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POS systems have revolutionized the retail and services industries, allowing businesses to manage sales transactions, inventory, and customer interactions more effectively. While customers appreciate the speed and convenience of POS checkouts, these systems also provide invaluable benefits to businesses.

What is a POS system? What is POS software? What is point-of-sale software used for? Which advantages does point-of-sale software provide to businesses? Read on to find the answers.

What Is POS Software?

So what is point-of-sale software? POS software is an application that runs on POS hardware and enables businesses to complete sales transactions. It's the central component for managing sales operations, tracking inventory, and recording customer purchases.

What's the Difference Between POS Software and a Point-of-Sale System?

Although these terms are often used interchangeably, they can convey different things.

POS software refers specifically to the application running on a computer or mobile device to process sales transactions and manage related tasks.

On the other hand, a point-of-sale (POS) system is a broader term. In addition to POS software, it involves the hardware and peripherals, such as cash registers, barcode scanners, receipt printers, and other devices used in the sales process.

How Does a POS System Work at a Small Business?

Small businesses across various industries are increasingly adopting POS systems to streamline their operations. So what is point-of-sale software used for?

POS systems allow small retailers, such as boutiques and convenience stores, to process sales and manage inventory faster and more accurately. But there's more to POS systems than just that. For instance, restaurants and cafes benefit from POS systems for order management and table tracking, while service-oriented businesses, like salons and spas, utilize them to manage appointments and maintain client records.

So how does a POS system work? Let's sort it out.

Product setup

The business owner or staff members input product information into the POS system. This includes details such as product names, descriptions, prices, and often barcode information.

Sales processing

When a customer is ready to make a purchase, the cashier uses the POS system to ring up the items, either by scanning barcodes or entering product information manually. The POS system calculates the total amount due based on the prices of the scanned items.

Payment handling

The POS system supports various payment methods, such as cash, credit cards, debit cards, digital wallets, and mobile payments.

Receipt generation

The POS system generates a receipt detailing the items purchased, their prices, any applicable taxes, and the total amount paid. The receipt can be printed or sent to the customer digitally.

Inventory management

One of the best things about POS systems is that they automatically update inventory levels in real-time as items are sold, helping businesses keep track of stock and reorder items on time.

Sales reporting

POS systems compile sales data, providing reports on daily, weekly, monthly, or custom time frames. These reports provide insights into top-selling products, sales trends, and other important metrics.

Integration with other systems

Depending on the business's needs, a POS system can be integrated with other software, with e-commerce and accounting software POS integrations being the most widespread cases.

What Features Should POS Software Include?

Let's look at some of the most essential features of point-of-sale software.

Sales transactions processing

This is the core function that involves scanning items, totaling the bill, applying discounts, calculating taxes, and processing payments.

Physical and digital receipts

Providing receipts is another must-have feature POS software should have. Businesses can offer both physical and email receipts through the POS system, providing customers with a choice of how they receive proof of purchase. Email receipts are getting traction since they contribute to a more environmentally friendly approach. Moreover, they are a great way to build your email list.

Mobile checkout

This feature allows staff members to process sales, returns, and exchanges and take payments from anywhere in the store using a mobile device, delivering seamless customer experiences today's shoppers expect.

Centralized inventory management

This feature automatically updates stock levels in real-time as items are sold, helping businesses keep track of their product availability, avoid stockouts, and optimize their ordering processes.

Customer relationship management (CRM)

Some POS systems offer integrated CRM functionality, allowing businesses to track customer information, purchase history, and preferences. This feature helps personalize customer interactions, implement loyalty programs, and enhance overall customer satisfaction.

Unified reporting and analytics

POS systems provide unified reporting and analytics tools that offer insights into sales performance, popular products, and overall business trends. This feature is handy for click-and-mortar businesses since it helps consolidate online and physical store data in a single report, providing a complete view of the brand's performance.

Employee management

POS systems can include employee management features, such as tracking individual sales performance, punching in and out, and managing access levels.

Gift cards

POS systems can support gift cards that can be used both online and in-store. This feature enhances the convenience of gift cards, catering to a broader range of customer preferences.

Consolidated order fulfillment

POS software enables the fulfillment of orders across different channels, combining in-store pickup, curbside delivery, and shipping under one roof. This allows businesses to adapt to diverse customer needs while managing orders more efficiently.

