While a key and obvious advantage of a POS system is the gain in efficiency with respect to processing and recording a purchase transaction, there are numerous additional benefits that have ramifications across the enterprise. In this whitepaper, we break down the advanced features of a modern POS system and we'll walk you through the steps to choose the correct vendor.

1. BUSINESS.COM GUIDE TO POS SYSTEMS

2. CONTENTS
OVERVIEW OF POS SYSTEMS 3
FEATURES 6
CHOOSING A VENDOR 10
CALCULATING COSTS 12
COMPARISON CHECKLIST 13
GLOSSARY OF TERMS 14

3. 3
WHAT
The point-of-sale is where a retail transaction is
conducted, which used to mean where a cash
register was located, typically near a store exit.
Today, it means any place where a sale is
conducted and money (primarily via credit card or
debit card) is exchanged for a product/service and
a receipt is given. In addition to an electronic cash
register, this could occur via a smartphone, tablet,
touchscreen, barcode scanner, or dedicated mobile
device or terminal.
OVERVIEW OF POS SYSTEMS

4. 4
HOW
A POS system essentially
comprises a computer
provided with application-
specific programs and I/O
(input/output) devices.
There is no one-size-fits-all
solution, but rather a range
of applications, components,
and vendors to tailor a POS
solution to any situation or
environment.
The benefits are not limited to
large retail operations; one-
person shops can also take
advantage of POS systems.
The systems are easy to use
and require minimal employee
training, so new hires can
be “up to speed” quickly
and effectively.

5. 5
WHY
While a key and obvious advantage of a POS system is the gain
in efficiency with respect to processing and recording a purchase
transaction, there are numerous additional benefits that have
ramifications across the enterprise. A POS system underpins
inventorying, accounting, reporting, and forecasting functions as
well as Customer Relationship Management (CRM) applications.
The data mining capabilities of POS systems help reduce
fraud, identify sales trends, and develop customer profiles and
purchase patterns.
An additional advantage is that a POS system increases customer
satisfaction by reducing checkout times and easing the payment
and return processes. Mobile terminals also provide the flexibility of
“roving registers” in which salespeople can both assist customers
directly on the sales floor and check out their purchases, all in one
convenient interaction.
The Point of Sale News provides case studies that detail the
feature/benefits of POS systems in varying industries.
“APOSSYSTEMINCREASESCUSTOMER
SATISFACTIONBYREDUCINGCHECKOUT
TIMESANDEASINGTHEPAYMENTPROCESS.”

6. 6
The type and number of hardware devices involved
depends not only on the physical size and location
of a business, but also on its branding/marketing
strategies. For example, retailers frequently employ
“stores within a store,” where the idea is to capture
sales immediately at multiple retail displays placed
throughout a single store.
The advantages include not only the ability to better
capitalize on impulse purchase decisions, but also to
eliminate long register lines at crowded exits that might
discourage shoppers from shopping there again.
Hardware comprises terminals and peripherals that
involve one, or a combination of, devices:
• Touchscreens (either all-in-one
units or terminal add-ons)
• Barcode scanners
• Credit card readers
• Check readers
• Cash drawers
• Receipt printers
• PIN (Personal Identification Number) pads
• Electronic cash register terminals
• Off-the-shelf personal computers
• Tablets
• Mobile phones
• Checkout scales
It is becoming increasingly common for these devices
to function on mobile or wireless platforms, which
further adds to the flexibility regarding placement of
the terminals as well as the environments under which
they can function. In addition, Web-enabled terminals
allow for inventory tracking across geographically
disperse locations; and also provide for remote training,
operation, and diagnostics.
FEATURES
“IT IS BECOMING INCREASINGLY COMMON FOR
THESE DEVICES TO FUNCTION ON MOBILE OR
WIRELESS PLATFORMS.”

