12/18/2018 Point of sale - Wikipedia

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The point of sale(POS) or point of purchase (POP) is the time and place
where a retail transaction is completed. At the point of sale, the merchant
calculates the amount owed by the customer, indicates that amount, may
prepare an invoice for the customer (which may be a cash register printout),
and indicates the options for the customer to make payment. It is also the point
at which a customer makes a payment to the merchant in exchange for goods
or after provision of a service. After receiving payment, the merchant may issue
a receipt for the transaction, which is usually printed but is increasingly being
dispensed with or sent electronically.[1][2][3]
To calculate the amount owed by a customer, the merchant may use various Points of sale at a Target store
devices such as weighing scales, barcode scanners, and cash registers. To
make a payment, payment terminals, touch screens, and other hardware and
software options are available.
Marketing
The point of sale is often referred to as the point of service because it
MarketingMarketing management
is not just a point of sale but also a point of return or customer order.
POS terminal software may also include features for additional Key concepts [show]
functionality, such as inventory management, CRM, financials, Promotional content [show]
or warehousing.
Promotional media [show]
Businesses are increasingly adopting POS systems, and one of the
most obvious and compelling reasons is that a POS system does away
with the need for price tags. Selling prices are linked to the product
code of an item when adding stock, so the cashier merely needs to
scan this code to process a sale. If there is a price change, this can also be easily done through the inventory
window. Other advantages include the ability to implement various types of discounts, a loyalty scheme for
customers, and more efficient stock control.

Contents
1 Terminology
2 History
2.1 Software before the 1990s
2.2 Modern software (post-1990s)
2.3 Hardware interface standardization (post-1980s)
3 User interface design
4 Cloud-based (post-2000s)
5 Retail industry
5.1 Physical configuration
6 Hospitality industry
7 Accounting forensics
8 Security
9 See also
10 References
11 External links

Terminology [ edit ]

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Retailers and marketers will often refer to the area around the checkout instead as the point of purchase(POP)
when they are discussing it from the retailer's perspective. This is particularly the case when planning and designing
the area as well as when considering a marketing strategy and offers.
Some point of sale vendors refer to their POS system as "retail management system" which is actually a more
appropriate term given that this software is no longer just about processing sales but comes with many other
capabilities such as inventory management, membership system, supplier record, bookkeeping, issuing of purchase
orders, quotations and stock transfers, hide barcode label creation, sale reporting and in some cases remote outlets
networking or linkage, to name some major ones.
Nevertheless, it is the term POS system rather than retail management system that is in vogue among both end-
users and vendors.
The basic, fundamental definition of a POS System, is a system which allows the processing and recording of
transactions between a company and their consumers, at the time in which goods and/or services are purchased.

History [ edit ]

Software before the 1990s [ edit ]

Early electronic cash registers (ECR) were controlled with proprietary software and
were limited in function and communication capability. In August 1973, IBM
released the IBM 3650 and 3660 store systems that were, in essence, a
mainframe computer used as a store controller that could control up to 128 IBM
3653/3663 point of sale registers. This system was the first commercial use of
client-server technology, peer-to-peer communications, local area network (LAN)
simultaneous backup, and remote initialization. By mid-1974, it was installed
in Pathmark stores in New Jersey and Dillard's department stores.
One of the first microprocessor-controlled cash register systems was built by
William Brobeck and Associates in 1974, for McDonald's Restaurants.[4] It used
the Intel 8008, a very early microprocessor (and forerunner to the Intel
8088 processor used in the original IBM Personal Computer). Each station in the
restaurant had its own device which displayed the entire order for a customer —
for example, [2] Vanilla Shake, [1] Large Fries, [3] BigMac — using numeric keys
and a button for every menu item. By pressing the [Grill] button, a second or third
McDonald's POS device by order could be worked on while the first transaction was in progress. When the
Brobeck customer was ready to pay, the [Total] button would calculate the bill, including
sales tax for almost any jurisdiction in the United States. This made it accurate for
McDonald's and very convenient for the servers and provided the restaurant owner
with a check on the amount that should be in the cash drawers. Up to eight devices were connected to one of two
interconnected computers so that printed reports, prices, and taxes could be handled from any desired device by
putting it into Manager Mode. In addition to the error-correcting memory, accuracy was enhanced by having three
copies of all important data with many numbers stored only as multiples of 3. Should one computer fail, the other
could handle the entire store.
In 1986, Gene Mosher introduced the first graphical point of sale software[5] featuring a touchscreeninterface under
the ViewTouch[6] trademark on the 16-bit Atari 520ST color computer.[7] It featured a color touchscreen widget-driven
interface that allowed configuration of widgets representing menu items without low level programming.[8] The
ViewTouch point of sale software was first demonstrated in public at Fall Comdex, 1986,[9] in Las Vegas Nevada to
large crowds visiting the Atari Computer booth. This was the first commercially available POS system with a widget-
driven color graphic touch screen interface and was installed in several restaurants in the USA and Canada.
In 1986, IBM introduced its 468x series of POS equipment based on Digital Research's Concurrent DOS
286 and FlexOS 1.xx, a modular real-time multi-tasking multi-user operating system.

