Watch: What is a POS system? And how to choose the right one

When a shopper is ready to make a purchase, your business should be ready to provide a smooth payment experience. From food trucks to footwear stores, the way your customers complete their purchase is an important part of their experience with your brand.

That’s where a point-of-sale (POS) system comes in. A great POS system can streamline payment transactions and even help manage sales, inventory, and customer data.

Here's what you need to know about POS systems, plus a quick video on how to find the best point-of-sale solution for your needs.

Video: Learn what to look for when you’re picking a point-of-sale solution for your business, and get a detailed guide to the best POS systems and tools

What is a POS system?

A point-of-sale (POS) system is a platform businesses use to process and complete customer payments—online, in-store, or both.

In the past, the most common POS system was a cash register. Now, portable and connected POS terminals, tablets, and monitors can power contactless and secure transactions.

A POS system can consist of both hardware and software, which offer different functionalities and benefits.

POS hardware

Within a POS system, the primary role of POS hardware is to provide a way for merchants to take payments from their customers. Here are some of the common types of POS hardware:

  1. Card readers: An EMV-compliant card reader allows customers to quickly make purchases with the swipe, tap, or chip-enabled credit card securely.
  2. POS terminals: These portable all-in-one devices not only process different payment methods but can also print receipts, accept tips, calculate taxes, and provide refunds.
  3. Tablets and accessories: Connected devices—like POS tablets and iPads—provide user-friendly, touchscreen interfaces for employees and shoppers while enabling checkout from anywhere in your establishment.1

POS software

POS systems run on software that helps the system complete transactions, gather data, provide feedback, and more. POS software can sync across devices and share updates in real time.

Beyond processing payments, comprehensive POS software systems can also help manage other aspects of your company, including sales, inventory, and reporting. This ultimately can boost efficiency, accuracy, and overall management.

Some POS software, like Tap to Pay accessed through the PayPal POS app, can work with or without traditional hardware. The PayPal POS App is preloaded on PayPal terminals and available on iPhone or Android to process payment transactions.1

What does a POS system do?

POS systems offer a range of capabilities. Some just process payments, while others can integrate your transactions, inventory, and customer data. A comprehensive POS system can facilitate sales, gather customer insights, activate special offers and discounts, and manage product inventory.

Not all businesses need the same POS capabilities. It’s important to assess your business’s needs and goals to ensure that your POS system has all the functionality you require to support your current and future operations.

How to choose the right POS system

A lot goes into choosing the right POS system for your business. The first thing to consider is whether you’ll be selling in one primary location (such as a storefront), in many locations (such as a food truck or event-based business), or a combination of the two.

The best POS systems for selling in-store

  • Portable card reader: gives you the ability to process swiped or chip-enabled credit and debit cards. Portable card readers are great for businesses in the food and beverage industry, to take orders from your customers’ table or while they’re waiting in line to place an order.
  • All-in-one terminal: Check inventory, update stock levels, and accept payments with one portable terminal. This terminal is a great option for retail businesses who want to manage everyday operations with one handy, portable device.

The best POS tools for selling on-the-go

Mobile businesses need a POS system that is fast, convenient, and portable. If your business will be making sales in multiple locations—such as in-home service providers, contractors, and businesses that sell at events and farmers markets, consider using Tap to Pay.

With Tap to Pay, you can Take contactless payments using a tap or QR code. You can enable Tap to Pay on your PayPal Point of Sale App. No extra hardware is required. With a phone or tablet, you can take payments virtually anywhere you do business1

Payment methods your POS system should support

The ability to process a variety of payment methods is an important feature of any POS system. Offering more choices in payment methods can help reduce friction for your customers during the checkout experience.

To help ensure that your customers can use the payment method that works best for them, look for a POS system that offers Tap to Pay, card payments, gift card transactions, QR codes, and manual card entry.

Learn more about POS payment processing

Other POS System features to look for

POS systems do more than just process payments. Compare the following features and benefits to choose a POS system that makes it easy to manage your day-to-day business operations:

  1. Access to sales revenue: A POS system that connects directly to a business account or bank account can give you fastaccess to the funds you earn from sales transactions. Being able to access your money quickly can help your business grow by purchasing supplies and inventory without delays.
  2. Integration with other platforms: Modern point-of-sale systems can connect to third-party platforms to help businesses sync data and simplify their workflows. With the right integrations, you can also avoid the hassle of learning new software or migrating data. Common POS integrations include ecommerce, accounting, and inventory management platforms.
  3. Inventory management: The most versatile POS systems should allow you to update inventory in real time. Some POS inventory management platforms will alert you when stock runs low. You can use this inventory feedback to reorder items in advance, helping to ensure you don't run out of your most popular items.
  4. Data and reporting: An effective POS system can generate comprehensive sales reports from POS data related to customer activity and transactions, including total sales, cost of items sold, gross margins, and net profits. With these insights at your fingertips, you can make more informed decisions to fuel small business growth.
  5. Staff management tools: You may be able to set up unique identifiers for each employee withing your POS system, enabling them to clock in and out from one unified platform. POS employee management features can also help business owners create schedules and track staff performance.
  6. Tipping capabilities: Make it easy for customers to show their support by providing POS tipping options at checkout. Many POS systems will prompt customers with suggested tip amounts, so they can simply tap and add the extra payment. A POS tip management feature can also help you track, organize, and distribute employee tips as needed.
  7. Customer profiles, loyalty programs, and promotional offers: You may consider using a POS system that supports comprehensive customer profiles. These profiles can contain payment and contact information, purchase history, and loyalty status. You can then use this data to create personalized marketing and sales campaigns and distribute special offers based on each customer's interests and preferences.

Summary: What is the best POS system for your business?

Ultimately, choosing the right POS system depends on the unique needs of your business. Consider a POS system that supports the following:

  • Multiple payment methods for fast, convenient, and contactless transactions
  • Compatible, simple-to-use hardware like card readers and terminals
  • In-store and mobile payment capabilities
  • Integrations with third-party platforms
  • Reporting data such as sales, costs, and profits
  • Real-time inventory feedback
  • Staff management tools
  • Fast access to funds

If you’re shopping for a POS system, PayPal Point of Sale can help streamline transactions and business operations. Click here to learn more about our complete Point of Sale solution.

These solutions and more are available with PayPal Open.

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