issued by a sales, seller to a buyer relating to a sale transaction and indicating the product (business), products, quantities, and agreed-upon prices for products or Service (economic ...
for the customer (which may be a cash register printout), and indicates 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
A receipt (also known as a packing list, packing slip, packaging slip, (delivery) docket, shipping list, delivery list, bill of the parcel, manifest, or customer receipt) is a document acknowledging that a person has received money or propert ...
for the transaction, which is usually printed but can also be dispensed with or sent electronically.
To calculate the amount owed by a customer, the merchant may use various devices such as
weighing scale
A scale or balance is a device used to measure weight or mass. These are also known as mass scales, weight scales, mass balances, and weight balances.
The traditional scale consists of two plates or bowls suspended at equal distances from a ...
s,
barcode scanners, and
cash registers (or the more advanced "POS cash registers", which are sometimes also called "POS systems"). To make a payment,
payment terminal
A payment terminal, also known as a point of sale (POS) terminal, credit card terminal, EFTPOS terminal (or by the older term as PDQ terminal which stands for "Process Data Quickly"), is a device which interfaces with payment cards to make electro ...
s, touch screens, and 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. POS terminal software may also include features for additional functionality, such as
inventory management
Field inventory management commonly known as inventory management is the function of understanding the stock mix of a company and the different demands on that stock. The demands are influenced by both external and internal factors and are balan ...
,
CRM, financials, or
warehousing.
Businesses are increasingly adopting POS systems, and one of the most obvious and compelling reasons is that a POS system eliminates the need for
price tag
A price tag is a label declaring the price of an item for sale. It may be a sticker or attached by twist tie or other means.
Some jurisdictions require items (possibly exceptions for bulk good and produce) to be individually marked with the pr ...
s. Selling prices are linked to the
product code of an item when adding stock, so the cashier merely scans 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 the ability to implement various types of discounts, a loyalty scheme for customers, and more efficient stock control. These features are typical of almost all modern ePOS systems.
Terminology
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 a more appropriate term, since this software is not just for 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, hide 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.
The basic, fundamental definition of a POS System, is a system which allows the processing and recording of transactions between a company and their consumers, at the time in which goods and/or services are purchased.
History
Software before the 1990s

Early electronic
cash registers (ECR) were controlled with proprietary software and were limited in function and communication 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
Peer-to-peer (P2P) computing or networking is a distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the network. They are said to form a peer-to-peer n ...
communications,
local area network
A local area network (LAN) is a computer network that interconnects computers within a limited area such as a residence, school, laboratory, university campus or office building. By contrast, a wide area network (WAN) not only covers a larger ...
(LAN) simultaneous backup, and remote initialization. By mid-1974, it was installed in
Pathmark stores in New Jersey and
Dillard's
Dillard's, Inc. is an upscale American department store chain with approximately 282 stores in 29 states and headquartered in Little Rock, Arkansas. Currently, the largest number of stores are located in Texas with 57 and Florida with 42. The ...
department stores.
One of the first microprocessor-controlled cash register systems was built by William Brobeck and Associates in 1974, for
McDonald's Restaurants
McDonald's Corporation is an American multinational fast food chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hamburger ...
. It used the
Intel 8008, an early microprocessor (forerunner to the
Intel 8088 processor used in the original
IBM Personal Computer
The IBM Personal Computer (model 5150, commonly known as the IBM PC) is the first microcomputer released in the IBM PC model line and the basis for the IBM PC compatible de facto standard. Released on August 12, 1981, it was created by a team ...
). 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
rillbutton, a second or third order could be worked on while the first transaction was in progress. When the customer was ready to pay, the
otalbutton 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,
Eugene "Gene" Mosher introduced the first graphical point of sale software featuring a
touchscreen
A touchscreen or touch screen is the assembly of both an input ('touch panel') and output ('display') device. The touch panel is normally layered on the top of an electronic visual display of an information processing system. The display is often ...
interface under the ViewTouch trademark on the 16-bit
Atari 520ST
The Atari ST is a line of personal computers from Atari Corporation and the successor to the Atari 8-bit family. The initial model, the Atari 520ST, had limited release in April–June 1985 and was widely available in July. It was the first per ...
color computer. It featured a color
touchscreen
A touchscreen or touch screen is the assembly of both an input ('touch panel') and output ('display') device. The touch panel is normally layered on the top of an electronic visual display of an information processing system. The display is often ...
