POS terminals have revolutionized the way consumers buy their goods and services. Even more so they have revolutionized the back end operations of retail stores. They have simplified the way that inventory is tracked. POS terminals help order new inventory, they keep track of sales and manage profits. Most importantly they provide the manager of retail stores with an efficient way to analyze information, make decisions and carry out those decisions.

POS terminals are much like cash registers in that they handle the money as customers purchase goods and services. However, they are much more than cash registers. POS terminal stands for point-of-sale terminal. Each terminal is a station that is tied to a central database that handles all of the sale or transaction. Because they are tied to a central database many POS terminals can be linked together to provide the same transaction tasks across a single store or even multiple stores.

POS terminals can handle many tasks that are related to sales. One such task is inventory control. POS terminals can help manage inventory. When a person purchases a product the information on the product that they purchase is stored. That information can be used to calculate the remaining inventory. This data helps the manager know when to purchase more products. Many software packages will actually tell the manager when it is time to replenish the inventory. Some will even order more inventory automatically.

A system like this does not work for all businesses or even all industries. The liquor industry for example would not benefit from a service like this. To facilitate accurate inventory tracking for places that sell liquor, liquor control systems were invented. To track liquor a measuring device is placed on the spout of the liquor bottles. Then as the drink is poured the liquor is measured by the device then the information is transmitted to the pos system where it is recorded and the total is calculated. This is especially convenient for mixing drinks.

Another useful feature is that reports can be given in real-time. Because each POS terminal stores the transaction information in a central database reports can be generated from that information without downloading the information from each terminal at the end of the day. The types of reports that can be generated can be anything from the gross sales of the day to the number of products sold. These features are very useful for store managers who need to know how well a promotion is working.



POS Terminals can save money and time. The need to constantly check the inventory manually is reduced because the computer takes care of the tracking. The computer can also handle much of the financial data which reduces the staff required to handle those functions. One company says that an effective POS system will boost profit $20,000 to $100,000 a year depending on the business.

POS terminals have changed the inner workings of most retail stores. They have made it easier to track and manage inventory. They have simplified many of the tasks associated with transactions. POS terminals have even increased profits for many retail firms. Little by little they are changing the way we do business.

The term point-of-sale is used to describe a variety of things. This can include the checkout counter in a store or a place where transactions occur. More frequently, the phrase refers to a computerized cash register. The commonly used abbreviation for point-of-sale is POS. Each letter in the abbreviation is pronounced individually (e.g. P-O-S) versus pronouncing the abbreviation itself (e.g. paws).

When computers were first invented, large retailers were the first to implement point-of-sale systems to help automate many of the tasks involved with operating a retail store. These computers were very large and expensive. This limited the adoption of point-of-sale systems to large retailers such as grocery chains. The introduction of low cost personal computers during the 1980s allowed retail stores of all sizes to improve efficiencies with the help of POS systems.


A common point-of-sale system includes a computer, cash drawer, receipt printer, pole display, bar code scanner, magnetic swipe reader, modem and point-of-sale software. Each piece provides the following functionality:

• Personal Computer – Operates the POS software and provides hardware interfaces for devices such as printers, credit card readers and so on.

• Cash Drawer – A lock box that stores cash and is triggered to open by the POS software.

• Receipt Printer – Prints a paper copy of the sales transaction for the customer.

• Pole Display – LED display that faces the customer and shows each item and price scan.

• Bar Code Scanner – A laser type of device (gun style, counter style) that when triggered over a bar code, converts bar code lines into numbers. This number or SKU (Stock Keeping Unit) is then transmitted back to the POS computer for automatic price lookup.

• Magnetic Swipe Reader – Reads the magnetic strip on the back of a credit or debit card. The information stored on the magnetic strip includes the credit card number, expiration date, customer name, and address. The information is transmitted to a credit card processing network through the point-of-sale system for payment of merchandise.

• Modem – Allows the point-of-sale computer to communicate with bank credit card processing centers and to other locations of the store chain.

• Point of Sale Software – Software that runs on the computer, controls the various devices, and performs traditional cash register functions such as ringing a sale.

Today’s point-of-sale software contains many more features in addition to the computerized cash register. As a result, the term POS System is slowly being replaced with the phrase Retail Management System. POS is now commonly referred to as only the cash register feature within a retail management system.

When point-of-sale systems were first introduced, their sole function was to ring sales by department codes. This simple automation allowed retailers to view their daily sales summarized by department. The automation saved a retailer many hours in determining which departments contained the best selling items and how many sales dollars were generated. Once these computers were in place, the rapid evolution of today’s sophisticated retail management systems began.

The next step in the point-of-sale evolution was the addition of automatic pricing. Rather than entering a department code and then the price of an item, cashiers could now enter the SKU (Stocking Keeping Unit) of the item and the point-of-sale would retrieve the price. Automatic Pricing saved retailers money by removing the need to place a physical price tag on each item and in reducing pricing errors made by cashiers.

