What Is a POS System? A Complete Guide for 2025

A point-of-sale (POS) system is a combination of hardware and software that lets businesses ring up sales, accept payments, and check out customers.

Whether you’re opening a retail store, launching a popup, selling at events, or even selling out of the trunk of your car, you need a POS system to accept payments and sell in person.

But finding the right POS system isn’t always easy—especially if your business started online and you're exploring selling in person for the first time.

What is a point-of-sale (POS) system?

A point-of-sale system is the combination of hardware and software that lets businesses accept payments, track sales, and manage operations at checkout—whether in a brick-and-mortar retail store, on the go, or online.

At its core, a POS system processes payments. But in 2025 and beyond, it’s also your inventory tracker, customer database, marketing engine, and business dashboard.

The core components of a modern POS system

Every modern POS system relies on two main components: the software that runs the show, and the hardware that powers the customer-facing experience.

POS software

This is the system you log in to every day: the digital hub where your sales, inventory, customer data, and staff activity converge.

A solid POS software platform should let you:

• Ring up transactions and accept all payment types (cash, chip, swipe, tap, mobile wallets)
• Apply promotions, loyalty rewards, or store credit automatically
• Track inventory in real time, flag low stock, and sync product availability across locations
• Build customer profiles, store purchase history, and drive personalized marketing
• Manage employee logins, set permissions, and track working hours
• Generate performance reports, export sales data, and analyze trends
• Integrate with ecommerce platforms, customer relationship management (CRM) systems, accounting software, and other tools

POS hardware

The hardware you use depends on whether you’re running a retail store, restaurant, popup, or mobile business.

Here are the most common POS hardware components:

• Touchscreen terminal, tablet, or smartphone: The primary device for running POS software. Many businesses use an iPad or Android tablet at the counter, or have employees carry them on the retail floor.
• Card reader: This device accepts chip, swipe, and contactless payments, including credit and debit cards, Apple Pay, Google Pay, and smartwatches.
• Cash drawer: Still essential for cash-handling businesses. Many drawers open automatically when a sale is completed.
• Receipt printer: Provides a printed proof of purchase. Even in a digital-first world, many customers still want a paper receipt.
• Barcode/QR scanner: This device speeds up checkout, reduces manual entry, and keeps inventory accurate with every scan.
• Internet connection: Cloud-based POS systems rely on stable Wi-Fi or mobile data to process card payments and sync transactions in real time.
• Power supply and UPS: Keep your system running. A battery backup known as an uninterruptible power supply (UPS) protects against outages, which can bring operations to a halt.

Add-ons and extras

Some businesses need more than the basics, especially in food service, high-volume retail, or specialty retailers. That’s where these industry-specific add-ons come in:

• Digital kitchen screens: In restaurants, these displays replace handwritten tickets and send orders straight from the POS to the kitchen, reducing misfires and speeding food prep.
• Integrated weighing scales: For stores that sell by weight (think produce, bulk coffee, spices), these POS-connected scales calculate prices in real time during checkout.
• Label and tag printers: This helps retailers who need to create shelf labels, barcodes, or price stickers on the fly.
• Employee time tracking: Some POS systems include built-in punch-in/punch-out tools, so you can monitor staff hours without a separate platform.

How does a POS system work?

Let’s walk through what actually happens when a sale goes down at a retail store using a modern, cloud-based POS system:

1. The product gets scanned or tapped in. The customer’s ready to buy. You scan the item’s barcode or tap it into your POS catalog. If you're using a mobile device like a tablet or phone, it’s just a few taps. (Online, this is the digital equivalent of clicking “checkout.”)
2. The POS system calculates the total. Taxes, discounts, loyalty points, and shipping—the POS handles it all. If there’s a promotion running or a VIP customer in front of you, it applies discounts automatically.
3. The customer picks how to pay. Cash? Card? Apple Pay? Tap-to-pay with a phone or smartwatch? You select the payment option in your system, and the customer completes the transaction with a swipe, tap, or quick scan.
4. Payment processes in seconds. Behind the scenes, your POS system sends the payment details to your payment processor. That processor talks to your bank (the acquiring bank) and the customer’s bank (the issuing bank). You get the approval in seconds, and the sale is complete.
5. A receipt is sent or printed. Want it printed? Done. Prefer it by text or email? Also done. The POS system takes care of it and logs the transaction for future reference.
6. Inventory updates automatically. As soon as the sale is complete, that product’s stock count updates in your system. You don’t have to update anything manually. 
7. Sales and customer data are recorded: You’ve just sold a product, but you’ve also captured valuable information. The POS system logs the transaction, tracks performance metrics, and (if the customer opts in) stores their details for loyalty programs, receipts, or personalized offers later.