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 US and Canada.
In 1986,
IBM introduced its
468x series of POS equipment based on
Digital Research
Digital Research, Inc. (DR or DRI) was a company created by Gary Kildall to market and develop his CP/M operating system and related 8-bit, 16-bit and 32-bit systems like MP/M, Concurrent DOS, FlexOS, Multiuser DOS, DOS Plus, DR DOS and ...
's
Concurrent DOS 286
Multiuser DOS is a real-time multi-user multi-tasking operating system for IBM PC-compatible microcomputers.
An evolution of the older Concurrent CP/M-86, Concurrent DOS and Concurrent DOS 386 operating systems, it was originally developed by ...
and
FlexOS 1.xx, a modular real-time multi-tasking multi-user operating system.
Modern software (post-1990s)
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 1993, IBM adopted
FlexOS 2.32
FlexOS is a discontinued modular real-time multiuser multitasking operating system (RTOS) designed for computer-integrated manufacturing, laboratory, retail and financial markets. Developed by Digital Research's Flexible Automation Business U ...
as the basis of their
IBM 4690 OS in their 469x series of POS terminals. This was developed up to 2014 when it was sold to
Toshiba
, commonly known as Toshiba and stylized as TOSHIBA, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. Its diversified products and services include power, industrial and social infrastructure system ...
, who continued to support it up to at least 2017.
As far as computers are concerned, off-the-shelf versions are usually newer, hence more powerful than proprietary POS terminals. Custom modifications are added as needed. Other products, like touchscreen tablets and laptops, are readily available in the market, and they are more portable than traditional POS terminals. The only advantage of the latter is that they are typically built to withstand rough handling and spillages, a benefit for food & beverage 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 wholly on the developer but at times on the compatibility between a database and an OS version. For example, the widely used
Microsoft Access
Microsoft Access is a database management system (DBMS) from Microsoft that combines the relational Access Database Engine (ACE) with a graphical user interface and software-development tools (not to be confused with the old Microsoft Access w ...
database system had a compatibility issue when Windows XP machines were updated to a newer version of Windows. Microsoft offered no immediate solution. Some businesses were severely disrupted in the process, and many downgraded back to Windows XP for a quick resolution. Other companies utilized community support, for a registry tweak solution has been found for this.
POS systems are one of the most complex software systems available because of the features that are required by different end users. Many POS systems are software suites that include sale, inventory, stock counting, vendor ordering, customer loyalty and reporting modules. Sometimes purchase ordering, stock transferring, quotation issuing, barcode creating, bookkeeping or even accounting capabilities are included. Each of these modules is interlinked if they are to serve their practical purpose and 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 and points accumulated. Comprehensive analysis performed by a POS machine may need to process several qualities about a single product, like selling price, balance, average cost, quantity sold, description and department. Highly complex programming is involved (and possibly considerable computer resources) to generate such extensive analyses.
POS systems are designed not only to serve the retail, wholesale and hospitality industries as historically is the case. Currently 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.
Different customers have different expectations within each trade. The reporting functionality alone is subject to so many demands, especially from those in the retail/wholesale industry. To cite special requirements, some business's 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. A few companies expect the POS system to behave like a full-fledged
inventory management
Field inventory management commonly known as inventory management is the function of understanding the stock mix of a company and the different demands on that stock. The demands are influenced by both external and internal factors and are balan ...
system, including the ability to provide FIFO (First In First Out) and LIFO (Last In First Out), reports of their goods for
accounting
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...
and tax purposes.
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 creating item buttons, various discounts, adding a service charge, holding of receipts, queuing, table service as well as takeaways, merging and splitting of a receipt. These capabilities may 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.