7. 7
In terms of software, certain industries have different
POS needs-e.g., a restaurant POS has different
software requirements than a hardware store or a hotel
operation. The size of the business also determines the
type of software. For instance, a small “mom-and-pop”–
type business has less complex needs than a large
chain retailer.
In some cases, the operating system (OS) may be
proprietary, but there are also standard Windows, Mac,
UNIX, and Linux offerings. The generally accepted
industry standards for dedicated POS systems are
OPOS (OLE Point-of-Sale), which is Object Linking
and Embedding technology developed by Microsoft
(and hence is a Windows-specific application); and
JavaPOS, which uses the Java programming language
and therefore is OS platform-independent.
Some Mac-based systems include Prosperity POS,
LavuPOS, ShopKeep POS, and Lightspeed. There is also
a QuickBooks POS that is attractive to those who already
use QuickBooks accounting and payroll software.
An increasingly popular choice is a Web-based
platform, also called a cloud-based POS, because
it is largely OS- and device-agnostic. Web-enabled
POS systems can not only run on any computer with
an Internet connection and browser; but also on
smartphones, tablets, and other mobile devices.
An additional advantage is that cloud-based systems
run remotely from one or more secure servers,
eliminating the need to install and update software at
the local level. In addition, the centralization of data
provides a single repository that can be accessed
across geographic and organizational locations via
a simple Internet connection, which also reduces
operational overhead costs.
“AN INCREASINGLY POPULAR CHOICE IS A
WEB-BASED PLATFORM, ALSO CALLED A
CLOUD-BASED POS.”

8. 8
Services
POS systems come in a variety of “flavors.” There are
complete bundled packages of hardware, software, and
services that may be put together by the OEM (original
equipment manufacturer) or a reseller. You can opt to
buy a system, a single terminal, or input/output (I/O)
device with software to use a computer, smartphone,
or tablet. Systems can be leased or bought, and
some systems are free with a contract for a payment-
processing agreement.
After-sale services include basic on-site repair and
remote telephone support, email support, and upgrades.
Such after-purchase care may run for a predetermined
limited period or may require a service plan at an
additional cost. Warranties can run from one to three
years, although some vendors offer lifetime warranties.
Additional services, typically arranged by the POS
vendor through a third party, include credit card
processing, cash advance and loan services, financing,
remote backup, and equipment leasing.
POS Packages
POS systems broadly fall into these industry-
specific packages:
Retail: The retail industry is one of the predominant
users of POS terminals, which are almost always
integrated into inventory and accounting back-office
functions. In addition to processing purchasing
transactions, the POS system also accommodates the
use of customer loyalty cards, gift cards, gift registries,
and coupon redemptions.
“YOU CAN OPT TO BUY A SYSTEM, A
SINGLE TERMINAL, OR INPUT/OUTPUT (I/O)
DEVICE WITH SOFTWARE TO USE A COMPUTER,
SMARTPHONE, OR TABLET.”

9. 9
Hospitality/Hotel: The hospitality/hotel industry needs
to track guests as they interact with various services
throughout their visit: from dining room to guest room
to a golf or tennis lesson reservation to a spa visit.
POS systems can also provide handy displays of guest
preferences in amenities and housekeeping. They allow
hospitality staff to anticipate guest needs, rather than
respond to requests, thereby raising service levels
and customer satisfaction and loyalty. POS software is
usually integrated with property management software.
Restaurant: Some of the first touchscreen terminals
were used in the restaurant industry, particularly in
fast-food chains. Today, they are the standard means
to input and track orders, process payments, and
generate customer receipts. A growing trend in quick-
serve restaurants is the use of wireless pagers to notify
customers when their orders are ready for pickup. Even
in fine-dining segments, waiters are equipped with
mobile input devices to send an order directly from the
table to the kitchen. The same device notifies waiters
when orders are ready for delivery to the table.
Grocery: In the grocery business, in particular, POS
systems can be part of self-checkout systems, and
will typically incorporate weight scales. Some systems
also allow customers to use bar scanners to record
their selections as they place products into their
carts, and thus expedite the final checkout process.
At the point-of-sale, data that directs decisions
within an organization-such as inventory, purchasing,
discounting, and marketing-is gathered. Good POS
systems will give you the confidence that decisions
are based on data, not hunches. A prime example of
how this data comes together at the point of sale is the
ability to generate instant coupons based in part on
what the customer has just purchased. Strong grocery
and retail POS can generate just-in-time marketing,
personalized for the customer at the checkout counter.
Salon: The hair and beauty industry needs to enter,
modify, and track client appointments and preferences
in a system that can generate performance reports
and loyalty profiles as well as identify and correct
workflow inefficiencies. The POS system also maintains
an inventory of beauty-care products and compiles
a database of customer emails to send appointment-
reminder notices, special offers, and other notifications.

