Point-of-Sale (POS): A U.S. News Guide

There was a time where a single cash register would have been considered the height of point-of-sale (POS) technology. Now, a basic register is considered the bare minimum, and POS systems have become an integral part of operating a retail or restaurant business. Current POS solutions help users do everything from handle payments to manage day-to-day chores such as the employee payroll. Cloud-based POS software can update data in real time from several locations and even produce end-of-day reports.

In this guide, we will help you sort through the various software and hardware features of today’s best POS solutions. There are also links to the Best POS Systems of 2021, Best POS Systems for Restaurants, Best POS Systems for Retail, and How to Use a POS System pages. These pages can help you find the POS system that best fits your business needs.

What Is a Point-of-Sale System?

An individual point-of-sale is where a sale occurs. Examples include your online storefront or a specific cash register in your brick-and-mortar location. A point-of-sale system consists of two parts: the hardware and the software. The hardware may include a card reader, cash register, and receipt printer. POS software is responsible for recording the transaction and sending that information along with debit or credit card information for payment processing.

It's easy to confuse the idea of a POS system completing a transaction (taking someone’s payment in exchange for your goods or food) with payment processing. Payment processing is when the payment processor acts as a go-between for the merchant account (a business account that allows businesses to accept debit and credit card payments) and the customer’s bank. See What Is a Merchant Account? and What Is a Payment Processor? for more information.

POS software can include a wide variety of features and apps that extend the functionality of a POS system beyond that of just taking and recording sales. For example, these can help you handle your company's marketing, payroll, accounting, and inventory.

Types of Point-of-Sale Systems

In general, there are two POS categories: retail and restaurant. Though these are the most common types of businesses, there are also POS solutions for appointment-oriented businesses (as offered by Square) and golf courses (as offered by Lightspeed). While most of the companies in our ratings offer a cloud-based POS system, a few have an on-premise option.

Retail

A retail POS system provides sales solutions for retail locations that are either virtual (e-commerce) or physical (brick-and-mortar). Retail POS systems often have an emphasis on inventory management and back-office functions (this includes accounting, marketing, and employee payroll). These functions can be synced across multiple retail locations, e-commerce platforms, and warehouses. For example, if a customer asks for an item that is out of stock in one location, you can use an integrated POS system to either tell your customer where it is in stock or have the item sent to your location.

Restaurant

A restaurant POS system typically offers tailored functions such as menu management and the ability to coordinate front-of-house activities (those of the waitstaff and the hosts) and back-of-house activities (those of the chefs and kitchen staff). You can often customize these to accommodate specific types of eateries, including food trucks, quick-service bakeries, or full-service restaurants. Other hardware options include kiosks where customers can place their own orders.

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Best POS Systems of 2021

Not all POS providers are right for every type of business, with some focusing on retail needs and others catering to restaurants. Some work for both. We've listed these below in our rating of the Best POS Systems. These can be of special benefit to combination businesses, whether it is a restaurant with a gift shop or a retail location with an attached snack bar. Follow the links in the companies' names to read our full reviews. You can also read more about the Best POS Companies of 2021 here.

Best POS Systems for Retail of 2021

We've listed the Best POS Systems for Retail below. These systems can accommodate a variety of retail businesses, including brick-and-mortar and web-based companies. Follow the links in the companies' names to read our full reviews. You can also read more about Best POS Systems for Retail here.

Best POS Systems for Restaurants of 2021

We've listed the Best POS Systems for Restaurants below. These companies tailor their POS solutions to the restaurant industry. Many offer software and hardware specialized for specific types of eateries whether they are a quick-service restaurant, bar, food truck, or full-service restaurant. Follow the links in the companies' names to read our full reviews. You can also read more about the Best POS Systems for Restaurants here.

How to Use a POS System

To use a POS system on an e-commerce platform you need to have internet access, a merchant account, a processor with a payment gateway, and a subscription with a POS provider. Use a tablet or computer to set up an online store to sell your goods and services. A merchant account will allow you to accept payments from debit or credit cards, and a payment processor acts as a go-between for your merchant account and the customer’s bank account. The POS system ties this all together as it records the transaction, passes along the necessary information to the payment processor, and compiles all your activities into a variety of reports.

