What Is a POS System

and
How Does It Work?
What Is a POS?
A POS or point of sale is a device that is used to process
transactions by retail customers. A cash register is a type of POS.
The cash register has largely been replaced by electronic POS
terminals that can be used to process credit cards and debit cards
as well as cash.
A POS may be a physical device in a brick-and-mortar store or a
checkout point in a web-based store.
The software for POS devices is growing increasingly elaborate,
with features that allow retailers to monitor inventory and buying
trends, track pricing accuracy, and collect marketing data,
Understanding POS
Points of sale (POSs) are an important focus for marketers
because consumers tend to make purchasing decisions on
high-margin products or services at these strategic
locations. Traditionally, businesses set up POSs near store
exits to increase the rate of impulse purchases as
customers leave. However, varying POS locations can give
retailers more opportunities to micro-market specific
product categories and influence consumers at earlier
points in the sales funnel.
Amazon’s concept convenience store, Amazon Go,
which deploys technologies that let shoppers come
in, grab items, and walk out without going through a
register, could revolutionize POS systems.
Besides increasing convenience, this could enable
POSs, loyalty, and payments to be rolled into a
single customer-centric experience.
Benefits of POS Systems
Electronic POS software systems streamline retail
operations by automating the transaction process and
tracking important sales data. Basic systems include an
electronic cash register and software to coordinate data
collected from daily purchases. Retailers can increase
functionality by installing a network of data-capture
devices, including card readers and barcode scanners.
Depending on the software features, retailers can track
pricing accuracy, inventory changes, gross revenue, and
sales patterns. Using integrated technology to track data
helps retailers catch discrepancies in pricing or cash flow
that could lead to profit loss or interrupt sales. POS
systems that monitor inventory and buying trends can
help retailers avoid customer service issues, such as out-
of-stock sales, and tailor purchasing and marketing to
consumer behavior.
Special Considerations: POS
Innovation
Modern POS systems are commonly programmable or allow
enhancement with third-party software programs. These systems
can be tailored to meet specific needs. For example, many retailers
use POS systems to manage membership programs that award
points to frequent buyers and issue discounts on future purchases.
Cloud-based POS systems are increasingly in use, particularly for
large online merchants, to track and process numerous purchases.
Cloud-based systems can greatly reduce the upfront costs of
implementing a POS system for many businesses.
Customers can also interact directly with POS systems, particularly in the
hospitality industry. Often referred to as location-based technology, these systems
can process transactions at customer locations. For example, at many restaurants,
customers can view menus and place orders on terminals located at their table. In
hotels, customers use similar terminals to place orders for room service or to pay
hotel bills.
To stay competitive and aid brand owners in promoting their products, POS display
manufacturers are focused on improving aesthetics and creating innovative
product designs. Also, the intensifying competition in the retail industry and
resulting use of POS displays for enticing customers to purchase products have
encouraged retailers to demand different custom-made displays capable of serving
specific needs across different retail facilities. Customization offered in terms of
aesthetics, capacity, and mobility can greatly impact a company's brand
identification.
Threats to POS Systems
1.Skimming - Skimming is an electronic method of capturing a victim's personal information

used by identity thieves. The skimmer is a small device that scans a credit/debit card and

stores the information contained in the magnetic strip. Skimming can take place during a

legitimate transaction at a business.

2.POS Malware -Point-of-sale malware (POS malware) is a type of malicious software

(malware) that is used by cyber criminals to target POS terminals with the intent to obtaining

credit card and debit card information by reading the device memory from the retail checkout

point of sale system.

Best Practices for secure usage of POS
systems
For organizations / service providers:

•Update POS Software Applications : Keep all POS Systems regularly updated including POS
application software.

•Use Antivirus : It is suggested to continually update the antivirus programs for it to be effective
on a POS network.

•Install a Firewall : Firewalls should be utilized to protect POS systems from outside attacks. A
firewall can prevent unauthorized access to, or from, a private network by screening out traffic
from hackers, viruses, worms, or other types of malware specifically designed to compromise a
POS system.
•Restrict Access to Internet : Apply access control lists on the router configuration to limit un-
authorized traffic to POS devices.

•Disallow Remote Access : Cyber Criminals can exploit remote access configurations on POS
systems to gain access to these networks. To prevent unauthorized access of POS systems, disallow
remote access to the POS network at all times.

•Review all Logs : Organizations and merchants providing POS services should review all system
logs for any strange or unexplained activity on a regular basis.

•Encrypt transmission of card holder data across open, public network.

 For Merchants:

•Update POS Software Applications : Keep all POS Systems regularly updated including POS
application software.
•Review all Logs : Organizations and merchants providing POS services should review all system
logs for any strange or unexplained activity on a regular basis.
•Account Lock out policy : Locking out accounts after 'N' number of incorrect login attempts.
•POS systems should not be used for general internet access by retailers.
•Use Strong Passwords : All POS devices owners should change passwords to their POS systems
on a regular basis, using unique account names and complex passwords.
•Merchants should ensure that all their Wi-Fi and internet connections are secured. Merchants
may use a network name that is extremely generic but unique keeping the network simple and
inconspicuous. In addition, Merchants may modulate the signal strength of their Wi-Fi network
so that it does not extend too far from the area of use or shop or building.
•Ensure that no electronic / magnetic devices are attached with POS systems. Enter the PIN
numbers in a secret manner.
•Merchants should always purchase POS Systems from reputed dealers.
•If any suspected transactions are observed, contact the service provider / bank immediately.
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