What Hardware Does POS Software Run On?

Depending on the industry, businesses typically use a few different pieces of hardware for their POS software to run on. Here are the most widely used pieces of POS hardware:

POS terminal

A POS terminal is a device designed specifically for processing transactions. Modern POS terminals have touchscreens and often include barcode scanners and receipt printers.

Smartphone or tablet

You can use a smartphone or tablet to run your POS software, which becomes a POS terminal once the software is installed. Consider using a tablet or smartphone to provide your customers with the mobile checkout option within your store or for a mobile setup, such as a pop-up shop.

Card reader

A card reader is a device for processing credit and debit card payments that allows customers to tap, insert, or swipe their cards and enter card details manually. This device is vital to any POS system as it enables securely accepting card payments at your store.

Cash drawer

A cash drawer is precisely what its name suggests — a physical drawer for storing notes, coins, gift cards, etc. It's a critical component of a retail POS ecosystem since some customers might prefer to pay with cash. A cash drawer opens as a cash transaction is processed, allowing the cashier to collect payment and give change.

Receipt printer

Although digital receipts are becoming increasingly popular, some customers might request a physical receipt. Retailers must have a receipt printer as part of their POS system to provide paper receipts.

Barcode scanner

Barcode scanners scan product barcodes to input them into your POS software and calculate how much the customer needs to pay, each item taking up just a few seconds. Otherwise, you'll have to input all items manually. These devices can also be used to count inventory.

What Are the Benefits of POS Software?

Improved efficiency and accuracy of transactions

POS software streamlines the sales process, making transactions quick and efficient, which is particularly valuable during peak business hours. In addition, automated calculations for pricing, taxes, and discounts minimize errors in transactions, leading to accurate financial records and precise tracking of every cent transacted.

Seamless inventory management for bricks and clicks

Businesses selling online and offline often struggle to reconcile their inventory data from the two channels. While this can be done with the help of API, APIs can't ensure real-time data sharing, leading to discrepancies such as incorrect item availability displayed on the website.

The good news is that modern POS software helps effectively tackle this challenge by changing inventory quantities immediately once you've sold an item online or at the store.

Consolidated reporting for multiple channels

POS software lets you consolidate data from online and physical stores, providing a comprehensive view of the business. You don't need to export data from your online store and POS to make reports. With modern POS software, you receive a complete picture of your sales. You can filter the data by channel, which gives crucial insights into sales trends and facilitates more informed decision-making.

Enhanced customer experience

Faster checkouts, personalized services based on purchase history, and accepting various payment methods contribute to delivering rewarding customer experiences. Efficient inventory management provided by POS software also feeds into creating a seamless shopping experience. The system checks and updates the status of any item in real-time, resulting in zero possibility of shoppers purchasing out-of-stock products.

And that's not all: POS software with an integrated loyalty program significantly streamlines the process of managing reward points, allowing cashiers to calculate the total discount and subtract it from the transaction value in a matter of clicks.


Ensuring the efficiency and accuracy of transactions and facilitating customer experiences, POS software has become a bare necessity for modern businesses. POS software also lets you consolidate reporting across multiple channels and provide real-time insights for more informed decision-making.

If you're considering adopting a POS system and need robust software to effectively address your business needs, contact Finamp experts. We're experienced fintech developers who can help you build a powerful solution with your unique needs and goals in mind.


What is POS system software?

POS system software is a computer program running on POS hardware (tablet, smartphone, cash registers, barcode scanners, receipt printers, etc.) that enables businesses to complete sales transactions. POS software is used across diverse industries, including retail, hospitality, healthcare, and service-oriented businesses.

What is POS software in retail?

Retail POS software is used to facilitate sales transactions in stores. It goes beyond basic transactions, offering features like inventory management, customer relationship management, and sales analytics.

What is the best POS software for retail?

To effectively address the needs of modern retailers, POS software should have but isn't limited to the following features:

  • covering all POS processes, from transactions to inventory management
  • cloud-enabled for quick updates
  • mobile-ready
  • compliant with EMV and PCI requirements
  • intuitive UI/UX design

What is a POS example?

A classic example of a POS system is a retail store's setup, where the POS software runs on a dedicated terminal.

Is a POS system a software application?

No. Although the terms are often used interchangeably, POS system software meaning is narrower than that of a POS system. POS software refers to only an application, while a POS system includes hardware.