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What is POS (Point of Sale)?

A point of sale (POS) system is an essential tool for every small business owner, capable of streamlining sales processes, payments, inventory, and managing business functions like accounting, rostering and more. 

The term “Point of Sale (POS) System” has evolved from the marketing term “point of sale (POS)”, which refers to the physical, in-store location where a retail transaction occurs when a customer pays the merchant for goods or services. 

Smartpay EFTPOS machine lying next to laptop with Vend POS

If you’re a Kiwi business owner looking to upgrade your current setup, we have developed a guide to help you understand the basics of a POS system and how to choose the right one for your business. Our guide covers everything from the key features to look for, to the benefits of integrating your POS system with a payment solution like Smartpay. So let’s jump right in to discover:

What is a Point of Sale (POS) system?

A Point of Sale (POS) system is a technology solution comprising of software and hardware that simplify and optimise business operations, including payments, inventory and sales & marketing – all from a single centralised location. 

POS systems can help businesses in several ways, including:

  • Increased efficiency: POS systems automate many of the manual inputs involved in the sales process, freeing up employee time and reducing the risk of human error. Consequently, you can keep queues moving quickly and process more sales.
  • Improved customer experience: By offering fast and accurate transactions, businesses can provide a better customer experience, encouraging repeat business and positive word-of-mouth referrals.
  • Better data management: POS systems provide a centralised location to store and manage customer and sales data, enabling businesses to better understand their operations and make informed decisions. This also works well for multi-site businesses.
  • Acceptance of a variety of payment types: Modern POS systems integrated with EFTPOS machines can accept a range of payment types, including cash, credit & debit cards, gift vouchers, and mobile payments, making transactions faster and more convenient for customers.

A POS system is a valuable investment for businesses looking to streamline operations, provide better customer experiences, and access valuable data insights. By reducing the time spent on manual processes, you can focus more on growing your business.

Who needs a Point of Sale system?

As a small business owner, it’s exciting to have so many tools and technologies at your disposal to help you succeed. One tool that can make a big impact on your business is a POS system. 

POS systems are available for nearly all businesses and industries today. Almost any business operating within any industry can benefit from having a POS system. Here are some examples of how POS systems help various industries: 

  • Retail: POS systems can help retailers manage inventory, track customer behaviour, and streamline the checkout process.
  • Restaurant and Food Service: POS systems help restaurants manage orders, track food inventory, and streamline payments.
  • Healthcare: POS systems can assist healthcare providers in managing patient information, scheduling appointments, and processing payments.
  • Beauty and Wellness: Salons, spas, and other beauty and wellness businesses can use POS systems to manage appointments, track inventory, loyalty programs, and process payments.
  • Hospitality: Hotels, resorts, and other hospitality businesses can use POS systems to manage reservations, track room inventory, and handle payments, including tipping and pre-authorised transactions.
  • Fitness and Leisure: Gyms, yoga studios, and other fitness and leisure businesses can use POS systems to manage memberships, track equipment usage, and process payments.
  • E-commerce: Online retailers can use POS systems to manage inventory, process payments, and track customer behaviour.

While certain POS systems can be industry-specific, others are multi-industry to fit the needs of any business. With developments in technology, POS systems have also become customisable and adaptable to specific business requirements; with the ability to integrate with third-party software to further increase their potential.

How does a Point of Sale system work?

At its most basic level, a POS system calculates the total of a customer’s purchase, facilitates payment processing (through integrated payment hardware), and adjusts inventory levels to reflect the sale. The standard process an integrated POS system follows is below:

  1. Customer buys your product or service: A customer decides to purchase your goods or services. When the customer is ready to make a purchase, the business employee uses the POS system to initiate the transaction.
  2. POS system calculates the price of the sale: Once the employee rings up the sale on the POS, the system provides a list of available payment options, such as credit cards, debit cards, or cash.
  3. Customer makes a payment: The customer chooses the desired payment method, and the POS system automatically sends the transaction over to the EFTPOS terminal which processes the payment.
  4. Proof of purchase: The POS system then provides the customer with a receipt, which serves as proof of purchase and can be used for returns or exchanges. It also creates a merchant copy of the receipt.
  5. Finalising the sale and adjusting inventory: The POS system updates the business’ inventory, keeping track of what has been sold, what is available and what needs to be restocked.

