POS SYSTEM

SlashMyFees platform has many mentions to a credit card terminal, so we wanted to explain that term in more detail. A credit card terminal, also known as a point of sale terminal, payment terminal, EFTPOS terminal is a device which interfaces with payment cards to facilitate electronic funds transfers.

Another term we often use on the SlashMyFees website is a Point of Sale (POS) system. It is important to understand this terminology from a broader perspective so we'd like to give you some background on the origins of POS.

The point of sale (POS) designates the time and place where a transaction is completed. For our purposes, it is the point at which a customer makes a payment to the merchant in exchange for goods or services. At the point of sale, the merchant would prepare an invoice for the customer (which may be a cash register print out) or otherwise calculate the amount owed by the customer and provide options for the customer to make payment. After receiving payment, the merchant will also normally issue a receipt for the transaction. Usually the receipt is printed, but it is increasingly being dispensed electronically.

Another term we often use on the SlashMyFees website is a Point of Sale (POS) system. It is important to understand this terminology from a broader perspective so we'd like to give you some background on the origins of POS.

The point of sale (POS) designates the time and place where a transaction is completed. For our purposes, it is the point at which a customer makes a payment to the merchant in exchange for goods or services. At the point of sale, the merchant would prepare an invoice for the customer (which may be a cash register print out) or otherwise calculate the amount owed by the customer and provide options for the customer to make payment. After receiving payment, the merchant will also normally issue a receipt for the transaction. Usually the receipt is printed, but it is increasingly being dispensed electronically.

For example, a grocery store may use a scale with the POS system while a restaurant may use software to customize the item or service sold when a customer has a meal or drink request. The POS systems in various retail situations would use customized hardware and software tailored to their particular requirements. Retailers may utilize weighing scales, scanners, electronic and manual cash registers, EFTPOS terminals, touch screens and a variety of other hardware and software available to accurately calculate the cost and charge their customers.

The point of sale is also referred to as the point of service because it is not just a point of sale but also a point of return or customer order. Additionally, today POS systems may include additional features to cater for different functionality, such as inventory management, CRM, financials, warehousing, etc.

The area around the POS system is often referred as the point of purchase (POP) when it is discussed in a marketing context from the retailer's perspective. POP is critical for any retail business when planning and designing the POP area as well as when considering a marketing strategy and offers.

Some point of sale vendors refers to their POS system as "Retail Management System" which is a more appropriate term given that this software is no longer just about processing sales but comes with many other capabilities:

  • inventory management
  • membership system
  • supplier recordkeeping
  • bookkeeping
  • issuing of purchase orders
  • Issuing of quotations
  • stock transfers
  • barcode label creation
  • sale reporting

Let's look at the history of POS systems:

Hardware interface standardization after the 1980s

Vendors and retailers are working to standardize development of computerized POS systems and simplify interconnecting POS devices. Two such initiatives are OPOS and JavaPOS, both of which conform to the UnifiedPOS standard led by The National Retail Foundation.

OPOS (OLE for POS) was the first commonly adopted standard and was created by Microsoft, NCR Corporation, Epson, and Fujitsu-ICL. OPOS is a COM-based interface compatible with all COM-enabled programming languages for Microsoft Windows. OPOS was first released in 1996. JavaPOS was developed by Sun Microsystems, IBM, and NCR Corporation in 1997 and first released in 1999. JavaPOS is for Java what OPOS is for Windows, and thus largely platform independent.

There are several communication ways POS systems use to control peripherals such as:

  • Logic Controls \ BemaTech
  • Epson Esc/POS
  • UTC Standard
  • UTC Enhanced
  • AEDEX
  • ICD 2002
  • Ultimate
  • CD 5220
  • DSP-800
  • ADM 787/788
  • HP

There are also nearly as many proprietary protocols as companies making POS peripherals. Most POS peripherals, such as displays and printers, support several of these command protocols to work with many different brands of POS terminals and computers.

Software before the 1990s

Early electronic cash registers (ECR) were controlled with proprietary software and were limited in function and communications capability. In August 1973, IBM released the IBM 3650 and 3660 store systems that were, in essence, a mainframe computer used as a store controller that could control up to 128 IBM 3653/3663 point of sale registers. This system was the first commercial use of client-server technology, peer-to-peer communications, local area network (LAN) simultaneous backup, and remote initialization. By mid-1974, it was installed in Pathmark stores in New Jersey and Dillard's department stores.