If you have in-store transactions, you may also need some additional hardware. While your exact needs are dependent on your business, common items include a cash drawer, a card reader, a receipt printer, and a POS terminal. The terminal type varies depending on your POS provider. Some use a tablet, such as an iPad POS system. Tablet-based systems create a mobile POS and can be an excellent choice for a small business, such as a food truck, or an on-the-go retailer that sells at farmers markets, festivals, or conventions. Some POS providers require you to purchase a proprietary terminal to use with their system.

A payment processor integrates with, and is sometimes part of, your POS system. It enables you to accept various types of payments depending on your payment card reader. Some card readers only read the magnetic strip on the back of the card when you swipe it through the machine. Many will include an EMV reader to accept chip cards. EMV stands for Europay, Mastercard, and Visa, which are the three companies that created the standard for this type of payment. This is sometimes referred to as a dip payment because of how you insert the card into the reader. And a third type of payment is a near-field communication (NFC) payment, also known as contactless payment or a tap payment. Examples of this include Apple Pay and Google Pay, which customers access with their smartphone or smart watch, and contactless credit cards.

More sophisticated features in a POS system include a barcode printer to print out labels to go on your merchandise. Scan the item into the system and when it is scanned again once it is sold, the information will adjust your inventory automatically. This can work for eateries as well by entering recipes for the various dishes on your menu. When a particular dish is ordered, the system adjusts the stock level depending on the different ingredients used in the dish and the quantity.

You can sync information from each transaction across multiple locations whether stores, restaurants, or warehouses to give you access to real-time data. A POS system can also use this information to generate end-of-day reports. These reports can update you on what things are selling, who is selling them, and when you are low on stock. Some systems even include a self-ordering feature where your POS system will order new stock when inventory levels reach a preset level.

Restaurants can use a POS system to manage the menu, tables, coordination between front-of-house staff and the kitchen, and online orders for takeout or delivery. Some sync with delivery companies like DoorDash, Postmates, and Grubhub.

You can also use your POS system for back-office tasks like employee management and payroll. Many will also integrate with programs like QuickBooks to make accounting easier.

For more information, visit our page How to Use a Point-of-Sale System.

How to Buy a POS System

Given the wide variety of POS systems, including the various features and hardware options, selecting one can be a daunting task. Here are some things to keep in mind when selecting a POS system.

One of the first things to keep in mind is that most POS systems are cloud-based subscription services that charge a monthly fee. Some of the factors that affect the cost are listed below.

Another thing to consider is ease of use. A complex POS system will not only make using it difficult but training new employees will also be more time intensive. An easy-to-use system cuts down on training time and also means faster transactions. You can use online demos and free trials to get some sense of how easy a system will be to learn.

Below are nine questions you should ask yourself when choosing a POS system.

Frequently Asked Questions

What is a merchant account? A merchant account is like a temporary holding account. Money is transferred there from your customer’s account after a purchase via your payment processor. After the payment processor initiates the exchange, the money goes from the customer’s account to your merchant account, and then from there to your business’s bank account. A merchant account may sometimes be provided by your payment processor.

What is a payment processor? This is the company that facilitates the transfer of funds after a customer makes a purchase. When a purchase is made, the payment processor contacts the customer’s bank, ensures there is enough money in the customer’s account, and then transfers the money to your merchant account.

Will I need a separate payment processor? You will likely not need a separate payment processor. Most of the companies on our list include their own payment processor with the POS solution. Of those that don’t, you will need to choose from among the payment processors that the companies support.

Some POS companies allow you to choose your own third-party option if you really want to choose your own payment processor. It must be compatible with the POS provider’s system, and the POS may charge you a processing fee in addition to the one charged by the payment processor, so, this may not be your most cost-effective option.

The Best POS Systems of 2021

Directory of U.S News Point-of-Sale (POS) System Guides

For more information on point-of-sale (POS) systems, please see our pages:

How U.S. News Evaluated POS systems

We explain what matters most when it comes to POS systems by sourcing experts and professional reviewers. We also provide an unbiased evaluation of POS systems. Our goal is to empower businesses with the information and tools they need to make informed decisions. More information about our 360 Reviews methodology for evaluating POS systems is available here.