What Is a POS Terminal – Explained in Simple Words

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POS-terminal (Point-of-Sale) is a device for accepting credit cards and contactless payment devices.

 

Simply speaking, the POS terminal allows paying for purchases with a bank card or smartphone with NFC. We are talking about full-fledged cash register systems in large shopping malls and small readers for smartphones.

 

Such terminals are often used in supermarkets, small grocery stores, as well as in restaurants, or cafes. Unlike a traditional cash register, they can track the number of sales and accumulate additional data for analysis. POS-terminal significantly speeds up cashiers’ work and saves them from queues at the cashier’s desk and unsatisfied customers.

 

Also POS-terminal:

 

  • Simplifies inventory – the system contains all the information about the sold goods and stock items.
  • Identifies users – in case of an error by the staff, it is easy to determine the degree of damage and the guilty party.
  • Provides mobility – indispensable for delivery services, allows for rapid card payments and reduces the amount of cash carried with you.

 

Thanks to the rapid growth of POS software development, modern models of POS-terminals work with different payment cards (chip cards, magnetic stripe, contactless technology PayPass) and other modern means of payment with NFC function (smartphone, watch, ring, card-sticker, etc.).

 

In addition to the terminal, to make a payment, the merchant needs to transmit data on the transaction to the tax authorities. For this purpose, terminals are integrated with cash register systems, which transmit data on each transaction to tax officials. (This varies from country to country, depending on local regulations).

How does a POS terminal work?

  1. To pay for a purchase, the cardholder, depending on the type of card, inserts it, passes it through a magnetic reader, or attaches it to the terminal. The cashier may ask to enter the PIN-code if the card settings require it.
  2. The device sends a transaction request to the acquiring bank (connected to the terminal) and the payment system.
  3. The device sends a request to the issuing bank (the credit organization which issued and services the buyer’s card) to check whether the buyer has money on his account and asks for permission to withdraw the required amount.
  4. If payment is accepted, the seller gives the goods, the receipt, and the card to the buyer. The bank refuses to carry out the transaction if there are insufficient funds.
  5. Usually, two copies of the receipt are printed – one is left at the cash register, and the other is given to the client. In many countries, the buyer also has the right to receive an electronic check.
  6. Data on the payment transaction is transmitted to the processing center.

Installing the terminal is not always at the request of entrepreneurs – some categories of businesses might be obliged by law to accept cards and thus acquire a POS terminal. 

Types of POS-terminals

  • Mobile POS terminal is a portable POS device. It runs on battery. Such a terminal can be found, for example, in couriers when ordering pizza at home. In this case, the delivery service employee must also have an online cash register to give out a cashier’s check immediately after receiving payment.
  • Cash register POS terminal (cash register POS-system or a fixed sensor cash register) – so-called full-fledged workplace cashier. You can see it in any mall.
  • Virtual POS terminals work without equipment on the client side, which reads data from the card. The client enters personal information and card details themselves via a web interface. This information is processed by the bank and/or payment service, after which the transaction takes place.

An ordinary acquiring terminal does not replace an online cash register: it does not issue fiscal checks and does not send information to the tax office.

What Is a POS Terminal – Explained in Simple Words

POS-terminal (Point-of-Sale) is a device for accepting credit cards and contactless payment devices.

 

Simply speaking, the POS terminal allows paying for purchases with a bank card or smartphone with NFC. We are talking about full-fledged cash register systems in large shopping malls and small readers for smartphones.

 

Such terminals are often used in supermarkets, small grocery stores, as well as in restaurants, or cafes. Unlike a traditional cash register, they can track the number of sales and accumulate additional data for analysis. POS-terminal significantly speeds up cashiers’ work and saves them from queues at the cashier’s desk and unsatisfied customers.

 

Also POS-terminal:

 

  • Simplifies inventory – the system contains all the information about the sold goods and stock items.
  • Identifies users – in case of an error by the staff, it is easy to determine the degree of damage and the guilty party.
  • Provides mobility – indispensable for delivery services, allows for rapid card payments and reduces the amount of cash carried with you.

 

Thanks to the rapid growth of POS software development, modern models of POS-terminals work with different payment cards (chip cards, magnetic stripe, contactless technology PayPass) and other modern means of payment with NFC function (smartphone, watch, ring, card-sticker, etc.).

 

In addition to the terminal, to make a payment, the merchant needs to transmit data on the transaction to the tax authorities. For this purpose, terminals are integrated with cash register systems, which transmit data on each transaction to tax officials. (This varies from country to country, depending on local regulations).

How does a POS terminal work?

  1. To pay for a purchase, the cardholder, depending on the type of card, inserts it, passes it through a magnetic reader, or attaches it to the terminal. The cashier may ask to enter the PIN-code if the card settings require it.
  2. The device sends a transaction request to the acquiring bank (connected to the terminal) and the payment system.
  3. The device sends a request to the issuing bank (the credit organization which issued and services the buyer’s card) to check whether the buyer has money on his account and asks for permission to withdraw the required amount.
  4. If payment is accepted, the seller gives the goods, the receipt, and the card to the buyer. The bank refuses to carry out the transaction if there are insufficient funds.
  5. Usually, two copies of the receipt are printed – one is left at the cash register, and the other is given to the client. In many countries, the buyer also has the right to receive an electronic check.
  6. Data on the payment transaction is transmitted to the processing center.

Installing the terminal is not always at the request of entrepreneurs – some categories of businesses might be obliged by law to accept cards and thus acquire a POS terminal. 

Types of POS-terminals

  • Mobile POS terminal is a portable POS device. It runs on battery. Such a terminal can be found, for example, in couriers when ordering pizza at home. In this case, the delivery service employee must also have an online cash register to give out a cashier’s check immediately after receiving payment.
  • Cash register POS terminal (cash register POS-system or a fixed sensor cash register) – so-called full-fledged workplace cashier. You can see it in any mall.
  • Virtual POS terminals work without equipment on the client side, which reads data from the card. The client enters personal information and card details themselves via a web interface. This information is processed by the bank and/or payment service, after which the transaction takes place.

An ordinary acquiring terminal does not replace an online cash register: it does not issue fiscal checks and does not send information to the tax office.