You might have seen a machine at a retail store which is used to take payments. The merchant swipes or insert your card in this machine to take payment. This machine is called as POS terminal. The full form of the POS is Point of Sale.
How POS System Works
Every POS machine is linked to a bank. In fact, mostly banks itself installs the machine at the retailer place. Some third party also provides POS in collaboration with the banks such as ‘ingencio’.
Generally, the POS machine requires internet connectivity to connect with the bank server. Now let us see how this POS terminal works.
- When you buy some products or services, you give your debit card or credit card to the merchant. The merchant swipes or inserts the card in the machine. Some advanced machine also use NFC technology. This works only by waving the card near the machine. The full form the NFC is Near Field Communication.
- The POS machine reads the data of your card. The data is stored in EMV chip and magnetic strip both.
- Now the merchant enter the required amount in the machine and press the Enter button (the Green one).
- Now POS terminal’s software checks whether the card holder’s bank account has sufficient balance or not.
- Then it asks to enter the ATM PIN by the cardholder.
- As you enter PIN and push the Enter button the payment happens. The money gets deducted from your account and goes the merhcant’s account.
- Then quickly the POS terminal presents the receipt for the merchant as well as for the customer.
- Thus in this way, it completes the cashless transaction. Moreover, the merchant can use the POS machine later for the inventory management and records keeping as well.
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Different Types of POS Terminals
Do you think only a machine with the merchant is a POS machine? It is not so. Besides the aforesaid device, there are some other different types of Point of Sale terminals as well-
- Traditional Touchscreen device
- Mobile POS
- IPad POS (This you would have seen at the self service restaurants)
- Web based POS terminals and
- Self Service Kiosks (Like a small screen situated at the Cinemas for ticket collection)
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Advantages of POS Terminals
Thus in the light of the aforesaid description, we can say that the POS system has reduced the burden of cash management so much. It has following benefits.
- Increases the efficiency and productivity
- Decreases the multiple costs
- It is accurate
- Easily manages the Inventory.
- Presents the quick, accurate and detailed receipt
- Moreover, promotes the cashless environment
Other Functions
Not only for the payment but POS terminal works in other fields as well. These are-
- Store Sales information displays
- Helps to prepare reports for the marketing purposes
- Also helps in case of customer returns
- Shows sales trends
- Helps in the analysis of purchase, cost, price and profits
- And helps to make future plannings as well.
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