Modern software (post-1990s) [ edit ]

A wide range of POS applications have been developed on platforms such as Windows and Unix. The availability of
local processing power, local data storage, networking, and graphical user interface made it possible to develop
flexible and highly functional POS systems. Cost of such systems has also declined, as all the components can now
be purchased off-the-shelf.
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In 1993, IBM adopted FlexOS 2.32 as the basis of their IBM 4690 OS in their 469x series of POS terminals. This was
developed up to 2014 when it was sold to Toshiba, who continued to support it up to at least 2017.
As far as computers are concerned, off-the-shelf versions are usually newer and hence more powerful than
proprietary POS terminals. Custom modifications are added as needed. Other products, like touchscreen tablets and
laptops, are readily available in the market, and they are more portable than traditional POS terminals. The only
advantage of the latter is that they are typically built to withstand rough handling and spillages; a benefit for food &
beverage businesses.
The key requirements that must be met by modern POS systems include high and consistent operating speed,
reliability, ease of use, remote supportability, low cost, and rich functionality. Retailers can reasonably expect to
acquire such systems (including hardware) for about $4000 US (as of 2009) per checkout lane.
Reliability depends not wholly on the developer but at times on the compatibility between a database and an OS
version. For example, the widely used MS Accessdatabase system had a compatibility issue when Windows XP
machines were updated to a newer Windows OS. Microsoft immediately offered no solution. Some businesses were
severely disrupted in the process, and many downgraded back to Windows XP for a quick resolution. Other
companies utilized community support, for a registry tweak solution has been found for this.[10]
POS systems are one of the most complex software systems available because of the features that are required by
different end-users. Many POS systems are software suites that include sale, inventory, stock counting, vendor
ordering, customer loyalty and reporting modules. Sometimes purchase ordering, stock transferring, quotation
issuing, barcode creating, bookkeeping or even accounting capabilities are included. Furthermore, each of these
modules is interlinked if they are to serve their practical purpose and maximize their usability.
For instance, the sale window is immediately updated on a new member entry through the membership window
because of this interlinking. Similarly, when a sale transaction is made, any purchase by a member is on record for
the membership window to report providing information like payment type, goods purchased, date of purchase and
points accumulated. Comprehensive analysis performed by a POS machine may need to process several qualities
about a single product, like selling price, balance, average cost, quantity sold, description and department. Highly
complex programming is involved (and possibly considerable computer resources) to generate such extensive
analyses.
POS systems are designed not only to serve the retail, wholesale and hospitality industries as historically is the case.
Nowadays POS systems are also used in goods and property leasing businesses, equipment repair shops,
healthcare management, ticketing offices such as cinemas and sports facilities and many other operations where
capabilities such as the following are required: processing monetary transactions, allocation and scheduling of
facilities, keeping record and scheduling services rendered to customers, tracking of goods and processes (repair or
manufacture), invoicing and tracking of debts and outstanding payments.
Different customers have different expectations within each trade. The reporting functionality alone is subject to so
many demands, especially from those in the retail/wholesale industry. To cite special requirements, some business's
goods may include perishables and hence the inventory system must be capable of prompting the admin and cashier
on expiring or expired products. Some retail businesses require the system to store credit for their customers, credit
which can be used subsequently to pay for goods. A few companies even expect the POS system to behave like a
full-fledged inventory management system, including the ability to provide even FIFO (First In First Out) and LIFO
(Last In First Out), reports of their goods for accounting and tax purposes.
In the hospitality industry, POS system capabilities can also diverge significantly. For instance, while a restaurant is
typically concerned about how the sale window functions, whether it has functionality such as for creating item
buttons, for various discounts, for adding a service charge, for holding of receipts, for queuing, for table service as
well as for takeaways, merging and splitting of a receipt, these capabilities may yet be insufficient for a spa or
slimming center which would require in addition a scheduling window with historical records of customers'
attendance and their special requirements.
It may be said that a POS system can be made to serve different things to different end-users depending on their
unique business processes. Quite often an off-the-shelf POS system is inadequate for customers; some
customization is required, and this is why a POS system can become very complex. The complexity of a mature
POS system even extends to remote networking or interlinking between remote outlets and the HQ such that
updating both ways is possible. Some POS systems even offer the linking of web-based orders to their sale window.
Even when local networking is only required (as in the case of a high-traffic supermarket), there is the ever-present
challenge for the developer to keep most if not all of their POS stations running. This puts high demand not just on
software coding but also designing the whole system covering how individual stations and the network work together,
and special consideration for the performance capability and usage of databases. Due to such complexity, bugs and
errors encountered in POS systems are frequent.[citation needed]