Since the point-of-sale system was now keeping an individual record for each inventory item, retailers wanted to maintain their stocking levels in the computer. This ushered in the era of real-time perpetual inventory. By placing a bar code that represented the SKU on each inventory item, the On Hand quantity of inventory was automatically reduced each time it was scanned at the point-of-sale. This feature allowed retailers to query their point-of-sale systems for up-to-date balances at a moment’s notice.

Once inventory stocking levels and retail pricing were being managed by the point-of-sale system, the next logical step was to add purchasing and receiving modules to complete the inventory management loop. This closed loop inventory automation allowed a retailer to:

1. Issue purchase orders to buy goods
2. Create inventory records and SKUs via the purchase order
3. Receive goods against the purchase order
4. On hand stock levels are increased based upon receiving
5. Print price tag with bar codes
6. Sell the goods via the point-of-sale cash register
7. On hand stock levels are depleted based upon SKU scans
8. Perpetual Inventory is automatically maintained
9. Generate reports on sales, inventory levels, purchases, and receiving
10. Manage inventory buying and markdown behavior based upon sales trends

As you can see, the simple point-of-sale system grew into a powerful information system for managers and store owners. Today, point-of-sale systems continue to innovate and some even include:

• eCommerce integration
• Integrated accounting
• CRM – Customer Relationship Module
• Electronic payment processing
• Gift card management
• Service order management
• Marketing
• Revolving accounts receivable
• Customer traffic counters
• Integrated video surveillance
• Open To Buy planning
• Linear inventory modeling
• Special order management
• EDI (electronic ordering)
• And much more…

As retail management systems continue to add more robust features, the term point-of-sale will continue to refer to just a module within the overall system.

POS barcode scanners or point of sale scanners will allow the cashier to scan the product and all the important information such as product category, product code, pricing etc will be digitally recorded. This process is very fast and easy to learn. The only difficult part comes when you need to tag all your store’s items with a barcode in order for the POS barcode scanner to be able to read.


Another advantage of using POS barcode scanners is that all recorded information is easily retrievable. This makes it easy to generate accounting data, ledgers etc convenient. Also the inventory levels in your store can be easily identified as well.

POS barcode scanners are not just useful in retail outlets but also can be used in clinics, libraries and any other business or organization where a large quantity of items are being transferred/purchased each day.

There are 2 types of POS barcode scanners. They are CCD-based and laser-based.
CCD-based POS barcode scanners are more common and cheaper, however they have a disadvantage in that they can’t read rounded surfaces. So if you have products which have a smooth curved surface, it is better to use laser-based barcode scanners.

Laser-based barcode scanners can read from any surface and can do this at a greater distance than CCD-based barcode scanners. This is because CCD-based scanners uses cameras to capture the barcode information hence they need to be within close distance of the barcode in order to capture the barcoding information.

An important type of barcode scanner is one that uses CCD technology. This technology was widely used in many retail outlets and involves scanning by pressing the scanner on the barcode to feed information into the computer. But its inability to read from round surfaces has resulted in the development of laser-operated scanners, which pick up barcodes from the surface of products even from a distance. With the advent of omni-directional laser scanners, more and more dealers are opting for those barcode readers that send out laser beams in different directions and pick up the barcodes on the products in a matter of seconds.

There are a wide variety of POS barcode scanners available in many different configuration depending on your market sector. Some uses USB, others wireless and some are handheld.

I personally prefer handheld POS barcode scanners from Symbol and Datalogic. I found they have the best support and handheld POS barcode scanners are light and portable and can easily to transport to other location as I see fit.

WHAT ARE MERCHANT ACCOUNTS?There are four most common Merchant Accounts:

* Visa Merchant Account * MasterCard Merchant Account * American Express Merchant Account * Interac (Debit Cards/Bank Debit Cards) Merchant Account

When you are setting-up your Payment Process System you will apply for Merchants Accounts on each Card that you would like to be able to allow your Customers/Clients to be able to pay by if they so desire to do so.

You do not have to have Merchant Accounts on all Cards. You can pick and choose which Cards you wish to your Payment Processing System to process. You can usually always add additional cards as time goes on. Most Merchant will initially get set-up with, at least, a Debit Merchant Account and usually Visa & MasterCard Merchant Accounts. Once you have been approved for each Card you will be given an individual Merchant number for each Merchant Account that is programmed on your Payment Processing System.

WHAT ARE THE FEES ASSOCIATED WITH ACCEPTING DEBIT & CREDIT CARDS?

What you have to take into consideration is that all Payment Processing Companies structure their Monthly fees in different ways. It is not a good idea to compare Debit costs to Debit costs, Credit Card costs to Credit Card costs, or Point-of-Sale Terminal costs to Point-of-Sale Terminal Costs. The best way to compare pricing and costs from provider to provider is to make chart of all the fees and rates and look at the whole program as a whole and see which one suits your business needs best.

EXAMPLES

DEBIT CARD MERCHANT ACCOUNTS: Each Merchant Account has different rates and fees associated with them. Typically Debit transactions are just a flat rate. An example Debit Transaction rate would be: 12 cents per Debit Transaction. It does not matter whether the Transaction processed was for $5 or $5000 the fee would be 0.12cents for the transaction to take place.