10. 10
You should evaluate the best POS vendors in terms
of hardware, software, after-purchase care, and
technology.
Questions to Consider
What Are Your Needs? The size and complexity of
the business dictates the size and complexity of the
POS solution. The provider should have demonstrated
expertise in your industry and be able to identify critical
features and benefits that pertain to your specific
needs. Will an off-the-shelf package satisfy, or do you
have customized requirements?
Ease-of-Use? You and your employees must find
the software intuitive and user-friendly. At the same
time, the system needs to be functional to fit your
requirements. Generally, the more complex your needs,
the more features you’ll require, and with that typically
comes a trade-off in ease of use. However, complexity
need not require a dedicated IT staff. The best systems
balance ease of use and complexity to provide
resources that are, with a little training and experience,
not overly difficult to use.
What’s the Track Record? The POS vendor should
have a success story. If the vendor is a distributor or
VAR (value-added reseller), what’s the reputation of
the products/services it resells? Who provides after-
purchase support-the vendor, the OEM, or a third party?
What disaster-recovery contingencies are offered, and
what level of confidence is provided to ensure that both
a computer crash as well as a physical catastrophe
(such as a fire or flood) are covered?
Is the System Upgradeable? The advantage of many
off-the-shelf packages is that they come with software
upgrades to avoid planned obsolescence. If you do
need to customize, ensure that customization does
CHOOSING A VENDOR
“YOU AND YOUR EMPLOYEES MUST FIND THE
SOFTWARE INTUITIVE AND USER-FRIENDLY.”

11. 11
not come at the cost of an inability to incorporate
new technology. Also, you might want to start with
something basic and eventually grow into something
more sophisticated. Make sure the system is easily
expandable to grow with evolving needs.
What’s the Level of Training? Training for you and
your employees shouldn’t necessarily be limited to pre-
installation or the first day on the job. Also, once you’re
comfortable with the system, you might want to customize
certain reports or incorporate advanced features. Make
sure the POS vendor offers after-installation training to
help you take full advantage of the system.
Is the System Secure? Visa, for example, requires
all merchants to adhere to the Payment Application
Data Security Standard (PA-DSS) for all credit-card
processing transactions. Also, if the POS system
allows for remote access, how does that access
remain secure? What kind of password and user
authentication system is used? Is a firewall in place to
block unauthorized Internet access? Does the system
come with virus and malware protection? Who manages
security-you or the vendor?
Will the POS System Integrate with Other Business
Systems? The advantage of a POS system extends
beyond customer transactions to encompass a range of
business reporting, accounting, and tracking functions.
If you’re just starting to automate, your decisions will
be easier to make in this regard, as you have more
flexibility to design the system. However, unless you’re
willing to entirely discard any existing systems, ensure
that the POS system can seamlessly integrate with your
other business systems. Otherwise, any theoretical
gains in productivity are lost when incompatible
systems can’t “talk” to one another.