How much does a POS system cost?

There are numerous options for setting up your POS hardware system. You can buy a card reader from one provider, a receipt printer from another, and run them both on third-party POS software. 

Or you can choose a provider that bundles everything together. Even then, hardware and software are usually priced separately, with their own plans, terms, and upgrade options.

Either way, it’s smart to break down your budget into four distinct categories:

1. POS software costs
2. POS hardware costs
3. Payment processing fees
4. Optional add-ons

POS software costs

Most POS platforms follow a monthly subscription model, though some offer annual billing or free starter tiers with limited functionality. 

• According to Tech.co, you can typically expect to pay between $15 and $100 per month for POS software, depending on your business size, sales volume, and feature needs.
• More advanced systems, especially those supporting multiple stores or high-volume inventory, may cost $100 to $400 or more per month.

POS hardware costs

POS hardware can range from a simple card reader to a full register setup with multiple accessories. Some POS systems run on proprietary hardware (a branded POS terminal), while others work with consumer tech like iPads. The latter can help lower upfront costs, as long as your POS software is compatible.

Tech.co reports that hardware costs range from $30 to over $1,000 per unit, depending on what you need and how many points of sale you plan to run. 

 

💡Pro tip: If you’re testing a new location, selling at a seasonal event, or running a short-term popup, renting your POS hardware can be a smart alternative to buying it outright. Shopify gives you a low-commitment way to scale up without committing to long-term equipment costs.

Payment processing fees

Every time you accept a card payment, there’s a processing fee involved. The pricing model you choose (or that your POS provider uses) determines your cost.

Nerd Wallet reports that card processing fees typically fall between 1.5% and 3.5% per transaction, depending on your provider, payment plan, and card type.

 

Even a 0.5% difference in processing fees adds up fast, especially if you’re scaling. Choosing the right setup now can save you thousands later.

For example, if your business processes $500,000 in card payments a year, the difference between a 2.6% and 2.1% rate would amount to $2,500 in annual savings.

Additional or optional costs

These aren’t always required upfront, but they’re worth budgeting for if you want to scale smoothly or add industry-specific functionality.

• Training and onboarding: Companies can charge $200–$1,000 for small teams, or up to $5,000 for large organizations. 
• Compliance fees (e.g., PCI): Some providers include this in their fees; others charge a separate monthly fee.
• Add-ons: Tools like kitchen display systems, label printers, or integrated scales can cost an additional $10–$300/month, or a few hundred upfront.
• Custom integrations or third-party APIs: These may involve developer time or platform-specific fees.

On average, retailers using other platforms spend up to 8.5 times more on annual third-party support compared to Shopify users.

📚Read:POS System Costs Guide for 2025

Types of POS systems

When choosing a POS system, you’ll need to make two key decisions:

• First, how the system is deployed: in the cloud or installed onsite.
• Second, whether it’s built to handle the specific demands of your business type.

POS deployment models: Cloud vs. on-premise

Cloud-based POS systems are ideal for retailers with multiple locations, mobile selling needs, or a strong ecommerce presence.

On-premise systems can work for businesses that require full control over local data, but they do come with higher costs and more technical upkeep.

Here’s how they compare at a glance:

 

POS systems by industry

Different industries have different needs, and your POS setup should reflect how you actually sell. 

For example, a clothing store might need inventory tracking by size and color, returns processing, and seasonal promotions; while a salon might need to book appointments, track services by staff members, and process recurring packages or memberships.

