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Point of sale (POS)

What does POS mean? Let Bankrate explain.

What is a point of sale (POS)?

A point of sale, or POS, is the place in a store, restaurant or hotel where sales transactions are completed. Most frequently, POS refers to the hardware used to complete sales transactions, such as cash drawers, cash registers and computer terminals. A self-service supermarket check-out, a vending cart on the sidewalk, a tablet with a credit card reader at an outdoor market or a mechanical cash register at your local bar: All are points of sale.

Deeper definition 

POS terminals process credit card transactions, record and track customer orders, manage store inventory, and connect to other systems in a network. POS terminals are personalized to serve specific businesses. A restaurant may have menu items stored in its database while an auto parts store would have a database full of vehicle parts.

A handheld POS terminal is a mobile version of a larger terminal. Frequently used by small business owners, such as hairstylists and art vendors, a handheld POS has all the features of a standard terminal, but allows merchants to move from place to place. In fact, some large retailers like Apple, Nordstrom and Home Depot have begun to use handheld POS terminals when their establishment is crowded and lines are long.

Hacking and identity theft have become a major problem from point-of-sale systems. There have been several huge, well-publicized incidents of theft, including a Home Depot breach in 2009 and the infamous Target hack in 2013. Criminal gangs have widely targeted POS systems, and POS malware has emerged as a subcategory in the hacking lexicon. This has driven the adoption of stronger security routines for retail businesses and card issuers, such as chip-and-PIN cards.

Looking to buy a POS system for your business? A HELOC is a great way to fund better technology for your firm.

Example of POS systems

Gustavo is looking to open an new chain of fried chicken restaurants throughout the southwestern region of the United States. As a very savvy businessman, he wants only the latest, most up-to-date technology in his point-of-sale systems, especially as he deals with formidable rivals. Gus has equipped his newest restaurants with a tablet computer-based POS system that interfaces with his inventory management backend and requires the use of chip cards. These are considerably more secure and help reduce a system’s vulnerability to hacking.

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