Running a store, cafe, restaurant, gas station, beauty salon, and other establishments of the sort requires you to constantly resolve administrative and management issues. That's where POS systems come to the rescue. They help business owners effectively organize the work of employees and simplify their daily tasks and professional duties.
If you don't have your own POS system yet, it's high time to amend the situation and buy, rent, or build the best point-of-sale solution. Not sure where to start? Then carefully read our article, as we're going to explain to you how to approach POS software development and choose hardware compatible with it.
What is a POS system?
Let's start our conversation by deciphering the POS abbreviation. What does it mean?
So, POS stands for ‘Point of Sale’ or ‘Point of Service’. More specifically, we're talking about a complete set of hardware and software, which task is to automate processes in the sales and service provision areas.
POS solutions aim at simplifying the work of service personnel (and, accordingly, speeding it up). In short, employees in a store, restaurant, or another similar institution use these systems to always have everything at hand, which means they can fulfill their duties quickly, efficiently, and competently.
The main equipment components of POS systems
Any Point-of-Sale system consists of POS software installed on a computer, a special terminal, and various peripheral devices connected to it.
We think we have to list and describe these devices, right? Just keep in mind, they may vary depending on the needs of your particular establishment.
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Fiscal registrar, that is, a cheque printer with a fiscal memory function. The task is clear from the name itself: printing cheques and various sorts of reporting documents, storing sales data, and so on;
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POS monitor of service personnel, which displays significant information to the operator (cashier in a supermarket, waiter in a cafe or administrator of a beauty salon);
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POS keyboard: it’s about data entry and transmission of control commands (sometimes POS keyboard is also equipped with built-in card readers);
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Buyer's screen, displaying data of interest to the consumer (say, the amount of money to pay);
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Barcode scanner, which makes it possible to quickly read the product code and get basic data about it;
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Cash box needed to store money safely;
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A device to read bank cards, whose key function is to organize the payment process with maximum comfort.
These are the main hardware components. But if you want to build a point-of-sale system working at a high level of efficiency, you may need other devices too (but again, be guided by the specifics of your business and its particular requirements): electronic scales, label printers, currency detectors, etc.
Where to use business POS solutions?
So, when should you make a POS system for your business? Let's take a closer look at a few basic examples:
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Grocery stores and hypermarkets. Naturally, the efficient operation of a major supermarket is impossible without the introduction of point-of-sale technologies. However, even a small grocery store would benefit from these systems.
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Any other point of sale: hardware stores, appliance shops, and the like.
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Catering places. A restaurant point-of-sale system will speed up the process of receiving and transferring customer orders to the kitchen.
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Places where services are provided, be it a hotel, cinema, casino, beauty salon, etc.
Key functions of POS systems
What is a POS system for, and what is it able to do? What functions does it perform?
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Identification of goods by barcode. The operator or cashier doesn’t need to memorize the entire range of goods the company sells. It's enough to scan the barcode of the product, and all the necessary information on it will be received and displayed automatically.
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Management of discounts and organization of loyalty programs. Such an opportunity would also come in handy, do you agree?
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Automatic payments. It's a very important function of POS solutions, without which it's impossible to imagine the work of a modern store, gas station, and other institutions of the sort.
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Controlling staff work. To start working with the system, an employee must be authorized, which means you can keep an eye on him.
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Formation of reports. Modern technologies help to collect statistics about your institution and analyze the information received with the aim of creating detailed reports on its basis. Usually, there're in-built, ready-made report templates, but you may customize your POS system according to your personal requirements.
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Simplified database management: the possibility to change information about the price of goods, the composition of the dish, and so on.
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Control of inventory balances. POS software stores the latest product data (we mean the automated recalculation of goods remaining in the warehouse or in the store itself). Thanks to this, sellers know if there is a need to order a particular product.
And that's not all by any means! Point-of-Sale systems focus on maximally facilitating the work of your employees by automating his or her routine activities.
The emergence of POS solutions
POS solutions have come a long way from the simplest mechanical cash registers (first half of the twentieth century) to complex multifunctional systems.
Let's break the history of development into stages and briefly examine each of them.
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It all started with two types of registrars: NCR registrars and Burroughs registrars. These were leverage-based cash registers, which recorded data in a special journal. They were less than perfect and not very convenient to use.
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A little later, more advanced recorders appeared (such as the NCR Class 5). They were no longer mechanical and powered by electricity.
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1973 had been marked by the introduction of the first computer systems (IBM 3653 Store System, NCR 2150, as well as TRW, Regitel, Darachecker) and the development of UPS / EAN barcode readers.
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Less than 10 years later, in 1986, IBM released a POS-based PC called the IBM 4683. It was a significant achievement at the time.
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In the late 1980s, POS vendors learned to introduce magnetic stripe readers, which allowed consumers to make contactless payments.
Modern Point-of-Sale systems include a lot of useful add-on modules targeted at customer interaction, inventory management, payroll, and more. Software and hardware work closely together to help manage the business properly.
