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How Are "Point of Sale" (POS) Systems Different From a Cash Register?

Point of sale (POS) is a technology for financial transactions at retail establishments, for example, at a supermarket. A POS system includes the hardware and software used for checkouts, the computer-age equivalent of a cash register. The most significant difference between a POS system and a cash register is communication. When a customer processes a transaction at the supermarket, automated response includes an update of inventory. If necessary, a reorder to replace the item is processed, the tax record is maintained, and the store management system is informed.

The main component of a point of sale system is the computer. It is wise to use the POS computer for only sales transactions, reports, and inventory control, and isolate use of POS computers from general purpose activities. Use a separate computer for surfing the web.

Two standardized software systems in common use for POS are JavaPOS and OPOS. These standards conform to the UnifiedPOS that is advocated by the National Retail Foundation. JavaPOS was designed by Sun Microsystems, IBM, and NCR, and is a JAVA compatible standard. OPOS (OLE for POS) is a standard followed by Microsoft, NCR, Epson, and Fujitsu. OPOS is a Windows compatible standard (COM). Celerant, Intuit, MICROS Retail, Microsoft, NCR, Oracle, and SAP are the most popular POS software solution providers.

Security is an issue for POS systems. Poorly implemented systems are one of the leading causes of credit card data compromises. A well designed system will encrypt wireless transmissions, and will not retain full magnetic stripe, credit card validation code, or PIN numbers. All sensitive traffic over public networks should be encrypted.

There are several subsets of POS systems, each of which is worthy of further study. Industry specific POS packages are available for auto repair shops, beauty salons, pharmacists, dry cleaners and more.

The restaurant industry is well served by many different POS systems. Kitchen monitors are used to view orders, and manage the operation. Systems are often enhanced with wireless systems which enable communications. This allows servers to send customer orders to the kitchen from any place within the restaurant and can be used to make credit card transactions more secure because the customer's credit card is never out of their sight.

A new trend in POS, especially at supermarkets, is self-checkout. In a self-checkout system, the customer scans the barcodes on the individual items. In the case of produce, a scale is employed, and the customer enters a code from a menu. Usually some kind of validation is utilized to compare the items scanned with the weight of the product. Payment on these systems is similar to using an ATM machine. The benefits of this system include reduced overhead for staffing, and also from reduced time that the customer must wait for checkout.

RFID (radio frequency identification) is a technology that shows promise for self-checkout. With this technology, the POS process could eliminate the reading of bar-codes. Since RFID does require line of sight (LOS), the customer could bag their purchases as they make their choices, and not need to remove their items from the bag in order for an inventory of purchases to be compiled. Integration of RFID readers into POS systems is not complicated. The interface is comparable to a bar-code reader.

Retail POS systems cost between $1,500 and $20,000. Options include bar-code scanners, credit card readers, and receipt/invoice printers. POS systems often are offered with integrated accounting modules and inventory control systems. Reports can be generated to include sales, costs, and profits by item, salesperson, category, or time-period.