It’s important to note that different POS systems can vary depending on the service provider. Some POS systems may offer more features, such as the ability to manage employee schedules or process online orders. While others may focus more on providing a simplified on-screen food ordering system for customers that directly prints kitchen tickets for staff.

Listing your requirements and diving deeper into the different types of POS systems and features available can help you choose the right one for your small business.

The makeup of a POS system

A POS system is typically made up of hardware and software components, either on-premise and/or cloud-based. Depending on its capabilities, It can also have integrations with third-party software (such as for accounting) and hardware (such as EFTPOS machines).
These components work together to handle your day-to-day tasks while keeping track of and generating reports for different areas of your business.

POS hardware

The specific hardware included with a POS system will depend on the needs of the business and the capabilities of the POS software and other 3rd party integrations. Common types of hardware that come with a POS system include:

  • Screens: A POS system usually features one or two screens, one for the cashier and one for the customer. The cashier’s screen supports tasks such as transaction administration, item management, discount management, loyalty programs, payments, and inventory lookups. The customer screen, on the other hand, displays transaction items and totals.
  • Till: A secure cash drawer is usually present for accepting cash payments.
  • Barcode Scanner: A barcode scanner speeds up transactions by scanning items, reducing manual lookup errors and increasing the volume of transactions.
  • Printers: A printer produces receipts, quotes, and vouchers using paper rolls. It can also produce end-of-day reports and print invoices.
  • EFTPOS terminal or Card Reader: An integrated EFTPOS terminal facilitates the acceptance of payments through credit and debit cards, contactless payments like Apple Pay and Android Pay, and loyalty programs such as Fly Buys or Airpoints. Some POS hardware might also allow payments to be accepted directly from its own card reader.

POS software

Most POS software will come with a range of different industry or business-specific features which help you manage your tasks. Depending on your needs, you might choose a POS software that comes with some or all of these features.

  • Inventory & Order Management: This component helps a business manage its stock levels, product information, and sales data. Depending on the level of complexity, it can also provide stock alerts and place orders with suppliers.
  • Customer Management: Helps track customer information and purchase history, allowing for targeted marketing, promotions management and loyalty programs.
  • Payment Processing: This component integrates with payment providers and EFTPOS terminals to process transactions and accepts payments from customers.
  • Employee Management: To manage employee time tracking, schedules, and permissions/access levels for different tasks within the POS system.
  • Accounting – This can be within the POS or an integration with external software like Xero or MYOB to manage reconciliations, invoices and payments for the business.
  • Reporting and Analytics: This component provides detailed insights into business performance, including sales, inventory, and customer behaviour. This is also very useful for businesses with multiple sites.

Advantages of Point of Sale systems

A POS system can be a crucial component of any small business and offer a number of benefits to business owners. Here are some of the key advantages of using this system:

  • Increased efficiency: Streamline your checkout process, reducing the time customers spend waiting in line. This can result in improved customer satisfaction and increased sales.
  • Better inventory management: POS systems can track your inventory levels in real-time, making it easier to order and track stock and reducing risks like shortages or over-stocking.
  • Data insights and reporting: Most POS systems can provide detailed reports on sales, inventory, customer behaviour, and more, giving you a better understanding of your business performance, and allowing you to make informed business decisions.
  • Streamlined payment processing: By directly sending over transactions to the EFTPOS terminal; the risk of manual errors is greatly reduced. Automating manual keying allows transactions to be processed quickly and efficiently, reducing lines and improving the customer experience.
  • Improved customer service: A POS system can store customer data, making it easier to manage customer relationships and personalise interactions with them. You can also easily manage tasks like bookings, loyalty programs and discounts.

Does my business need a POS system?