We'll discuss different ways to create POS software later, but right now, we'd like to explore another issue, namely...
Early POS software formats
First electronic cash registers had integrated patent software, the functionality of which left much to be desired.
In the summer of 1973, IBM launched two special systems (the IBM 3650 and 3660 Store System) commercially using client-server, backup, local area network (LAN), and remote provisioning technologies. About a year later, these systems had been installed in Dillards and Pathmark stores in New Jersey.
A few more years passed, and in 1979 the owners of Gene Mosher's Old Canal Cafe (New York) implemented a POS system with software developed by the famous Mosher. The system was based on the Apple II and had useful features such as processing a customer order, transferring data to the kitchen, etc.
Since then, a lot of water has passed under the bridge, and Point-of-Sale solutions have turned into multifunctional complex programs, thereby becoming true salvation for many businesses.
But if you do want to develop a POS system of your own, you must understand how it works. We'll do our best to help you figure it out.
How do POS systems work?
Previously, sellers used to spend a lot of time issuing purchases, calculating balances, and completing other routine operations; luckily, now the situation has greatly improved. The cashier in the supermarket reads the product barcode using a special scanner, and the customer resorts to a bank terminal to pay for the purchase made (naturally, there is also an option to pay in cash): that's all, the process has started. The rest happens automatically, just a few clicks are required.
But what happens behind the scenes, so to speak?
The above diagram clearly illustrates how business POS solutions work. Let's explain it in words (in general terms):
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Scanning the product barcode. The scanner reads the barcode of the product, and the data about it is being automatically transferred to the cash register program: its price, markdown, possible discounts, etc. The program determines which product should be issued, generates a sales check, and so on. The employee just needs to accept money from the client and give him the product. And speaking of money and payment…
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Payment. First, the customer swipes the card over the terminal's reader. The card data is being sent to the POS system, which contacts the PSP (Payment Service Provider). PSP reaches the bank to initiate the transaction authorization procedure (which bank depends on the type of credit card). The buyer is now prompted to enter a PIN to confirm the transaction. If everything goes well, the authorization code is being sent to the POS system, and the buyer is informed that the payment has been successful.
The POS program automates and integrates front-office (supermarket checkout, waiter's terminal, etc.) and back-office (accounting, warehouse, HR and marketing department, establishment administration, and the like). Data exchange between these blocks goes on continuously, usually via a cloud server.
By the by, a cloud server isn’t the only way to solve the problem... There are other options besides cloud-based POS solutions too.
On-Premise vs. Cloud-based POS solutions
You have two basic options to choose from. Each of them has its pros and cons, and it's up to you what to select in your particular case.
On-premise solutions
On-premise means using your own resources to host software, namely:
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you can purchase a physical server and locate it within your organization;
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if you don't like the above option, you may rent a dedicated server in a data center.
Pros:
On-premise POS systems are considered more secure and protected because third parties don't have access to your corporate data. In addition, such a method to host software provides you with greater independence. You are your own master.
Cons:
Locating servers on the premises of your own company is a laborious and expensive task. You'll have to allocate a significant budget for equipment maintenance and hire specialists able to ensure its reliability and trouble-free operation.
And even if you decide to rent a dedicated server to host your software, you'll still face certain difficulties. Among other things, you'll have to fork out pretty much (rental fee, as you see).
Cloud-based systems
Forward-thinking entrepreneurs choose this particular model when all internal data is stored and processed in the so-called ‘cloud” (virtual server). Such a virtual server operates in a distributed computing environment and provides its services over the Internet.
Pros:
Cloud-based POS solutions have many benefits, such as:
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Good scalability;
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Payment on demand and after delivery;
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Stability in work;
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Access from any device anywhere in the world.
Cons:
The cloud server is provided by a third party and the client interacts only with its virtual part, which reduces the data security, as some believe. However, with the right approach to information protection, the problem can be easily solved.
POS Software Features
Below, we provide a detailed infographic to show you what features your Point-of-Sale system cannot do without. In words, we'll just briefly describe its key functional blocks:
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Inventory management. The 1st block will allow you to be always aware of the presence or absence of products in stock;
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Payments. Comments are unnecessary, aren't they?
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Analytics & Reporting. You'll be able to monitor the efficiency of your establishment.
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Loyalty policy so that your customers are always happy with your store or restaurant.
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Personnel Management, another mandatory functional block of POS systems.
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Additional blocks (see infographic below).
Main benefits of POS systems
Let's talk about the benefits of POS systems for your business... just in case we haven't convinced you of the expediency of POS software development yet.
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Improving the speed of customer service. Automation of processes allows you to serve customers in stores (and visitors to cafes) much faster, which means the queues will be reduced.
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Permanent remote business control. Business POS solutions provide real-time remote access to view any transactions and receive reports. It implies complete control over all processes taking place in the sales area. The actions of cashiers (and other employees) are also under control.
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Customer loyalty management. Consumers love all kinds of discount programs, coupons, and other promotions, and a modern point-of-sale system gives you the possibility to manage these marketing initiatives in a much easier way.
