Customize your transaction experience, organize inventory, and record sales with the best POS systems in 2023. Compare pricing, see hardware, and find what works best for your business.
Last Updated: April 2025
What is a POS System and How Does It Work?
A Point of Sale (POS) System combines software and hardware technology to help businesses organize, perform, and record sales.
Organize Inventory
Every type of business—whether retail, restaurant, or hospitality—manages some form of inventory. A POS system’s first function is to organize your business’ unique inventory by categorizing products, adding price values to items, and keeping track of the number of units in stock.
For example, if you run a food truck that sells street tacos, your POS system would help you organize your menu items, add prices to each menu item, and notify you when you’re running low on a specific ingredient.
Perform Transactions
When it’s time to actually sell your product or service, a POS system can provide the tools needed to process the transaction. Think of the modern POS system as an intelligent cash register—when a customer comes up to make a purchase, you can use your POS terminal to ring up the purchase, accept the customer’s cash or credit card, and provide a receipt of purchase.
NOTE: Some POS systems do not process credit card transactions, requiring business owners to instead search for third-party credit card processing companies. You can learn more about that service, here.
Record Transactions
When a customer purchases a product or service, a modern POS system will also record several important data points. These may include their contact information, the price of the product, the number of sales, the time of day, the date, and more.
Over time, your POS system will gather enough data to run analytics on your data set, resulting in key insights that could benefit your bottom line. Some of the insights may be on the individual level, like customers collecting rewards points. Others may be larger scale; you may find that some products have seasonality–they sell better in some months and worse than others. You can use these insights (among others) to help improve sales and strengthen marketing campaigns.
Software for POS Systems
One of the great features about POS software is how it can be customized based on both your industry and your specific business. Out of the box, though every POS system includes a few universal features:
Hardware for POS Systems
As a business owner, you can add a POS system into your workflow in several ways. Some POS setups require lots of hardware, others require none. Setups include:
Terminal Hub+
Terminal hubs act as the command center for business transactions. Your primary piece of hardware will be the terminal itself: an internet-connected device that has your POS software of choice already installed. In addition to the terminal, many business owners will purchase bonus hardware such as credit card readers, cash registers, receipt printers, and UPC scanners.
Tablet or Desktop Repurposing
Instead of purchasing a stand-alone terminal, POS system software can often be installed on devices such as laptops or tablets, repurposing them for business transactions. In addition to purchasing cash registers, receipt printers, card readers, and UPC scanners, some business owners may purchase specialized stands or cases that make it more convenient for customers to enter their cards and sign a receipt during a transaction.
E-Commerce
Some businesses will forgo all hardware, sticking instead to an entirely online presence. If your business is solely e-commerce, you can oftentimes purchase POS software to fully integrate into your online store. This way, you can get all of the benefits of a POS system without having to purchase any hardware.
POS Features by Industry
POS systems are designed to fit the workflows of one of the three primary industries: retail, restaurant, and hospitality. Here are a few unique POS features for each industry:
Retail
Food Service
Hospitality
For even more information on POS features by industry, check out our article detailing these features in greater detail.
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