What is Point of sale (POS) and how does it work

A POS system combines hardware and software to process digital payments. A card-accepting machine is part of the hardware. Other payment methods, processing, and value-added services are handled by software.

POS terminals have become central to retail business operations. The first POS terminal accepted card payments. POS devices were upgraded to accept mobile wallets and other contactless payments. ePOS is payment acceptance software that runs on a smartphone and can accept digital payments without a card swipe machine.

Modern POS systems accept all forms of payment, including:

• Cash/check.
• Magnetic-strip debit, credit, and prepaid cards.
• Chip-enabled debit, credit, and prepaid cards.
• Mobile wallet, UPI, or QR code contactless payments (QR code).

Ways in which a POS Terminal Works 

POS terminals accept card payments in three ways:

• Swipe: magnetic-stripe cards start the transaction.
• Insert: Microchip cards stay in the POS machine during the transaction.
• EMV chip cards can use NFC for contactless payments by tapping the POS terminal.

Encrypted data is sent over radio waves to make transactions fast and secure. This eliminates the need to swipe, insert, or hand over the card.

When a payment is initiated at a POS terminal:

• The machine connects to the merchant's acquirer bank for banking and card services.
• Customer authentication is required.
• Now, the card-issuing bank is contacted through payment networks (like Visa or Mastercard).
• The card-issuing bank verifies the transaction and approves it.
• This shows the POS terminal and software that the transaction was successful.
• A receipt is generated.

Types of POS

POS terminals come in different shapes and sizes and allow businesses to accept payments. Small, sleek card acceptance devices for Android smart POS are available. Each digital POS system has its own features and uses. Examples:

GPRS/PSTN POS

A GPRS POS terminal is among the oldest POSs. Originally, it was wired and connected to a phone line. Data connectivity now uses GPRS SIM cards.

• Bulky but affordable POS devices.
• Small screens accept card payments.
• These POS terminals are for businesses that don't want to invest in a payment experience, just basic digital payment acceptance. A billing counter, for example.

mPOS

 GPRS POS was bulky and immobile. POS devices needed to be sleek, wireless, and portable.

• mPOS is a sleeker, smarter, wireless POS that can accept digital payments anywhere.
• It's smartphone and app-based.
• It has GPRS, 3G, wi-fi, Bluetooth, USB, and NFC cards.
• It has a low cost of ownership and is a good option for small and medium-sized retail businesses that want to focus on anywhere payment acceptance, including at the counter, customer's doorstep, or a kiosk.
• It's best for collection and delivery merchants.

Android POS

Due to increased customer experience pressure, Android POS was created to provide a seamless payment experience.

• A wireless Android POS terminal runs Android.
• It's easier to use because of its intuitive interface and large screen.
• The device can run multiple apps, so a separate phone isn't needed for delivery or payment apps.
• The Android POS device has a barcode scanner, receipt printer, and card swipe, insert, or tap. The device supports 4G, 3G, and Wi-Fi connectivity.
• Android POS has many features, so it's more expensive.
• It's best for modern retail stores, large restaurants, government agencies, and other customer-focused businesses.

ePOS (Virtual POS) 

Payment service providers are looking for low-cost ways for stores to accept payments without having to buy new equipment. POS devices are evolving into ePOS (electronic POS).

• An app turns a smartphone into an ePOS device.
• This ePOS allows the merchant to accept UPI, mobile wallets, and SMS pay directly from his smartphone and record or reconcile the same.
• Micro merchants, small businesses, and new age entrepreneurs who want low-cost payment acceptance without a device should use ePOS.

As ePOS demand grows, Pin on Glass, Pin on COTS, and Tap on Phone will revolutionize the payment industry.

• Pin on Glass allows card payments on a touchscreen instead of a keypad.
• Pin on COTS connects a small PCI-certified card reader to a smartphone to enable pin acceptance.
• NFC-enabled cards will also support "Tap on Phone," where smartphones will accept card payments contactlessly without swiping.

Peripheral Services Around POS 

Payment providers offer peripheral solutions to expand POS capabilities. These can turn a POS into a payment solution. These improve business efficiency and go beyond payment acceptance. Examples:

• Payment options
• Integration
• Auto-reconciliation
• Dashboards
• Analytics, insights
• Cost-cutting measures
• Rewarding loyalty

Digital POS benefits

Let's look at how digital POS solutions help businesses:

1. Customer Satisfaction

Merchants can improve the customer experience by accepting a customer's preferred payment method anywhere.

Automated and interconnected systems reduce payment hassles.

By skipping checkout lines and fast-tracking transactions, customers can have a better experience. Self-checkout can be offered to customers buying one or two items.

2. Growth aid

Every business needs a competitive edge to grow today. POS can make or break a sale.

A digital POS with a technology-backed payment platform that accepts all payments and offers value-added services allows merchants to focus on their core business without worrying about payments or the customer experience.

A robust POS designed for your business gives you the tools to scale.

3. Customised POS

Modern POS solutions integrate. The device or solution connects to ERP, billing, and other backend systems.

Instead of disintegrating processes with multiple payment methods, all payments are accepted via a single solution connected to a single server.

This is done across all touchpoints, allowing for a quick checkout and seamless payment process.

4. Automation improves efficiency

Manual payment capture is inefficient and limited. Payment processing and reconciliation are delayed.

A digital POS system can streamline operations by automating daily settlement, reconciliation, and reporting.

This improves efficiency by reducing manual errors and payment processing time.

5. Payment flexibility for customers

New payment technologies give customers more payment options. Customers prefer digital payment methods like mobile wallets, UPI, QR, etc. over cash.

Digital POS systems accept multiple payment methods to help merchants meet customer expectations.

How to Choose the Right Digital POS?

A digital POS solution streamlines payments and customer satisfaction. When choosing the right option, keep these in mind:

1. Customised

Choose a digital POS device based on your payment needs.

A light device is preferred for a business that accepts payments at the customer's door. The device should be portable and run on mobile data. Smart Android machines can accept payments anywhere, so they're great for cutting store lines.

2. Payment options

When choosing a digital POS machine, make sure it accepts debit and credit cards, magnetic stripe cards, chip cards, UPI, QR codes, etc.

3. Robust Security

Customer data is crucial and must be secure. Ensure the digital POS system has strong encryption for transactional data and is PCI-DSS and EMV-compliant.

4.Connectivity

Connectivity is another important aspect of customer service.

Digital POS devices with Bluetooth, Wi-Fi, or 4G/3G make payments easy and fast. The device should fit your environment seamlessly.

5. Digital vs paper receipts

After a transaction, customers could only receive paper receipts. This adds to the environmental impact of record-keeping. Choose a POS machine with secure, easy-to-maintain digital slips.

Since the COVID-19 pandemic began, people have started avoiding direct contact.

6. Supports bank/network cards

Ensure a digital POS machine accepts many cards before buying it. A POS machine that only accepts payments from a few banks and networks is useless.

For the best payment experience, the POS machine must accept Mastercard, Visa, American Express, and RuPay cards.

7. Monthly Payments and POS Affordability

High-ticket businesses must simplify affordability for customers.

POS devices are equipped with monthly instalment

 (EMI) solutions that allow instant EMIs through banks, brand offers, and NBFC schemes. Increasing customers' purchasing power

Conclusion

Modern digital POS terminals are smarter and offer tailored payment experiences for various organisations. Modern POS systems save time and reduce errors. Through add-on services, digital POS systems become more reliable and make it easier to access data and insights, which helps businesses grow.