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Access to useful features. We’re referring to such features as a simplified inventory process, less paperwork; automatic reporting, control of inventory balances, and others.
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High work efficiency. Benefits of the POS solutions described above lead to greater efficiency of your employees and result in an increase in income.
So, we figured out WHY you should build a point-of-sale system... and now it remains to see HOW to do it.
How to make your own POS system
Before you consider purchasing or creating a point-of-sale system, you have to answer a key question: what exactly does your business need? What tasks should your Point-of-Sale platform solve? There are many options, as you could have already understood if you’re reading our article carefully: writing-off of items in the warehouse, provision of discounts, reporting, and much, much more. And only after answering the above question, you can move on to the next one, namely…
Where should you get your Point-of-Sale system?
Any POS system consists of software and hardware. And if you think you can buy hardware first and then choose the right software, we must warn you: this is a completely wrong approach to the issue.
But don't you worry! We're here to explain to you what to do. Let's start in order.
#1. Buying a Point-of-Sale system
The first course of action is to buy ready-made and well-tested POS kit with the installed software. You just have to customize your POS system and plug the equipment into the outlet. That's all!
Pros:
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fast start. As we’ve already explained, it doesn't take a lot of effort on your part to connect the equipment and start using it.
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ease of use. Usually, such ready-made POS systems are user-friendly and intuitive.
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Approved budget. You must allocate money just one time to buy the system, after which you’re welcome to take full advantage of it.
Cons:
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An inflexible solution. Ready-made Point-of-Sale systems aren’t always flexible enough and require individual customization.
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Technology obsolescence. Any technologies become obsolete over time, and POS solutions are no exception. Unfortunately, you'll have to update your program yourself (and, of course, it requires additional financial investments) since there is no support... which is another disadvantage of these off-the-shelf systems.
#2. POS software subscription
You have no desire or opportunity to invest a lot of money in purchasing a Point-of-Sale system? Then you may turn to experienced POS software providers and subscribe to their services. As a result, you'll be able to use their solution on a regular basis (with their full support, by the way!).
As to hardware, providers usually tell you which brands their software is compatible with.
Pros:
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Constant company support (24/7).
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Fast start. You'll be provided with assistance with configuring and starting the program.
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Access to system updates (which means you'd run no risk of the problem of obsolete technologies).
Cons:
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Security issue. You have no choice but rely entirely on the protective measures of the providers you've chosen.
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Monthly fee. You'll have to pay a monthly fee to the providers to use their services and support.
There’re a huge number of ready-made Point-of-Sale solutions on the market, as well as their providers. However even the most popular POS software is sometimes unable to meet the needs of your particular establishment, be it a shopping mall or a restaurant (or something else). And if it is the case, you’re left with the one and only way to act, namely...
Full POS software development
So you've decided to develop a POS system from scratch. What steps should you take?
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form detailed requirements for the future system (based on the specifics of your company);
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find and hire experienced developers skilled enough to make a POS system that meets these requirements;
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create POS software (and select compatible Point-of-Sale hardware).
Pros:
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A unique solution, which fully meets your requirements;
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Continuous software advancements and release of useful updates;
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System flexibility and project scaling with business growth;
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The most convenient UI and, accordingly, the best UX;
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System security due to the fact your data won’t be received by third parties.
Cons:
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The complexity of the project (you cannot cope with it yourself, without the help of POS software developers);
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Long start. If the time factor is critical, choose a different solution for your store, beauty salon, or restaurant;
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Lack of support (you’ll have to deal with the problems arising yourself);
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Significant financial development costs.
Although in the long run, the idea to develop a POS system from square one is good and profitable.
Tips on creating a point-of-sale system
What should be considered to make a POS system you've created successful and long-lasting? Let’s see!
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User-friendly interface. The task of the UI is to help your company's employees quickly learn to work with the Point-of-Sale system. The Initial familiarization with the program should take no more than half an hour.
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The type of your establishment. When choosing a POS system, your type of business is also important. Let's say, a restaurant should pay special attention to software, which must have certain features: a waiting list for payment, linking order to a table, the possibility to add a client's address to a check (if delivery is planned), etc. On the other hand, catering establishments don't need electronic scales, as opposed to retail stores.
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Good scalability. Keep in mind that your business may develop in the future, which should be taken into account when creating a point-of-sale system (and you had better think over each detail at the design and planning stages).
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Different access levels. Your system is going to be used by different employees: yourself, cashiers, salespeople, and so on. And it is unwise to provide everyone with full access to confidential information. The best way to approach the issue is to ensure reliable data storage with delimited access rights.
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Offline mode. Make sure your program is active even when there is no internet connection. Alas, it's not uncommon to have problems with Wi-Fi, but they shouldn't affect your business's workflow.
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Third-party integrations. It's also helpful to provide the possibility to integrate your system with other third-party programs (mobile loyalty apps, payment solutions, etc.).
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Reliable performance in all conditions. And of course, it makes no sense to create POS software, if it’s unreliable and ineffective.
