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POS Purchase: Checking Out Through POS Technology

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Ryleigh Stangness | February 1, 2022

“Read on to find out what a POS purchase is, what it does, how it differs from POS systems and how to set your business up to take POS purchases”
5 min read

    If you're looking into how to accept debit and credit card payments for your business, you've probably heard many terms like POS purchases, POS systems, cloud based pos systems, POS software, and hardware options such as card readers floating around.

    Let's get to why you're here: You want to know the meaning of a point of sale (POS) purchase and how it relates to how your business collects payments?

    There are a few things worth noting: the differences between a POS purchase, POS system, and POS tools and how understanding them. All of these help to aid your business in running more effectively and smoother for your day-to-day operations and assets.

    While we can't promise that learning about POS purchases will have you on the edge of your seat, we can assure you that it doesn't have to be complicated.

    So here's what you need to know:

    POS purchase: what is it and what does it stand for?

    POS stands for Point of Sale.

    If you've left your house lately, you've probably been participating in POS purchases all the time, everywhere you go. A POS transaction occurs whenever you, the cardholder tap your card on the card reader for your weekly groceries for example, or enter your PIN number at reception to pay your chiropractor.

    Basically, a POS transaction, or purchase, is the process of collecting payment when a customer goes to buy something from a merchant.

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    Payment forms of a POS purchase

    There are almost endless ways a customer can make a POS purchase; A customer may use various payment methods such as cash, credit and debit cards, mobile or contactless payment methods, interlink, bank payments, or even online payments.

    It can be as simple as rifling for pocket change for coffee or paying an invoice online through a virtual terminal.  To be specific, a POS purchase refers to the actual point in time when a customer is making a cash or cashless purchase from a merchant.

    A POS is different from a POP (point of purchase), usually unrelated to a POS system. A POP refers to the physical location of the transaction, checkout area, or the last physical opportunity to sell to a customer before the sale takes place. Don't worry about this for now.

    What process does a POS purchase undergo?

    The terminal or card reader within a physical POS system refers to the hardware/ technology that facilitates processing payments. The system consists of a terminal or card reader which processes the payment and POS software that calculates and records the transaction receipt. Online POS purchases would use a virtual terminal to process invoices or eCommerce transactions. All of this is an integral part of the POS purchasing process. Here is what a POS purchase looks like in a chronological timeline (keep in mind this is all within a mere minute) :

    Step 1: A customer would like to pay for goods or services

    The merchant will calculate the amount due; Some POS systems calculate tax, tip, and offer features such as split payments.    

    Step 2:  Selecting a payment method  

    A terminal, card reader, or POS system is not required for cash transactions, only when paying via credit card or debit for in-person or virtual payments.  

    Step 3: The card reader/ terminal reads and processes the customer's card and sends a request for approval and verification.

    Step 4:  Payment is processed and recorded on the terminal and POS system and an emailed, or printed receipt option is prompted.    

    All of these four steps happen in the blink of an eye, but it consists of an entire process known as POS purchase.

    So then, how is a POS system different from a POS purchase?

    It comes down to how the POS purchase is made. A point of sale system is typically used to process credit cards or debits for in-person or virtual payments, whereas it is not inherently necessary for a cash POS purchase.

    Aside from being the software/ hardware used to collect a payment, POS systems have many other functions for merchants and their businesses. POS systems often have added perks and features to make the checkout process intuitive and efficient.

    For example, some POS systems include tools to streamline operations and processes, including:

    • Customized product inventory
    • Employee time clocks
    • Reporting capabilities
    • Customer tracking
    • Barcode scanners
    • Secure credit card vaults
    • Sales data and reports
    • Online payment portals and more.

    Setting up your business to take POS purchases

    Setting your business up to take POS purchases means more flexibility for customers and, in turn, an increased likelihood that you will make the sale as a merchant.

    Now that you're caught up to speed on what a POS purchase is and how it works let's cover a must-have list of what you will need to get started.

    Here is a checklist you can use to get started:

    Choose the right POS hardware and software

    There are many options out there when it comes to your POS hardware and POS software. First you should decide which type of payments you will need to accept whether that is through an online store or in-person. That will quickly narrow down which equipment you will need.

    If you are accepting in-person POS transactions consider whether you would prefer a checkout counter, a mobile POS system, or both.

    Here are some POS hardware device options including portable payment technology:

    • Ipad / tablet

    • Mobile phone

    • Laptop or desktop computer

    • Card reader

    • Cash register

    • Barcode scanners

    • Simple cash register

    • Receipt printer


    Companies must adhere to just a few stringent requirements to qualify to take cashless payments. These requirements keep merchants and cardholders safe from security breaches, fraud or lost/stolen information. Ensure your  POS system is PCI compliant to protect you and your customer's sensitive credit and debit card details. For example, a credit card vault will tokenize and store your customer data offsite to keep you safe from data breaches.


    Do I Need a POS system to make a POS purchase?

    Not all POS purchases require a POS system, although all payments collected through a payment system would be a POS purchase.

    Do I need a POS system if I only take cash POS purchases?

    Technically, cash exchange for goods or services is still a POS; however, it does not require a POS system.

    What is the cost of a POS system?

    The cost will vary depending on your payment processing company, the price of a card reader and POS system, any associated monthly fees such as credit card processing fees, and more. These costs can quickly add hundreds of dollars per month while being locked into contracts with hidden fees.

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