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How does POS terminal work and how can it help your business?

Have you ever wondered what happens when a customer pays at the checkout? In other words: how does POS terminal work?

What is a POS terminal? 

How does POS terminal work? First, let us have a look at the key components of the POS system. The POS system is the infrastructure that enables the checkout process to take place; it consists of POS hardware and POS software.  POS hardware is the physical devices (a monitor, a tablet, a terminal, a cash drawer, a self-service kiosk …) through which payments can be made. POS software is the programs that run on these devices; they enable merchants to accept payments and monitor their sales. POS terminals are physical devices such as card reading terminals, mobile terminals or tablet terminals

How does POS terminal work? 

So how does POS terminal work and what takes place in the process?  A POS is not a standalone machine or process, but a combination of them that enables the merchant to process payments made with different payment methods. Point of sale terminals can be portable or fixed. In order to use portable POS devices such as smartphones, tablets or other wireless devices, you need apps like a card reader downloaded onto the device that will be used for the transactions. You can also pair your portable POS with additional hardware such as a barcode scanner, a cash drawer or a receipt printer. You can have one or more terminals and they can all be connected to the same server – a central database for collecting information about your transactions.

The main components of the POS system

POS systems offer various hardware components depending on what you need for your own business to run. You may also need:

  • A cash drawer: this can be very useful if you accept cash payments in addition to card and NFC payments. It is a safe and secure place for storing your cash and receipts.  
  • A card reader: a must-have if your business accepts card payments. Cards can be read in different ways, e g. through a magstripe or a chip. 
  • A barcode scanner: reads barcodes or QR codes on items, notifies the system about the purchase and records stock changes. 
  • A receipt printer: very common but not always essential, e.g. if a store sends invoices through email or SMS messages. 
  • A label printer: very useful for big retailers, which often need to print product labels on the spot. For example, if an item is offered at a discount, you can simply print that label from your POS system.  

How can the POS terminal help your business? 

Research shows that 71% of consumers say that the speed of the service and the checkout experience are important for their loyalty to a certain retailer. By changing your POS terminal for the next-generation one like Elly POS, you will avoid long lines and enhance the user experience by giving your customer the option to use many different payment methods, not just cash and cards. Your POS terminal can also significantly improve your work process in terms of effective sales overview. Check out our Elly POS and find out how it can add to your business! 

Checklist for selecting the best POS terminal for your business

What kind of POS system is best for you depends on your business type and needs. If you have a delivery service and spend most of the time in the field, you need a light, portable POS terminal such as Elly POS, which also works extremely well for physical stores because it does not need to be fixed if you do not want it to be. When looking for your next POS terminal, the following factors need to be considered: 

  • How does POS terminal work and what kind of business needs do you have? Do you need a small terminal that you can always take with you? Do you need separate barcode scanners and receipt printers or would it be practical to just have them integrated into the POS itself, like in the case of Elly POS? 
  • What kind of payment would you like to accept – cash, cards, NFC payments or even cryptocurrencies? Hint: Elly POS enables all of those!
  • How easy is it to use the terminal? Will there be staff training required? Does the device support the operating system that you need and know? Elly POS is an Android device, and a lot of merchants have experience with Android already. 
  • How much does the POS system cost? 


Would you like to find out more about the advantages of Elly POS for your business? Contact us for a quote tailored to your company needs!