Now some Payment Processing Companies will charge you a Low Transaction rate on your Debit Transactions (like 0.05cents) and a % of your sales (like 0.0025%) that is a quarter of 1 percent. This may seem like a good deal, but rarely is.

Example 1:

Debit Transaction at 0.12 cents 576 Debit Transaction that month Total Monthly Debit Business Volume $13,876.00 Average Ticket: $23.56 0.12 cents X 576 = $69.12 in you monthly Debit Fees

Example 2:

Debit Transaction at 0.05 cents + 0.0025% 576 Debit Transactions that month Total Monthly Debit Business Volume $13,876.00 Average Ticket: 23.56

0.05 cents X 576 = $28.80 $13,876.00 X 0.0025% = $46.94 $28.80 + 46.94 = $75.74 in your monthly Debit Fees You can see that Example 1 is cheaper by $6.62 even though it may initially look like Example 2 would have been less expensive. Typically, it is always better to have a flat Debit Fee only on your Debit Merchant Account.

The only time the lower Debit Fee + % works in your favour on Debit Merchant Accounts is if you have a very high Debit transactions on with a very low average Debit ticket price.

CREDIT CARD MERCHANT ACCOUNTS

Again each Merchant Account has different fees associated with Credit Card Processing. Typically, it is a % of your monthly sales amount + a flat transaction fee. However, Payment Processing Companies do not charge a flat transaction fee, just the % on the monthly sales volume. When is comes to Credit Card Merchant Accounts it usually the % that you want to keep as low as possible and it is not usually as much an issue with the flat transaction fee.

Example 1:

Credit Card Discount Rate: 2.65% No Transaction Fee: 0.00 327 Transactions $18,267.00 in Credit Card Sales that month Average Ticket Price: $55.86 2.65% X $18,267.00 = $484.07 in Credit Card Processing Fees that month

Example 2:

Credit Card Discount Rate: 1.89% Transaction Fee: 0.10 cents 327 Transactions $18,267.00 in Credit Card Sales that month Average Ticket Price: $55.86 327 Transactions X 0.10 cents = $32.70 1.89% X $18,267.00 = $345.24 $32.70 + $345.24 = $377.94 in Credit Card Processing Fees that month It is obvious in this Example that example 2 is the better Merchant Account to go with.

IT IS VERY IMPORTANT THAT YOU LOOK AT THE OVER-ALL PROGRAM TO FIND WHICH MERCHANT ACCOUNTS RATES ARE BEST FOR YOUR BUSINESS.

The Canadian merchant account marketplace is drastically different than in the US. The US has a multitude of competing merchant acquiring banks. In Canada merchant acquiring is controlled by a few banks. Competition is limited and there is little opportunity for outsiders to penetrate the market.

There are a handful of merchant banks in Canada. Scotiabank, TD Bank, Royal Bank, and CIBC. Bank of Montreal, First Data Loan Company and National Bank have tight control over the Canadian merchant account marketplace. In Canada, the few banks have divided the territory among themselves. Each bank has well established branch networks established through which to sell merchant services.

Global Payments is a associated with CIBC and National Bank. Paymentech has a relationship with Scotia Bank and First Data Loan Company. Moneris is owned by and processes for Royal Bank and the Bank of Montreal. TD Bank and First Data Loan Company have an alliance as well.

The Canadian processing system is different than in the US. Merchants need two banks, one for each of the major brand bank cards. A merchant cannot process transactions for one acquirer through another acquirers system as the banks do not cross settle.

The concept of Independent Sales Organizations (ISOs) which is a common distribution channel for US merchant acquiring banks does not exist in Canada. There are a few processors which act as quasi-ISOs for Canadian acquiring banks. However, for the most part they act as referral partners. They do not have any control over underwriting, risk management and portfolio ownership.

Canadian banks do not do not need ISOs. There is no reason for the banks to sponsor organizations that will compete with them and reduce their margins. In many ways, it's a moot point.

It is almost impossible for an ISO to compete with the firmly established Canadian banks. Additionally, the banks have a vast number of association agreements in place whereby they sell directly to merchants at rates only slightly above interchange. Any ISO would be locked out of those market segments.

Naturally, the banks and processors do not solicit ISOs or independent agents as in the US. Sometimes an ISO or independent agent has Canadian merchant business to place and approaches a Canadian bank or processor. The agent may be offered a small up-front commission or a miniscule part of back end processing residuals. Clearly there is no motivation for ISOs or independent agents to spend time and money selling into the Canadian market.

Depending on the type of merchant and average ticket size, interchange in Canada can be substantially lower then it is in the US. There reason is that there are far fewer interchange categories in Canada then there are in the US

Most terminals in Canada are owned by the banks. Debit is controlled by an association called Interac which is owned by the banks. All processing terminals must be certified with Interac. Canada joining the rest of the world in migrating to EMV over the next couple of years