Retail POS

Retail POS systems are designed for businesses that sell physical products, whether from a single storefront, online, or across multiple locations. The systems are increasingly doubling as customer relationship management (CRM) tools. 

In fact, the growing focus on CRM is one of the key drivers behind the expansion of the US retail POS market, which is projected to grow from $5.61 billion in 2023 to $13.49 billion by 2030.

Key POS features retailers typically need:

• Real-time inventory management (with variants like size, color, style)
• Barcode scanning for quick sales and returns
• Customer profiles and purchase history
• Gift cards, discounts, loyalty rewards
• Multi-location stock visibility and transfers
• Ecommerce integration for unified reporting and inventory sync

Retailers often struggle to keep online and offline channels in sync. A unified retail POS system solves this challenge.

Take Wildling, for example. As the brand grew, they faced a challenge: they had high repeat purchases, but low conversion from new customers unfamiliar with their barefoot-style footwear. To close the gap, the brand opened physical showrooms in Germany and used Shopify POS to unify try-before-you-buy experiences with their online store.

“Shopify POS enabled us to reach different customer groups without huge investments in new technologies.” — Sebastian Feuss, Company Lead, Wildling

Restaurant and food and beverage POS

A restaurant POS system combines hardware and software to manage everything from order entry and payment processing to coordinating the flow between front-of-house and back-of-house teams.

And adoption is growing fast. Nearly 65% of restaurants now use POS and integrated payment systems to keep up with shifting consumer expectations, from contactless payments to online ordering options.

Key POS features restaurants typically need:

• Customizable menus with modifiers and combos
• Table management and order routing
• Split checks, tabs, and tip tracking
• Kitchen display systems (KDS) or order printers
• Ingredient-level inventory and auto-reordering
• Employee time tracking and shift reports
• Multichannel order management (dine-in, takeout, delivery)

One of the most common challenges in food and beverage operations is fragmentation. Orders come in from multiple channels: online, in-person, and third-party apps, but many kitchens still operate on handwritten notes or disconnected systems.

Before switching to Shopify, Sweet E’s Bake Shop took orders by hand: walk-ins, phone calls, and custom cakes all managed with pen and paper. The bakery had no ecommerce site and no way to sync kitchen workflows with front-of-house activity.

After adopting Shopify POS, Sweet E’s unified every channel: online orders, next-day pickups, popup events, and in-store checkout. Orders now flow into a single system, giving the kitchen clear visibility into what needs to be made, when, and for whom.

The results speak for themselves:

• Repeat customer rate increased by 41%
• Conversion rate lifted 5x with next-day pickup
• POS Go powers popup and event sales without added hardware

“My favorite thing about using Shopify POS is that it’s simple and easy to use. I can easily train all my staff to use Shopify. I can manage products, run reports, and keep a pulse on my business myself,” shares Erica Tucker, founder of Sweet E’s.

Appointment and service-based POS

Running a salon, spa, wellness studio, or service business is about time, relationships, and customer experience. 

An effective POS system for these businesses helps you manage appointments, personalize client experiences, and simplify back-end operations so your team can focus on delivering great service.

Key POS features appointment and service-based businesses typically need:

• Appointment scheduling to manage bookings by service type, staff availability, and customer preferences from one calendar
• Service tracking to keep a record of what services were performed, by whom, and when
• Client management for storing customer profiles with visit history, notes, preferences, and purchase data
• Packages, memberships, and gift cards to offer recurring services or bundled deals while tracking usage and redemption automatically.
• Tip and commission tracking to automatically allocate tips or calculate commissions based on the service performed
• Mobile checkout to let staff complete sales at the chair, onsite, or in private rooms
  
  

But many POS systems treat services like inventory, not relationships.

That leads to clunky bookings, inconsistent service records, and disjointed experiences across in-person and online channels.

When Oz Hair and Beauty expanded from professional salon services to ecommerce, the brand quickly outgrew their developer-heavy tech stack. Making simple site changes or syncing product updates across channels took too long, and opening new stores felt out of reach.