A POS system can be made to serve different purposes to different end users depending on their business processes. Often an off-the-shelf POS system is inadequate for customers. Some customization is required, and this is why a POS system can become very complex. The complexity of a mature POS system extends to remote networking or interlinking between remote outlets and the HQ such that updating both ways is possible. Some POS systems offer the linking of web-based orders to their sale window. Even when local networking is only required (as in the case of a high-traffic supermarket), there is the ever-present challenge for the developer to keep most if not all of their POS stations running. 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 special consideration for the performance capability and usage of databases. Due to such complexity, bugs and errors encountered in POS systems are frequent.
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 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 cannot be compromised. This places much stress on individual enterprise databases if there are just several tens of thousands of sale records in the database. Enterprise database Microsoft SQL Server, for example, has been known to freeze up (including the OS) entirely for many minutes under such conditions showing a "Timeout Expired" error message. Even a lighter database like Microsoft 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
In computer programming and software development, debugging is the process of finding and resolving '' bugs'' (defects or problems that prevent correct operation) within computer programs, software, or systems.
Debugging tactics can involve in ...
and improvisation of solutions to preempt failure of a database before commercial implementation complicates the development.
POS system accuracy is demanding, given that monetary transactions are involved continuously not only via the sale window but also at the back end through the receiving and inputting of goods into the inventory. Calculations required are not always straightforward. There may be many discounts and deals that are unique to specific products, and the POS machine must quickly process the differences and the effect on pricing. There is much complexity in the programming of such operations, especially when no error in calculation can be allowed.
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 is 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. Unless one is a developer, it is unrealistic to expect the reviewer to know all the aspects of a POS system. For instance, a POS system might work smoothly on a test database during the 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.
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 were
OPOS OPOS, full name OLE for Retail POS, a platform specific implementation of UnifiedPOS, is a point of sale device standard for Microsoft Windows operating systems that was initiated by Microsoft, NCR, Epson, and Fujitsu-ICL and is managed by the A ...
and
JavaPOS JavaPOS (short for Java for Point of Sale Devices), is a standard for interfacing point of sale (POS) software, written in Java (programming language), Java, with the specialized hardware peripherals typically used to create a point-of-sale system. ...
, both of which conform to the
UnifiedPOS UnifiedPOS or UPOS is a world wide vendor- and retailer-driven Open Standard's initiative under the National Retail Federation, Association of Retail Technology Standards (NRF-ARTS) to provide vendor-neutral software application interfaces (APIs) fo ...
standard led by
The National Retail Foundation.
OPOS (
OLE for POS) was the first commonly adopted standard and was created by
Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washing ...
,
NCR Corporation
NCR Corporation, previously known as National Cash Register, is an American software, consulting and technology company providing several professional services and electronic products. It manufactures self-service kiosks, point-of-sale termin ...
,
Epson and
Fujitsu-ICL. OPOS is a
COM
Com or COM may refer to:
Computing
* COM (hardware interface), a serial port interface on IBM PC-compatible computers
* COM file, or .com file, short for "command", a file extension for an executable file in MS-DOS
* .com, an Internet top-level d ...
-based interface compatible with all COM-enabled
programming language
A programming language is a system of notation for writing computer programs. Most programming languages are text-based formal languages, but they may also be graphical. They are a kind of computer language.
The description of a programming ...
s for
Microsoft Windows
Windows is a group of several proprietary graphical operating system families developed and marketed by Microsoft. Each family caters to a certain sector of the computing industry. For example, Windows NT for consumers, Windows Server for serv ...
. OPOS was first released in 1996. JavaPOS was developed by
Sun Microsystems
Sun Microsystems, Inc. (Sun for short) was an American technology company that sold computers, computer components, software, and information technology services and created the Java programming language, the Solaris operating system, ZFS, the ...
,
IBM, and
NCR Corporation
NCR Corporation, previously known as National Cash Register, is an American software, consulting and technology company providing several professional services and electronic products. It manufactures self-service kiosks, point-of-sale termin ...
in 1997 and first released in 1999. JavaPOS is for
Java
Java (; id, Jawa, ; jv, ꦗꦮ; su, ) is one of the Greater Sunda Islands in Indonesia. It is bordered by the Indian Ocean to the south and the Java Sea to the north. With a population of 151.6 million people, Java is the world's List ...
