Point of Sale (POS)

A point of sale (POS) is the place and moment at which a customer pays for goods or services, and, by extension, the system a business uses to record the sale and take the payment. In a shop it is the checkout counter with its till, scanner, receipt printer and payment terminal; in a café it may be a tablet on the counter; online it is the checkout page.

In payments language the term has two layers. The "POS system" is the merchant's business software that tracks items, prices, taxes, staff and stock. The "POS payment" is the card or wallet transaction captured at that moment and sent to the merchant's acquirer. The two are often supplied by different companies and joined by an integration. Card schemes, data-security standards and national tax rules govern different parts of the set-up.

A point of sale is the modern version of the shopkeeper's counter, cash drawer and order book rolled into one. When a customer buys a coffee, the system writes down what was sold, works out the total and the tax, takes the money and remembers the sale for the end-of-day accounts.

The payment part is like handing a cheque to a clerk who phones the bank before accepting it, except that it happens in a second or two. The till asks the payment terminal to collect the card, the terminal asks the bank, and the till prints the receipt once the answer comes back.

• Software. The application that holds the product list, prices, discounts, tax rules and sales history. It may run on a local computer or in the cloud.
• Input hardware. Barcode scanners, touchscreens, keyboards and scales used to ring up items.
• Payment acceptance. A terminal or card reader that handles chip, contactless payments and, where offered, QR code payments.
• Output and storage. Receipt printers, cash drawers and kitchen display screens.
• Back-office links. Connections to inventory, accounting, loyalty and staff-scheduling systems, and to the merchant's bank for cash reconciliation at the end of the day.

Older set-ups used a dedicated electronic cash register and a separate standalone card terminal, with the cashier keying the amount into both. Integrated systems pass the amount from the till to the terminal automatically, which removes keying errors and lets the payment result flow straight back into the sales record.

1. The cashier finalises the basket and the POS software sends the total to the terminal.
2. The customer taps, inserts or swipes a card or phone; the terminal reads it and asks for a PIN or other check where the rules require one.
3. The terminal sends an authorization request through the acquirer and the card networks to the card issuer, which approves or declines.
4. The approval code returns to the till, which closes the sale and prints a receipt.
5. At the end of the day the terminal's batch is submitted for clearing, and funds reach the merchant's merchant account after settlement, minus the merchant discount rate.

These are card present (CP) transactions, which generally carry lower fraud and lower interchange than online sales because the chip produces a one-time cryptogram that a fraudster cannot easily copy.

• Fixed retail POS. Checkout lanes in supermarkets and department stores, often with several terminals linked to one store server.
• Hospitality POS. Systems built around tables, tabs, tips and kitchen orders, common in restaurants and bars.
• Mobile POS. A phone or tablet with a card reader, used by market traders, delivery drivers and pop-up shops; see mobile point of sale (mPOS).
• Self-service POS. Self-checkout tills, kiosks and vending machines with built-in readers.
• Online POS. The checkout of an online shop, connected to a payment gateway or, in markets such as Turkey, a bank's virtual POS.

Several rule sets meet at the checkout. Card data handled by the POS is covered by the Payment Card Industry Data Security Standard (PCI DSS), version 4.0.1 since 2024, and merchants that keep card numbers out of their till software (by letting an encrypting terminal handle them) reduce what they must assess. Terminal hardware must meet EMVCo and PCI PIN security approvals. In the European Union and the UK, in-store payments fall under strong customer authentication (SCA) rules, with an exemption for low-value contactless transactions.

Tax authorities in many countries also regulate POS systems. Several EU states, such as Italy and Croatia, and Pakistan's Federal Board of Revenue POS integration scheme for large retailers require sales data to be reported to the tax authority in real time or near real time, so that recorded turnover can be checked against declared tax.

In several emerging markets POS terminals also act as cash points: in Nigeria and other countries, agents use them to offer withdrawals and transfers to people without easy access to a bank branch or an automated teller machine (ATM), which ties the point of sale to financial inclusion.

• PCI Security Standards Council
• EMVCo