Then they switched to Shopify POS. With Shopify’s user-friendly backend and click-to-deploy POS, Oz Hair and Beauty was able to scale:

• 484% year-over-year revenue growth
• Retail jumped from 5% to 20% of total sales
• Seven new stores launched in 18 months
• Click and collect, plus endless aisle enabled instantly
• No developer required for updates or POS expansion

“Shopify POS has empowered us to transform our business from an ecommerce seller to an omnichannel retailer practically overnight, with the flick of a switch.” — Anthony Nappa, CEO and Chief Customer Officer, Oz Hair and Beauty

Understanding POS security and PCI compliance

POS scams are on the rise, and they’re getting smarter. As of July 2025, in Toronto’s east end, multiple small business owners reported losing thousands of dollars to sophisticated point-of-sale scams. 

For example, a scammer fakes a payment issue, distracts the store owner, then swaps the POS terminal with their own device. In another scam, the fraudster guesses the admin password and issues a $5,000 refund—to themselves.

The local Business Improvement Area (BIA) has since warned retailers to tighten up security around POS systems.

And it’s not an isolated case. Retail ranks among the top five industries most vulnerable to cybersecurity attacks.

What is PCI DSS compliance and why does it matter for retail?

The Payment Card Industry Data Security Standard (PCI DSS) is a global framework that applies to any business accepting credit card payments. Its purpose is to protect cardholder data and reduce the risk of fraud through a set of mandatory security requirements.

Non-compliance with PCI standards can lead to severe financial penalties and even loss of payment processing privileges:

• In the first three months, non-compliant businesses may be fined $5,000 to $10,000 per month.
• From months four to six, monthly fines jump to $25,000–$50,000.
• After six months, penalties can reach up to $100,000 per month.

Additionally, PCI breaches carry steep costs: in the event of a data breach, businesses may be fined $50 to $90 per affected customer, with total penalties capped at $500,000—even if the business was technically PCI compliant.

Most modern POS systems, like Shopify POS, come with PCI-compliant hardware, so you're already covering many of the core requirements out of the box.

In addition to federal guidelines, some US states have their own rules on credit card surcharges and payment processing. It’s smart to consult legal counsel to ensure you're compliant with both PCI DSS and state-specific laws where you operate.

The latest PCI DSS version (4.0.1) emphasizes shared responsibility between retailers and their vendors. 

For example:

• If you embed third-party scripts on your checkout page (like a payment form), you’re still responsible for ensuring those scripts are secure.
• Requirement 6.4.3 specifically mandates control over all payment page scripts to prevent vulnerabilities like skimming or spoofing.

How Shopify POS keeps you protected

Shopify POS is built with security-first principles that protect against unauthorized access and ensure PCI compliance by default:

• Staff permissions: Set granular roles (e.g. sales associate, shift supervisor, manager) to limit who can process refunds, apply discounts, or modify inventory.
• Unique PINs: Each employee uses a secure, individual PIN to log in. Every sale, refund, or void is tracked to that person, so there’s always a clear trail.
• PIN reentry during checkout: If an error occurs or a checkout is canceled, the system requires a PIN to resume, blocking opportunistic misuse.
• Access control: Team members can’t log into the POS unless a properly credentialed user signs in first, preventing unauthorized use when unattended.

For example, you could configure Shopify POS so baristas can take payments, check inventory levels for beans and milk, and print receipts—but only the floor manager can issue refunds over $25, override happy hour pricing, or apply a staff discount above 15%.

For ecommerce sales, Shopify Protect pairs with Shop Pay to safeguard your store against fraud and chargebacks. Together, they offer 72% higher conversion rates than traditional checkout methods and free chargeback protection on eligible US-based Shop Pay orders (includes the full order value and chargeback fees).

Both Shopify Protect and Shop Pay are included for free as part of Shopify Payments, the easiest way to get paid directly through your Shopify store at no extra cost.

By enabling Shopify Payments, you gain access to:

• 3D secure checkouts
• Advanced fraud analysis
• Automated dispute resolution
• A wide range of popular payment methods, all backed by PCI-compliant infrastructure

Key benefits of an integrated POS system

The average shopper today can hit more than 50 touchpoints before making a purchase. That includes everything from browsing a website and checking reviews to visiting a store and asking a question via chat.

