Point of Sale Systems: (also called POS systems) is the place where a retail transaction is completed. This is the point in which a customer makes a payment to a merchant in exchange for goods or services, usually done at “checkout” or at the register. The retailer (or merchant) calculates the amount owed by the customer and provides options for the customer to make payment: i.e. cash, check, debit or credit card. If a debit or credit card is selected, a POS terminal (or credit card terminal) is used for swiping the card and processing the transaction, and issuing a receipt.
There are many benefits of using a point of sale system for processing payments. Below we discuss a few!
Safer Credit Card Transactions: Other than cash-payments, physically swiping a card is the safest way for debit and credit card processing. Not only will you get the lowest credit card processing rates with swiped transactions, but there is less chance for fraudulent activity. With a POS system you have greater security as credit card information is physically swiped, verified with the buyer, and approved in your POS terminal (in comparison to keyed entry: which happens online or over the phone, or waiting for check payments to clear).
Improved Book-Keeping: A POS system is a computer software and hardware network that immediately records sales as they’re occurring. This solves a variety of operational and record-keeping headaches and allows for more timely and accurate sales tracking. It also helps businesses identify low inventory levels, or sudden shrink (which is when the inventory amount quoted in your books doesn’t match actual stock) -helping to recover missing inventory and possibly pinpoint the cause of the shrink.
Easier Tracking of Markdowns & Promotions: Many small businesses struggle with tracking price reduction—knowing which items have been marked down and recording those discounts accordingly. Rather than messing with cash-register receipts or trying to remember which items were “on sale” at day’s end, a POS system automates the process of markdowns and, in turn, tracks them accurately. Similarly, many companies use coupons, direct mail, special discounts or other promotions to drive business to their establishment. However, managing and reconciling these short-term specials can be difficult. A POS system not only immediately tracks and reconciles promotions, but can pinpoint their impact helping to provide insight into future marketing activities.
Price Consistency: If you are a retailer or restaurant with multiple locations, price consistency can become a real issue (especially if a customer questions why an item has a different price at 2 locations). A point of sale system can help ensure price consistency from one location to another, and can also automate overall inventory control, helping to keep stocks in proper balance from one location to the next.
Increased Efficiency: There are plenty of useful tools that your employees can use to make their job easier and increase efficiency in your business processes. In fact, today’s POS systems are more like a “point of service” system (rather than point of sale) as the functions extend beyond the initial payment transaction. Some POS systems include add-on modules like payroll and time clocks where employees can easily log-in right from the register giving them more time to service your customers (rather than taking time off the floor). Some advanced management features may include; inventory management, Customer Relationship Management (CRM), tracking financials, stocking goods in the warehouse, etc. Prior to these modern day POS systems, these functions were done independently. This not only took more time, but also required manual re-keying of information, which can lead to entry errors.
Summary
If these benefits all sound great to you, then it’s time for you to look for a merchant services provider that can get you set up! Be sure to review “selecting a merchant services provider” to help you identify the important factors you’ll want to consider when setting up a merchant account. In addition to credit card processing rates, contract terms, and customer service…One item you will want to investigate clearly with a point of sale system is how much the company charges for a POS Terminal. Some companies charge hundreds of dollars for equipment, where others offer it for free!
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