What Is A Point-of-Sale (POS) Device?
A point-of-sale (POS) device is a system used by businesses to process customer transactions and manage sales. It typically includes hardware, such as a tablet or a small computer, and software to allow users to accept payments and generate receipts. POS systems can be used in a variety of businesses — from retail stores and restaurants to salons and hotels.
How Does A POS Device Work?
While each POS system follows a unique set of steps, the following is a general outline of how it works:
- Product Identification: Products are identified by scanning their barcodes using a barcode scanner. The scanner transmits the barcode data, typically a Global Trade Item Number (GTIN), to the POS software. Alternatively, the product code can be manually entered on the POS terminal.
- Product Lookup & Price Calculation: The POS software retrieves product information from its database using the GTIN or product code. This information includes the product description, price, and any applicable taxes. The system then calculates the total cost of the purchase based on the scanned or entered items.
- Payment Processing: The customer selects their preferred payment method, such as cash, credit card, or debit card. If using a card, the POS system encrypts the card data and transmits it securely to the payment processor via a payment gateway. The payment gateway verifies the card information with the issuing bank and authorises the transaction.
- Transaction Completion & Record Keeping: Once the payment is authorised, the POS system finalises the sale. It updates inventory levels, generates a receipt for the customer and stores the transaction data for record-keeping and reporting purposes.
What Are The Benefits & Drawbacks Of A POS Device?
POS devices offer numerous advantages for businesses, including:
- Streamlined Operations: POS systems automate many tasks involved in sales, such as scanning items, calculating totals, and processing payments. This frees up employee time to focus on customer service and other tasks.
- Improved Inventory Management: POS systems track inventory levels in real-time, allowing businesses to avoid stockouts and reorder products efficiently.
- Enhanced Data Analysis: POS systems generate valuable sales data that businesses can use to track trends, identify best-selling products and make informed business decisions.
- Better Customer Service: POS systems can help improve customer service by allowing employees to access customer information quickly and process transactions efficiently.
However, there are also some drawbacks to consider:
- Initial Investment: POS systems can require an upfront investment in hardware, software, and installation.
- Technical Dependence: Businesses reliant on POS systems may experience downtime if the system malfunctions or encounters technical issues.
- Security Risks: POS systems can be vulnerable to security breaches if not properly secured.
- Learning Curve: There may be a learning curve for employees who are not familiar with using POS systems.
Which Indian Startups Offer POS Devices?
With the meteoric rise of the UPI ecosystem in recent years and the demand for digital transactions and POS devices, the ecosystem has seen increased competition from several Indian fintech giants.
Some of the most important names in the Indian POS segment include Pine Labs, Mswipe and BharatPe. The three unicorns offer POS devices to serve various needs — from basic card swipe machines to feature-rich Android POS terminals.
Fintech unicorns like Paytm and PhonePe have also joined the POS race. These two unicorns offer soundboxes, a simple-to-use Android-based POS device to accept UPI payments. The likes of Google Pay have also joined the fray, aiming to digitise India’s economy.