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With regards to databases, POS systems are very demanding on their performance because of numerous
submissions and retrievals of data - required for correct sequencing the receipt number, checking up on various
discounts, membership, calculating subtotal, so forth - just to process a single sale transaction. The immediacy
required of the system on the sale window such as may be observed at a checkout counter in a supermarket also
cannot be compromised. This places much stress on individual enterprise databases if there are just several tens of
thousands of sale records in the database. Enterprise database Ms SQL, for example, has been known to freeze up
(including the OS) entirely for many minutes under such conditions showing a "Timeout Expired" error message.
Even a lighter database like Ms Access will slow to a crawl over time if the problem of database bloating is not
foreseen and managed by the system automatically. Therefore, the need to do extensive testing, debugging and
improvisation of solutions to preempt failure of a database before commercialization further complicates the
development.
POS system accuracy is demanding, given that monetary transactions are involved continuously not only via the sale
window but also at the backend through the receiving and inputting of goods into the inventory. Calculations required
are not always straightforward. There may be many discounts and deals that are unique to specific products, and the
POS machine must quickly process the differences and the effect on pricing. There is much complexity in the
programming of such operations, especially when no error in calculation can be allowed.
Other requirements include that the system must have functionality for membership discount and points
accumulation/usage, quantity and promotional discounts, mix and match offers, cash rounding up, invoice/delivery-
order issuance with outstanding amount. It should enable a user to adjust the inventory of each product based on
physical count, track expiry of perishable goods, change pricing, provide audit trail when modification of inventory
records is performed, be capable of multiple outlet functionality, control of stocks from HQ, doubling as an invoicing
system, just to name some.
It is clear that POS system is a term that implies a wide range of capabilities depending on the end-user
requirements. POS system review websites cannot be expected to cover most let alone all the features; in fact,
unless one is a developer himself, it is unrealistic to expect the reviewer to know all the nuts and bolts of a POS
system. For instance, a POS system might work smoothly on a test database during the review but not when the
database grows significantly in size over months of usage. And this is only one among many hidden critical
functionality issues of a POS system. GOODS

Hardware interface standardization (post-1980s) [ edit ]

Vendors and retailers are working to standardize development of computerized POS systems and simplify
interconnecting POS devices. Two such initiatives are OPOS and JavaPOS, both of which conform to
the UnifiedPOS standard led by The National Retail Foundation.
OPOS (OLE for POS) was the first commonly adopted standard and was created by Microsoft, NCR
Corporation, Epson and Fujitsu-ICL. OPOS is a COM-based interface compatible with all COM-
enabled programming languages for Microsoft Windows. OPOS was first released in 1996. JavaPOS was developed
by Sun Microsystems, IBM, and NCR Corporation in 1997 and first released in 1999. JavaPOS is for Java what
OPOS is for Windows, and thus largely platform independent.
There are several communication ways POS systems use to control peripherals such as:
Logic Controls \ BemaTech
Epson Esc/POS
UTC Standard
UTC Enhanced
AEDEX
ICD 2002
Ultimate
CD 5220
DSP-800
ADM 787/788
HP
There are also nearly as many proprietary protocols as there are companies making POS peripherals. Most POS
peripherals, such as displays and printers, support several of these command protocols in order to work with many
different brands of POS terminals and computers.