One of the first microprocessor-controlled cash register systems was built by William Brobeck and Associates in 1974, for McDonald's Restaurants. It used the Intel 8008, a very early microprocessor. Each station in the restaurant had its own device which displayed the entire order for a customer—for example, Vanilla Shake, Large Fries, Big Mac—using numeric keys and a button for every menu item. By pressing the [Grill] button, a second or third order could be worked on while the first transaction was in progress. When the customer was ready to pay, the [Total] button would calculate the bill, including sales tax for almost any jurisdiction in the United States. This made it accurate for McDonald's and very convenient for the servers and provided the restaurant owner with a check for the amount that should be in the cash drawers. Up to eight devices were connected to one of two interconnected computers so that printed reports, prices, and taxes could be handled from any desired device by putting it into Manager Mode. In addition to the error-correcting memory, accuracy was enhanced by having three copies of all important data with many numbers stored only as multiples of 3. Should one computer fail, the other could handle the entire store.

In 1986, Gene Mosher introduced the first graphical point of sale software under the ViewTouch trademark on the 16-bit Atari 520ST color computer. It featured a color touchscreen widget-driven interface that allowed configuration of widgets representing menu items without low level programming. The ViewTouch point of sale software was first demonstrated in public at Fall Comdex, 1986, in Las Vegas Nevada to large crowds visiting the Atari Computer booth. This was the first commercially available POS system with a widget-driven color graphic touch screen interface and was installed in several restaurants in the USA and Canada.

Modern software after the 1990s

In 1992, Martin Goodwin and Bob Henry created the first point of sale software that could run on the Microsoft Windows platform named IT Retail.[11] Since then a wide range of POS applications have been developed on platforms such as Windows and Unix. The availability of local processing power, local data storage, networking, and graphical user interface made it possible to develop flexible and highly functional POS systems. Cost of such systems has also declined, as all the components can now be purchased off-the-shelf.

In fact as far as the computer is concerned, off-the-shelf versions are usually more powerful than those proprietary pos terminals provided by POS vendors and more RAM can also be easily added if needed. Furthermore, touchscreen tablets and laptops - both Windows or Android types - are readily available on the market. And they are also more portable than traditional pos terminals. The only advantage of the latter is they are built to withstand rough handling, food and drink spillages; however this is not a concern for non-Food & Beverage businesses.

The key requirements that must be met by modern POS systems include high and consistent operating speed, reliability, ease of use, remote supportability, low cost, and abundant functionality.

Reliability depends not completely on the developer but at times on the compatibility between a database and an OS version. For example, Microsoft Access database used very widely for POS systems is known to fail for Windows 7 and upward versions and no solution has been offered by Microsoft. However through community support, a registry tweak solution has been found by a developer for this.

That such a serious compatibility bug has emerged for Microsoft Access database is shocking even to veteran developers using Windows, some of whom may not be able to find the solution. Businesses using POS systems with Microsoft Access database were caught off guard when they upgrade from Windows XP to a newer version of the OS. As a result, their businesses were severely disrupted, but some suspecting it had something to do with OS upgrade took the initiative to downgrade quickly back to Windows XP.

POS systems are by far one of the most complex of software because of the features that are required by different end-users. The reporting functionality alone is subject to many demands especially from those in the retail/wholesale industry.

POS systems are also very demanding regarding accuracy given that monetary transaction is constantly involved not only via the sale window but also at the backend through the receiving and inputting of goods into the inventory.

A POS system in some retail/wholesale businesses is often attempted to be used as inventory management system which is a highly sophisticated software by itself not to mention that inventory management is a full-time job which many businesses are not prepared to undertake.

When a user wants to find out how his products are performing the POS system must be able to provide a comprehensive report of not only the sales but also the balance quantity, profit margin, so forth.

Other requirements include that the system must have functionality for membership discount and points accumulation/usage, quantity and promotional discounts, mix and match offers, cash rounding up, invoice/delivery-order issuance with outstanding amount. It should enable a user to adjust the inventory of each product based on physical count, track expiry of perishable goods, change pricing, provide audit trail when modification of inventory records are performed, be capable of multiple outlet functionality, control of stocks from HQ, doubling as an invoicing system, just to name some.