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
* AEDEX
* ICD 2002
* Ultimate
* CD 5220
* DSP-800
* ADM 787/788
* HP
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 to work with many different brands of POS terminals and computers.
User interface design
The design of the sale window is the most important one for the user. This
user interface
In the industrial design field of human–computer interaction, a user interface (UI) is the space where interactions between humans and machines occur. The goal of this interaction is to allow effective operation and control of the machine f ...
is highly critical when compared to those in other software packages such as word editors or spreadsheet programs where the speed of navigation is not so crucial for business performance.
For businesses at prime locations where real estate is at a premium, it can be common to see a queue of customers. The faster a sale is completed the shorter the queue time which improves customer satisfaction, the less space it takes, which benefits shoppers and staff. High-traffic operations such as grocery outlets and cafes need to process sales quickly at the sales counter so the UI flow is often designed with as few popups or other interruptions to ensure the operator isn't distracted and the transaction can be processed as quickly as possible.
Although improving the
ergonomics is possible, a clean, fast-paced look may come at the expense of sacrificing functions that are often wanted by end-users such as discounts, access to commission earned screens, membership and loyalty schemes can involve looking at a different function of the POS to ensure the point of sale screen contains only what a cashier needs at their disposal to serve customers.
Cloud-based (post-2000s)
The advent of
cloud computing
Cloud computing is the on-demand availability of computer system resources, especially data storage ( cloud storage) and computing power, without direct active management by the user. Large clouds often have functions distributed over mul ...
has given birth to the possibility of electronic point of sale (EPOS) systems to be deployed as
software as a service
Software as a service (SaaS ) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. SaaS is also known as "on-demand software" and Web-based/Web-hosted software.
SaaS is con ...
, which can be accessed directly from the
Internet
The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, pub ...
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. EPOS systems based in the cloud (most small-business POS today) are generally subscription-based, which includes ongoing customer support.
Compared to regular
cash registers (which tend to be significantly cheaper but only process sales and prints receipts), POS systems include automatic updating of the inventory library stock levels when selling products, real-time reports accessible from a remote computer, staff timesheets and a customer library with loyalty features.
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
The iPad is a brand of iOS and iPadOS-based tablet computers that are developed by Apple Inc. The iPad was conceived before the related iPhone but the iPhone was developed and released first. Speculation about the development, operating s ...
. Thus cloud-based POS also helped expand POS systems to
mobile device
A mobile device (or handheld computer) is a computer small enough to hold and operate in the hand. Mobile devices typically have a flat LCD or OLED screen, a touchscreen interface, and digital or physical buttons. They may also have a physical ...
s, such as
tablet computer
A tablet computer, commonly shortened to tablet, is a mobile device, typically with a mobile operating system and touchscreen display processing circuitry, and a rechargeable battery in a single, thin and flat package. Tablets, being comput ...
s or
smartphone
A smartphone is a portable computer device that combines mobile telephone and computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities and extensive mobile operating systems, whic ...
s.
These devices can also act as
barcode readers using a built-in camera and as
payment terminal
A payment terminal, also known as a point of sale (POS) terminal, credit card terminal, EFTPOS terminal (or by the older term as PDQ terminal which stands for "Process Data Quickly"), is a device which interfaces with payment cards to make electro ...
s using built-in
NFC
NFC may refer to:
Psychology
* Need for cognition, in psychology
* Need for closure, social psychological term
Sports
* NFC Championship Game, the National Football Conference Championship Game
* NCAA Football Championship (Philippines)
* Nati ...
technology or an external payment card reader. A number of POS companies built their software specifically to be cloud-based. Other businesses who launched pre-2000s have since adapted their software to evolving technology.
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 fewer 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.
[The Online POS System Revolution](_blank)
via Small Business Bonfire
Cloud based POS requires an internet connection. For this reason it important to use a device with
3G connectivity in case the device's primary internet goes down. 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 many developers 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. It appears from such software reviews that enterprise-level cloud-based POS systems are currently lacking in the market. "Enterprise-level" here means that the inventory should be capable of handling a large number of records, such as required by grocery stores and supermarkets. It can also mean that the system software and cloud server 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 headquarters 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 fail-over server support. Sometimes 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 high traffic. 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