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User interface design [ edit ]

The design of the sale window is the most important one for the user. This user interface is highly critical when
compared to those in other software packages such as word editors or spreadsheet programs where the speed of
navigation is not so crucial for business performance.
For businesses at prime locations where real estate comes at a premium, it can be common to see a queue of
customers. The faster a sale is completed the shorter the queue and hence the more room available in a store for
customers to shop around and employees to do their work. High-traffic operations such as grocery outlets and cafes
need to process sales quickly at the sales counter so the UI flow is often designed with as few popups or other
interruptions to ensure the operator isn't distracted and the transaction can be processed as quickly as possible.
Although improving the ergonomics is possible, a clean, fast-paced look may come at the expense of sacrificing
functions that are often wanted by end-users such as discounts, access to commission earned screens, membership
and loyalty schemes can involve looking at a different function of the POS to ensure the point of sale screen contains
only what a cashier needs at their disposal to serve customers.

Cloud-based (post-2000s) [ edit ]

The advent of cloud computing has given birth to the possibility of POS systems to be deployed as software as a
service, which can be accessed directly from the Internet using any internet browser. Using the previous advances in
the communication protocols for POS's control of hardware, cloud-based POS systems are independent from
platform and operating system limitations. Cloud-based POS systems are also created to be compatible with a wide
range of POS hardware and sometimes tablets such as Apple's IPad. Thus cloud-based POS also helped expand
POS systems to mobile devices, such as tablet computers or smartphones.[11] These devices can also act
as barcode readers using a built-in camera and as payment terminals using built-in NFC technology or an external
payment card reader. A number of POS companies built their software specifically to be cloud-based. Other
businesses who launched pre-2000s have since adapted their software to evolving technology.
Cloud-based POS systems are different from traditional POS largely because user data, including sales and
inventory, are not stored locally, but in a remote server. The POS system is also not run locally, so there is no
installation required.[12][13]
Depending on the POS vendor and the terms of contract, compared to traditional on-premises POS installation, the
software is more likely to be continually updated by the developer with more useful features and better performance
in terms of computer resources at the remote server and in terms of lesser bugs and errors.
Other advantages of a cloud-based POS are instant centralization of data (important especially to chain stores),
ability to access data from anywhere there is internet connection, and lower start-up costs.[13][14]
Cloud based POS requires an internet connection. For this reason it important to use a device which has its own 3G
capability in case the device's primary internet goes down. In addition to being significantly less expensive than
traditional legacy point of sale systems, the real strength of a cloud based point of sale system is that there are
developers all over the world creating software applications for cloud based POS. Cloud based POS systems are
often described[by whom?] as future proof as new applications are constantly being conceived and built.
A number of noted emerging cloud-based POS systems came on the scene less than a decade or even half a
decade back. These systems are usually designed for restaurants, small and medium-sized retail operations with
fairly simple sale processes as can be culled from POS system review sites. It appears from such software reviews
that enterprise-level cloud-based POS systems are currently lacking in the market. "Enterprise-level" here means
that the inventory should be capable of handling a large number of records, such as required by grocery stores and
supermarkets. It can also mean that the system—software and cloud server—must be capable of generating reports
such as analytics of sale against inventory for both a single and multiple outlets that are interlinked for administration
by the headquarters of the business operation.
POS vendors of such cloud based systems should also have a strong contingency plan for the breakdown of their
remote server such as represented by failover server support. However, sometimes even a major data center can fail
completely, such as in a fire.[15] On-premises installations are therefore sometimes seen alongside cloud-based
implementation to preempt such incidents, especially for businesses with very high traffic. However the on-premises
installations may not have the most up-to-date inventory and membership information.
For such contingency, a more innovative though highly complex approach for the developer is to have a trimmed
down version of the POS system installed on the cashier computer at the outlet. On a daily basis the latest inventory
and membership information from the remote server is automatically updated into the local database. Thus should
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the remote server fail, the cashier can switch over to the local sale window without disrupting sales. When the
remote server is restored and the cashier switches over to the cloud system, the locally processed sale records are
then automatically submitted to the remote system, thus maintaining the integrity of the remote database.
Although cloud-based POS systems save the end-user startup cost and technical challenges in maintaining an
otherwise on-premises installation, there is a risk that should the cloud-based vendor close down it may result in
more immediate termination of services for the end-user compared to the case of a traditional full on-premises POS
system where it can still run without the vendor.
Another consideration is that a cloud-based POS system actually exposes business data to service providers - the
hosting service company and the POS vendor which have access to both the application and database. The
importance of securing critical business information such as supplier names, top selling items, customer relationship
processes cannot be underestimated given that sometimes the few key success factors or trade secrets of a
business are actually accessible through the POS system. This security and privacy concern is an ongoing issue
in cloud computing.

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