It is clear that POS system is a term that implies a broad range of capabilities depending on the end-user requirements. POS system review websites cannot be expected to cover most let alone all the features; in fact unless one is a developer himself it is unrealistic to expect the reviewer to know all the nuts and bolts of a POS system. For instance a POS system might work smoothly on a test database during review but not when the database grows significantly in size over months of usage. And this is only one among many hidden critical functionality issues of a POS system.

Although POS systems based on the sale window interface alone all appear, to be similar it is really under the hood that end-users come to know by and by whether the software functionality they required are available. For this reason for those looking to purchase a POS system, perhaps one of the best routes to a prudent purchase decision is to find out from other users in a similar trade about their experience with various POS systems. Given the complexity of the software, even this fact-finding process takes much effort, but it is far better than ending up with a system that you will live to regret for years.

Another way is to ask for a demo installation of the POS system from a vendor so that you can test out the functionality. However, because of the complexity of the software, it is not likely that you may get to test out the features comprehensively enough.

Another alternative is to consider engaging an expert in POS systems to source for a suitable one. However experts in this field are not easy to find. Nevertheless if found investing in such consultation is very critical especially when your business is large and highly dependent on acquiring the right system. This implies not just in terms of technical functionality of the system but also in terms of licensing issues such as whether your company can acquire the source code to ensure that future development of the software is not dependent on the survival of the original developer.

Cloud-based POS after the 2000s

The advent of cloud computing had given birth to the possibility of POS systems to be deployed as software as a service, which can be accessed directly from the Internet, using any internet browser. Using the previous advances in the communication protocols for POS's control of hardware, cloud-based POS systems are independent from platform and operating system limitations. Cloud-based POS systems are also created to be compatible with a wide range of POS hardware and sometimes tablets such as Apple's IPad. Thus cloud-based POS also helped expand POS systems to mobile devices, such as tablet computers or smartphones. These devices can also act as barcode reader using a built-in camera and as payment terminal using built-in NFC technology or an external payment card reader. A number of POS companies built their software specifically to be cloud-based. For example, Epos Now's POS software has been cloud-based since it launched in 2011. Other businesses who launched pre-2000s have since adapted their software to adapt to evolving technology. Cybertill which is based in the UK, claims to be the world's first multi channel cloud-based POS system.

Cloud-based POS systems are different from traditional POS primarily because user data, including sales and inventory, are not stored locally, but in a remote server. The POS system is also not run locally, so there is no installation required.

The advantages of a cloud-based POS are instant centralization of data (necessary to chain stores), ability to access data from anywhere there are an internet connection and lower startup costs.

Cloud-based POS requires an internet connection. For this reason it important to use a device which has built-in 3G capability in case the device's primary internet goes down. First Data's Clover mini and mobile are examples of cloud-based POS, which have their internet capability if the primary internet fails.

In addition to being significantly less expensive than a traditional legacy point of sale systems, the real strength of a cloud-based point of sale system is that there are developers all over the world creating software applications for cloud-based POS. Cloud-based POS systems are often described as future-proof as new applications are constantly being conceived and built.

POS vendors of such cloud-based systems should also have a strong contingency plan for the breakdown of their remote server such as represented by failover server support. However, sometimes even a major Microsoft data center can fail completely such as in a fire. On-premise installations are therefore sometimes seen alongside cloud-based implementation to preempt such incidents especially for businesses with very high traffic. However the on-premise installations may not have the most up-to-date inventory and membership information.

For such contingency, a more innovative though highly complex approach for the developer is to have a trimmed down version of the POS system installed on the cashier computer at the outlet. On a daily basis, the latest inventory and membership information from the remote server is automatically updated into the local database. Thus should the remote server fails, the cashier can switch over to the local sale window without disrupting sales. When the remote server is restored and the cashier switches over to the cloud system, the locally processed sale records are then automatically submitted to the remote system, thus maintaining the integrity of the remote database.

Now that you have learned all about the history of the POS systems, we encourage you to check your reduced rates and fees on our platform for saving up to 60% on your current fees.