They’re not thinking about sales channels—they just experience one unified brand experience. 

An integrated POS system brings your online and offline operations together, so you can sell everywhere, manage everything, and clearly understand what’s working.

Unify online and in-store sales

When your online and retail storefronts don’t talk to each other, you risk out-of-stock orders, delayed fulfillment, inconsistent pricing, and messy customer experiences.

From the moment someone shares an email or phone number, Shopify builds a unified customer profile that captures everything they do: what they browse, what they buy, where they order from, and who they talk to in-store.

That means you can personalize the experience even before the first purchase. And every data point after, from loyalty points to product quiz answers, flows into the same customer profile.

With POS data analysis, you can personalize at scale. Shopify enhances data collection and segmentation to deliver a higher return on marketing spend. In fact, Shopify POS enables an 8.9% average GMV increase through unified commerce.

Shopify POS retailers also report 150% quarterly growth in omnichannel sales thanks to consistent, personalized customer experiences.

Case in point: Astrid & Miyu.

When this fast-growing jewelry brand struggled with fragmented customer data, they migrated from Adobe Commerce to Shopify. They now have a single view of customer behavior across all channels, leading to a fivefold increase in customers purchasing four times or more when shopping omnichannel.

Molly Allen, senior ecommerce manager at Astrid & Miyu, says: “Shopify’s big singular view of our customer is the secret power to scaling fast and managing international growth.”

Centralize inventory management

Inventory management is the lifeblood of retail. Get it right, and you’ll avoid stockouts, dead stock, and customer complaints. Get it wrong, and you’re either refunding disappointed buyers or losing money with dusty shelves.

But managing inventory across multiple locations—whether storefronts, back rooms, warehouses, or growing ecommerce channels—can quickly spiral out of control. When data is scattered, you can’t tell what’s in stock, what’s selling fast, or where to replenish. 

The fix is a single source of truth for your inventory data.

Shopify POS connects your in-store and online sales to a unified inventory system. Every transaction updates your stock levels in real time, so you’re never flying blind.

In 2021, The Rugged Society launched both a brick-and-mortar store and a Shopify site—but kept SumUp POS. That setup quickly fell apart. After switching to Shopify POS, their inventory now updates in real time—with impressive results:

• 20% jump in order volume
• 10% higher average order value

Our inventory syncs across our Shopify site and POS system in real time, which saves us a lot of time.

Streamline staff management

Retail teams need structure, especially when juggling seasonal hires, multiple locations, and high transaction volume. The wrong system creates bottlenecks. The right one keeps operations running smoothly.

According to McKinsey, retailers in the top quartile for employee experience are twice as likely to rank in the top quartile for customer experience outcomes.

Shopify POS Pro provides built-in tools designed to streamline team management at scale:

• Role-based access control: Assign roles by job function so staff permissions are consistent, secure, and simple to manage.
• Custom staff permissions: Limit what each team member can do—from who can issue refunds to who can apply discounts.
• Unlimited POS-only staff accounts: Add as many staff members as you need, at no additional cost.
• Sales attribution tracking: Know exactly who made each sale to recognize top performers and tailor training where it’s needed.
• Location-specific management: Run multiple stores while keeping teams organized and performance data clean.

Shopify’s unified approach has been proven to save retailers the labor cost equivalent of 0.4 full-time employees per store, reduce total cost of ownership by 22%, and boost GMV by up to 8.9% through operational efficiency alone.

Take Starlight Knitting Society. After switching from fragmented tools to Shopify POS, they slashed daily admin time and trained seasonal staff in minutes, not days.

Owner Melissa Nelson says: “My team now has time to beautify the shop, make samples, and personal shop for folks via email or phone. They told me that the time that switching to Shopify freed up for them felt like they were getting a bonus.”

Access unified reporting and analytics

Disconnected data makes it hard to see what’s really driving sales. Shopify’s Analytics dashboard brings all your performance data into one place, so you can track recent activity, understand customer behavior, and make sharper decisions across sales, marketing, and merchandising.