The advantages of a POS solution are many and varied, but ultimately it comes down to what is best for your particular business. Almost any business can benefit from a POS, but customer-facing or businesses with fast-moving inventory would find POS systems invaluable. There are some initial considerations small businesses will need to take into account:

  • Costs: Depending on the requirements of your business and the complexity of tasks, you might want to consider the initial outlay to get the right system. Most POS systems charge a monthly subscription fee. There are cost-effective and free options available for small businesses that want to explore the benefits of a POS.
  • Training: The effectiveness of a POS system will depend on how well it is used and maintained. To ensure this, you would need to consider effective training methods for staff and new employees.
  • Set-up and maintenance: You might need to invest time and money for the initial set-up of the system, including integration with third parties and having the right network infrastructure at your place of business. There may also be ongoing costs associated with subscriptions and additional features.

How to choose the best POS system

Often a POS system can be the missing piece of the small business puzzle, giving you the boost you need to take processes and reporting to the next level. However, the number of options and information can be overwhelming. Narrowing it down to some key considerations ensures you’re looking in the right direction for the best solution. Here are some factors to consider:

Industry-specific systems

One of the first things to consider is whether or not the system you are researching is industry-specific. Some POS systems are designed specifically for certain types of businesses, such as retail, hospitality, or beauty. These systems offer features and functionalities tailored to the specific needs of that industry, making it easier to manage your business processes.

Before investing in a system, ask yourself things like:

  • Does this system cater specifically to my industry?
  • Are the POS features and functionalities relevant to my business needs?
  • How many other businesses in the same industry use this platform?

User experience

The user experience is an important factor to consider. A system with a clean, intuitive interface will make it easier for employees to use, increasing productivity and reducing frustration. When evaluating user experience, ask yourself:

  • Is the interface easy to navigate?
  • Are the features accessible and straightforward to use?
  • Does the system provide training and support for employees?

Reporting and analytics

The user experience is an important factor to consider. A system with a clean, intuitive interface will make it easier for employees to use, increasing productivity and reducing frustration. When evaluating user experience, ask yourself:

  • Is the interface easy to navigate?
  • Are the features accessible and straightforward to use?
  • Does the system provide training and support for employees?

Easy integrations

Finally, it’s important to consider how easy the system will be to integrate with your current business processes. You want to find a system that can seamlessly integrate with your existing tools and software, saving you time and reducing the complexity of managing multiple systems. When evaluating integrations, ask yourself:

  • Can the system integrate with my existing software and tools?
  • Does the system provide API or developer resources for custom integrations?
  • Is the system compatible with my hardware and technology setup?


As a business owner, it is important to look into the future and consider a POS system that can support your business as it grows and scales. Systems that are modular and can easily add-on new functionality as you need it would serve you best as your business grows. Consider asking questions like:

  • Will this system support multiple stores or sites?
  • Can I add and remove employees easily?
  • How can I capture more customer data and run integrated marketing campaigns?

By keeping these considerations in mind when researching POS systems, you can ensure you find the best solution for your small business that fits seamlessly into your existing processes and supports your growth and success. 

How POS systems seamlessly integrate with Smartpay

Point of sale (POS) systems and payment processing go hand-in-hand for many small businesses. Integrating these two systems can lead to a more streamlined and efficient checkout process for customers. Smartpay offers a unique solution for small businesses by providing easy integrations with a variety of POS systems.

All our integrations are built in-house with no involvement from third-party providers, making it easy for us to facilitate set-up and provide assistance when you need it.  This integration also provides you with a wealth of reporting and analytics data, to better understand sales, revenue and customer behaviour.

Smartpay offers a free POS system called Till2Go that easily integrates with our EFTPOS terminals to provide a seamless solution. If you like the sound of a POS and want to trial one for your business, Till2Go is easy-to-use and suits multiple industries. 

With a unified solution for sales management and payment processing, you can save time and increase efficiency compared to using separate systems. Backed with Smartpay’s 24/7 support promise, you know you can get help anytime you need it. 

If you’re interested in learning how you can benefit from an integrated EFTPOS solution, get in touch with Smartpay today or learn more here. We would be more than happy to discuss your options and help you find the best solution for your business.

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