12. 12
Systems can be leased or bought; some systems
are free with a contract for a payment-processing
agreement. Generally speaking, the more complex
the system and the more terminals, the higher the
expense. Basic cash registers can cost up to $500, but
POS terminals can run as high as $4,000 each, with
additional expenses for installation and programming,
particularly if they involve proprietary software.
The good news is that, as with all forms of technology,
systems are getting less expensive and more
affordable, and even small businesses can take
advantage of them. Also factor in that whatever the
upfront costs might be, the return on investment in
terms of greater efficiency and improved customer
satisfaction make this type of purchase worthwhile.
Moreover, with the growing popularity of Web-based
solutions, particularly for smaller businesses, there’s
a range of economical choices that can be fitted to
popular smartphone, tablet, and PC platforms.
CALCULATING COSTS
“AS WITH ALL FORMS OF TECHNOLOGY, SYSTEMS
ARE GETTING LESS EXPENSIVE AND MORE
AFFORDABLE, AND EVEN SMALL BUSINESSES
CAN TAKE ADVANTAGE OF THEM.”

13. 13
This checklist will help you quickly assess
the best vendor for your needs.
Hardware
Bundled All-in-one Package
Dedicated Terminals/Devices
Smartphone/Tablet/PC-compliant
Input/Output (I/O) Devices for All Business Requirements
Mobile/Wireless Technology
Software
Proprietary
Adaptable Across Platforms
Web-based
Customizable
Services
24/7 Phone Support
24/7 Email Support
Remote Assistance
On-siteTechnical Service
Migration of Services
Warranty Length
Third Party or Vendor After-care Service
Credit Card Processing Included
Cost
Free (With Credit Card Processing Contract)?
Equipment Lease?
Training/Support Fees?
My Needs Vendor 1 Vendor 2 Vendor 3
POS SOFTWARE CHECKLIST

14. 14
Barcode: Randomly printed patterned spaces and bars
(sometimes including numerals) that can be scanned
into a computer to identify the product and related
characteristics.
Cash Drawer: Connected to the POS terminal to store
cash payments.
Central Control Unit (CCU): The computer hub to which
all terminals are connected.
Check Conversion Service: Bank-provided service
that allows processing of checks as a debit transaction;
requires a check reader to scan and verify checks.
Customer Relationship Management (CRM): Usually
refers to software that enables lifetime management of a
customer’s data, including analyzing that data for marketing
opportunities. POS data often feeds into CRM systems.
EBT (Electronic Benefit Transfer): A card used to allow
processing of state government benefits through a POS
system.
EDC (Electronic Draft Capture): Provides the ability
to automatically balance, settle, and authorize credit
card transactions.
EDI (Electronic Data Interchange): Allows for
purchase-order creation between a POS system and
another vendor’s system.
End-to-End Encryption: Protects consumer credit
information by encrypting data transmitted at the point-of-
sale and processed through the network.
GLOSSARY OF TERMS
“CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
USUALLY REFERS TO SOFTWARE THAT ENABLES
LIFETIME MANAGEMENT OF A CUSTOMER’S DATA.”

15. 15
PCI (Payment Card Industry): Guidelines designed to
shield credit card information from fraud and misuse.
Peripheral: Any POS device, including PIN pads, check
readers, card readers, barcode scanners, cash drawers,
touchscreens, weight scales, and customer devices.
Perpetual Inventory: Constant monitoring and tracking
of inventory in terms of quantity on hand and total value
to continually reflect current receipts, returns, and sales
reported in real-time.
PIN (Personal Identification Number) Pads: Part of a
POS system that allows customers to swipe credit cards
and debit cards, verify the amount charged, enter a PIN
number or signature, and pay for a purchase.
Point-of-Sale (POS) System: A combination of software
and hardware that facilitates commercial transactions,
often including a credit-card reading device and/or a cash
register.
Signature Capture Device: Component of a credit card
terminal used to record a customer’s electronic signature
to authorize a transaction; eliminates need to maintain
paper receipts.