POS: What it is, How it works and How to choose it according to your payment needs

Accepting card payments in physical stores is not only a growing trend, but the presence of a POS within your business is also mandatory. And not respecting this law means accepting the risk of incurring heavy penalties (which in Italy will start from January 1, 2023, even if it is rumoured that the date could be brought forward by a few months).

Contrary to what one might think, using a POS is by no means an impossible feat.

Just have a clear idea of ​​what POS is, how it works and how to choose it. And that’s exactly what we’re going to talk about in this article. Also, Read – What is a Digital Wallet? How to use it?

What is the POS?

POS is a payment system that companies use to manage transactions that take place via credit or debit cards.

Until a few years ago, having a POS in your point of sale meant having a bulky cash register with an external device that recorded purchases and sales.

Today, things have changed, and you can add a POS to your store in a very simple way. Not only that, the most modern solutions also automate other types of operations, from customer purchases to inventory management, making your job much easier.

Normally, a POS system includes several accessories:

  • A barcode scanner
  • A printer for receipts
  • A card reader terminal
  • An internet-connected device capable of supporting the POS app

POS: Meaning

POS is an English acronym for Point Of Sale, literally “point of sale”.

In practice, this is the device where sales take place and thanks to which businesses can keep track of all transactions.

How many types of POS are there?

Between consumers who prefer to pay by card, and ever-changing laws requiring POSs to be present, it’s no surprise that there are different types of POS.

  • Fixed POS: the most traditional POS, the one you are used to seeing in the most common cash desks. This is the device used for reading debit and credit cards connected via a telephone line or LAN cable.
  • Wireless POS: This POS is not connected by cable, and has a maximum range of about 10 meters via Bluetooth connection.
  • POS GSM / GPRS: POS equipped with a SIM card, which means that it offers the possibility to carry out transactions independently, without the need for a connection via a fixed-line.
  • Mobile / portable POS: it is the most modern version of POS, and is connected via Bluetooth to a smart device (smartphone or tablet) on which an app is installed that manages the terminal.

Understanding what they are, how they work, and what the main differences are between the various types of POS is essential in deciding which type of POS you should use for your business. Also, Read – How to Choose the Best Ecommerce Packages?

How does the POS payment work?

So how does a POS payment work?

  1. A customer decides to buy a product or service, and whoever is at the cashier uses the barcode reader to identify the price of the product (some mobile POS allow you to read the codes directly from the camera of the smartphone or tablet on which is installed the app).
  2. The POS system calculates the price, including any tariffs, VAT, etc., and updates the inventory.
  3. The customer pays with his own card, physical or digital, and his bank authorizes the transaction.
  4. The transaction is finalized, the payment has been successful and a physical or digital receipt is created, which will be sent or delivered to the customer.

As you can see, the operation is quite simple.

What about contactless payments?

Contactless payments, literally “contactless”, are those payments that take place by touching the POS with the ATM or with your enabled mobile device.

The main difference is that there is no need to insert or swipe a physical card into the POS, and the transaction then automatically becomes faster.

Remember that if you need to insert or swipe the customer’s physical card, the POS requires the PIN to be entered. On the contrary, the contactless method does not require any PIN for transactions below € 50. Also, Read – What are the Payment Methods That Can Be Used in E-Export?

The main features of a POS

What can POSs do, besides handling card transactions?

POS software is a bit like the control centre of your business. The simpler ones only manage payments, while the more complete solutions also offer several tools, from sales reports to inventory management.

Here are the main features of a POS system:

  • Payment processing
  • Inventory management
  • Sales and earnings report
  • Employee management
  • CRM (Customer Relationship Management)
  • Receipts
  • Tip support

Why use a portable POS?

The portable POS, or mobile POS, is the most modern and innovative type of POS available for merchants.

The first advantage of mobile POS is that it allows you to accept payments and carry out transactions anywhere, at any time, simply through the data connection of the device on which you have installed the relevant app.

This flexibility, often underestimated by those who have a physical store and carry out their business only inside it, represents an incredible functionality for professionals “on the go” such as craftsmen, private teachers, taxi drivers or restaurateurs who deliver home.

Furthermore, the smart functionality of this system makes it significantly cheaper than traditional POS systems.

In fact, by relying on a portable POS you will not have to incur costs for the purchase of hardware, usage fees, fixed network and physical installation that are inevitable with traditional POS.

Last but definitely not least, a modern and smart system for managing payments will allow you to offer a better customer experience to your customers.

Not only will your image benefit, but proving to be a business in step with the times, a faster system and more fluid payment will allow you to offer the same simplicity of online payments even in in-person payments.

As usual, put yourself in your customers’ shoes: would they prefer to wait for the POS to connect to the network and go home with a paper receipt, or pay with a “tap” and receive the receipt via email or SMS? Also, Read – 10 Best wireless chargers for iPhone


At this point, you should have a fairly clear idea of ​​what POS are and how they work.

All that’s left to do is figure out which POS is right for your business. To do this, you can start by checking out our guide on the best POS for merchants.

Always remember that only you really know how your business works and what it needs, and only you know your expectations for the future.

However, whatever stage your business is in, a POS will allow you to manage payments in a much more fluid and efficient way and will ensure that you comply with the legal requirements of physical stores.

POS Systems Frequently Asked Questions

What is the POS?

The POS, or Point Of Sale, is a payment terminal that allows you to make transactions with credit or debit cards, physical or virtual.

How does POS payment work?

To pay via POS, simply type the amount to be charged on the keyboard of the device, or on the associated smartphone or tablet, and read the customer’s card (swiping, inserting it or via contactless).

How do you use the POS?

The POS is a payment system that connects via a fixed network or via a mobile app. In the case of connection via a fixed network, a LAN cable or a Bluetooth connection will be required, while portable or mobile POS use the 3G or WiFi network of the device (smartphone or tablet) connected to them.

How much does the POS cost?

POS have variable costs. Some have a fixed monthly fee, while other POS providers earn commissions on every purchase.

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