Use it to:

• See which landing pages convert best and focus efforts there
• Analyze which products are frequently bought together
• Identify sales trends, top-performing channels, and visitor behavior in real time

Shopify POS also integrates with tools like ShopifyQL Notebooks, giving you a flexible, SQL-powered way to answer deeper business questions, like which products sell best by region or time of day.

And because everything is updated instantly, you can respond faster, coach better, and make smarter inventory decisions, without waiting for batch reports or spreadsheets.

How to choose the right POS system for your business

The right system keeps your inventory in sync, your staff on point, and your customers coming back. The wrong one adds friction, creates silos, and slows growth. 

Here’s how to pick a POS that actually works for your business.

Assess your core business needs

Start by mapping your daily business operations. 

Ask:

• Do I need to manage both online and in-person sales from a single system?
• How complex are my inventory, staffing, and customer service requirements?
• What’s my average transaction volume, and do I need mobile or multi-location support?

A clothing boutique has very different needs than a café or salon, so make sure the POS system you choose is tailored to your industry.

Compare features and integrations

Look for systems that integrate with the tools you already use, like accounting software, email marketing apps, or loyalty programs. 

Unified systems reduce manual work, prevent data silos, and help you act quickly on customer insights.

Ask:

• Does this POS system integrate with my ecommerce platform, CRM, and marketing tools?
• Can I customize roles, permissions, and checkout workflows to match my operations?
• How easy is it to sync inventory, sales data, and customer profiles across channels?

Shopify POS integrates directly with apps like Klaviyo, QuickBooks, Smile.io, and more, giving you one system of record across your business. Plus, with POS UI extensions, Shopify developers can build custom functionality directly into the POS app. This allows merchants to tailor in-store workflows, integrate third-party tools, or add custom app experiences—all with a seamless, native feel.

📚Read:POS System Requirements Checklist (2025)

Plan for future growth

Your POS system shouldn’t just work for where you are today—it should also support where you’re going next. Whether that’s adding new store locations, expanding online, or launching international sales, look for a platform that scales with you.

• Will this system scale with me if I open new stores or expand internationally?
• Does the provider offer support for features like loyalty programs, upselling, and omnichannel selling?
• What’s the total cost of ownership (TCO)—including hardware, fees, support, and add-ons—over the next three years?

💡The Shopify POS total-cost-of-ownership advantage: According to an independent research study, Shopify POS delivers a 33% better total cost of ownership on average compared to competitors. 

What's the best POS system for unified commerce?

If unified commerce is your goal, Shopify is the clear frontrunner.

Forbes Advisor listed Shopify as the number one choice for the best POS system of 2025, with the highest rating on the list: 4.8 out of 5 stars. 

And it’s not hard to see why Shopify POS leads the pack:

• A single source of truth for your entire business: Shopify is the only platform that truly unifies your online and retail operations in one place. Customer profiles, inventory, orders, returns, and sales data all live in the same back office.
• Payment processing without the profit drain: Fees typically range from 1.5% to 3.5%, but in some cases, they can creep up to 6% of the total transaction. Shopify Payments helps protect your margins by eliminating the need for a third-party processor. Fees remain competitive, ranging from 2.4% to 2.9% plus a flat $0.30 per transaction, depending on the purchase method. 
• Inventory management that keeps up with you: Forecast demand, track low inventory, automate purchase orders, and count stock across your stores, warehouse, and online shop. And since everything syncs in real time, there’s no need to worry about overselling or phantom stock.
• Scales with your ambition: New stores can be set up in days, staff can be trained quickly with the intuitive interface, and everything, from payments to product management, can be controlled from a single system.
• Built-in tools for unified growth: Tap into features like:
• Shopify Audiences to build data-powered ad segments and lower customer acquisition costs
• Shopify Collective to expand your product catalog by selling goods from partner merchants, with no inventory risk

“Unifying our commerce stack on Shopify has noticeably improved our omnichannel customer experience and our bottom line,” says Guillaume Jaillet, chief omnichannel officer at Frank And Oak. “We’re spending less on technology, there’s greater synergy between our sales channels, and we’re cultivating more loyalty and engagement at every level of interaction.”

Make the switch to a POS system provider that works with you, not against you.