How Does POS Work?

How Does POS Work?

08 August, 2023

An integral aspect of running your business operations smoothly is efficiently handling the checkout process. However, times have changed, and cash registers are becoming almost obsolete. Today, your business can significantly benefit from a POS system. As to what it means, the POS machine full form should give you a clue; it is a Point of Sale machine. Essentially, a POS system helps you execute customer payments in exchange for your goods or services. You can use a POS machine at your store, offices, and even remotely to allow for online transactions. This article will help you understand how POS works and how it can benefit your business.

How Does POS Work?

Now that you have some knowledge of the meaning of POS, you also need to understand how it works. As mentioned earlier, POS systems allow your business to accept electronic payments and keep a record of sales. While the functioning is simple enough, the setup varies as per your business needs. A physical POS machine will be situated at a cash register, whereas POS apps and an internet-enabled device are used for digital transactions. POS systems function as given below:

1. Customer purchases your goods or services

Once customers decide to buy your service or product at a physical store, they may ask a salesperson to ring them up. The salesperson can use a bar code scanner to retrieve the item details. If the transaction takes place online, the total price is displayed after the customer has added all the items to their cart and proceeded to checkout.

2. POS calculation

The POS machine/app calculates the purchase price, along with sales tax and the discounts applicable (if any). The POS system also updates the inventory to reflect the current sale prices of items.

3. The customer makes the payment

To complete their transaction, the customer has to use their credit/debit card, loyalty points, gift card, mobile wallet, etc., and pay. Depending on the type of payment chosen, the customer's bank must approve the transaction.

4. POS transaction is finalised

As soon as the payment goes through, a digital or physical receipt is generated. The salesperson then hands over the goods physically or ships them to the customer's address. This step completes the sale.

What are the Benefits of Having a POS System?

A POS system offers various advantages that can benefit your business. They are:

Processing Payments

The core function of a POS system is to process sales each time a customer makes a purchase. POS systems accept payments made via various means, including cash, online payments, credit/debit cards, contactless payments via mobile wallets or UPI, etc.

Inventory Management

POS comes with inventory management software that keeps you updated with your products and services. The software can also be linked with the sales data, so you are alerted when an item is running low.


POS can help you collect important data that can impact business growth. For instance, it can provide regular reports on how much you are selling, and the amount earned. This information presents a clearer picture of your business's strengths and weaknesses. It also allows you to formulate your own growth plan.

Employee Management

POS systems can also tell you more about how your employees perform. Since employees can use it to clock in and out, you have a better idea of the time they spend working. As such, POS systems enable business owners to ascertain employee efficiency levels to some degree.

Customer Relationship Management (CRM)

POS systems often come outfitted with CRM tools that can enable you to understand customer behaviour. You can gain insights into your customers' purchasing patterns. This kind of data can help you personalise marketing campaigns and sales strategies, thus creating a pleasant shopping experience for increased customer satisfaction.

Now that you know more about what POS is and how it can impact increasing business efficiency, you can opt for an MPOS machine that meets your entrepreneurial needs from HDFC Bank to upgrade a better business POS solution for your business with HDFC Bank SmartHub Vyapar – a holistic platform for all banking and business needs.

To Download SmartHub Vyapar App By HDFC Bank, Click Here.

Read more to explore HDFC Bank POS Solution Range.

​​​​​​​*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. HDFC Bank SmartHub Vyapar is available to only Individual & Sole Proprietorship entity and for select Current Account variants only. For other entity types, please connect with the nearest branch.

To Download SmartHub Vyapar App Click Here

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