What is a POS (point-of-sale) system & how does it work?

GoDaddy PaymentsCategory
10 min read
Andrea Wahbe

Now, more than ever, it's essential to choose the right point-of-sale (POS) system for your store, restaurant or pop-up. The right system can keep your checkout lines moving and your customers' transactions fast and secure. 

A good POS system must also let them pay the way they want, wherever they are. 

Read on to learn what a POS system is and how to select the right one. 

What is a POS (point of sale) system?

How does a POS system work?

What are some common POS system features

Do I need a POS system?

How much does a POS system cost

Evaluating your POS system options

Finding a versatile POS solution

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

Generally speaking, point of sale means the location where customers pay you in exchange for your goods and services.  

You’ll need a payment device that’s hooked up to a POS system to complete a transaction: 

  • In a physical retail location  
  • At an event, pop-up or farmer’s market 
Person using smartphone with Poynt Smart Terminal
GoDaddy’s Poynt Smart Terminal lets customers pay how they want — anywhere.

Point-of-sale systems typically include the hardware needed to scan a product bar code, QR code or to manually input the product price. They also come with the software to calculate taxes and securely process the payment. 

GoDaddy's POS system offers an easy, fast and encrypted payment experience for customers. 

It helps small business owners unify their selling across multiple points of sale — in-store, in-person and online. 

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How does a POS system work?  

Drawing of a hand holding a credit card

Your point-of-sale system is the middleman between the credit or debit card merchant and your financial institution. So as a payment from a sale is processed through your POS, it must first be verified with your customer's bank (for debit cards) or with their credit card merchant before the transaction can be completed.  

Once the payment is approved, the POS system will then work with your bank to make sure that money is deposited into your account as soon as possible. 

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What are some common POS system features? 

Here's everything you'll need from a POS system to sell quickly, easily and securely across all of your sales channels.  

POS systems hardware overview 

Ideally, a POS device comes ready out of the box with everything built-in for a convenient in-person checkout process.  

Many come with a warranty and refund policy to ensure you're completely satisfied with your product.

Overhead view of Poynt Smart Terminal

Some features to look for in POS system hardware:

  • Dual screens — a dedicated screen for you and one for your customers 
  • A paper receipt printer 
  • A barcode scanner to quickly scan product UPCs and QR codes 
  • End-to-end encryption that conforms to strict payment cards industry (PCI) security standards 
  • Lightweight enough for in-store mobility

POS system software overview  

The best POS systems let you set up your new system online while you wait for your hardware to arrive. For example, you can: 

  • Add your product listings in advance 
  • Upload your company logo 
  • Customize printable receipts

This means your device will be ready to accept transactions as soon as it's out of the box and connected to your Wi-Fi. 

Look for a POS system that manages and tracks every sale you make, online or in-store. 

This is far preferable to software that can only be installed locally on your device and does not integrate with other payment data. 

GoDaddy Payments dashboard showing total sales
Quickly see how you’re doing with the GoDaddy Payments dashboard.

The better POS systems come with a dashboard that keeps you organized.  

For example, the GoDaddy Payments dashboard enables you to quickly track your inventory and view metrics on how your small business is performing. 

The dash makes it easy to compare your sales performance across all the places your business sells — giving you access to both in-person sales and online orders made on your website and on Amazon and eBay. 

POS payment processing overview 

Your POS system should be able to accept all major credit and debit cards. It should also offer other ways for customers to pay, such as via: 

  • Digital wallets on their phones 
  • Interac for in-person payments 
  • Apple Pay 
  • Google Pay  
  • Online pay links (especially useful for businesses without websites) 
  • Virtual terminal (for over-the-phone payments) 

Many Canadians adopted touch-free payment methods during the global pandemic and plan to continue using them in the future. In fact, 43% of Canadians say their preference for digital and contactless payments is here to stay. 

Pro tip: Be sure to get a POS terminal with a battery that lasts all day and enables your customers to tap, dip or swipe to process payments everywhere you sell. 

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Do I need a POS system?  

Depending on where and what you sell, this is a question worth asking. Not every small business needs to invest in a POS system.  

Here are some pros and cons to help you decide whether to invest in a POS system now or wait until a future time. 

POS System Pros: 

  • POS systems help with inventory tracking and management Man in red apron leaning against a counter
  • They process all types of payments from one device 
  • Are able to scale up as the business grows 
  • Many work with Avalara, a tool that calculates your sales taxes for you 
  • POS systems enable you to create and scan QR codes, along with coupon codes or loyalty reward programs 
  • Many allow you to customise your receipts or payment confirmations with your logo 
  • Some POS systems work with online sales platforms, tracking all sales — whether in-person or digital 
  • Many POS systems come with free trials  

POS System Cons: 

  • Some POS providers have hidden fees or require long-term contracts 
  • Some systems are hardware-dependent, requiring a customer be physically present 
  • Some POS systems are less reliable and harder to set up  
  • The quality of customer service varies between POS system providers 

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How much does a POS system cost? 

Let's look at how much you'll need to pay for a good POS system. 

According to MerchantMaverick.com, POS systems can range in cost from $66 to $2,298 CAD for your POS hardware and $0 to $540 CAD/month for the software (per terminal).

Some companies offer free POS software, and some even include free POS hardware. 

These costs depend on: 

  • The number of registers you'll need: Additional registers may come at a discount if you're buying in high volume 
  • Your inventory size: Managing a large number of SKUs will sometimes cost more 
  • Employee numbers: Some POS systems charge for each employee using the system 
  • Your industry: For example, it may cost more to buy some restaurant POS systems, which combine a kitchen cash register with hand-held restaurant POS devices 
  • Add-on features: There may be an added monthly cost if you wish to offer gift cards or loyalty programs  
Logo GoDaddy Poynt

GoDaddy charges $399 CAD for the Poynt Smart Terminal, with GoDaddy Payments software built into the cost. 

We also offer a one-year warranty and a 30-day refund, with free three-day shipping to get you up and running quickly.

On top of the hardware and software costs, you also need to factor in the fees you'll need to pay per transaction.  

According to Forbes, the average payment processing fees for credit card payments range from 1.5% to 3.5%. 

Person holding up card that reads lowest processing fees

GoDaddy Payments offers the lowest fees per in-person transaction (2.3% + $0 CAD) in the industry.*

Other benefits include:  

  • No long-term contracts  
  • No monthly minimums  
  • No unexpected fees 
  • No fixed fees for online, in-person or keyed-in transactions 
  • Accepts all payment types, from Visa, Mastercard, Amex, Discover, and Interac debit cards to contactless Apple Pay and Google Pay. 

Who should consider getting a POS system? 

Small businesses with a large number of SKUs, as well as entrepreneurs who sell in a physical retail location, pop-up or farmer's market are the most likely to benefit from POS systems with a smart terminal. 

People shopping in outdoor marketplace

Some examples include:  

  • Boutique owners who sell unique, high-value items 
  • Bodega owners who sell everything under the sun 
  • Bakeries, coffee shops or tea shops that might sell premade food items, along with dry goods or kitchenware 
  • Restaurant or food truck owners who need wireless payment solutions 
  • Pop-up shops or events where retailers sell items on the go 

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Evaluating your POS system options 

If you've decided to invest in a POS system, but don't know where to start, let's discuss some options. 

Different types of retail POS system

As you do your research, you'll discover there are basically two types of POS systems. 

Legacy POS systems 

Traditional POS machines and systems store sales data on local servers in a closed internal network.  

Many grocery stores and big-box stores might still be using these legacy systems.

This scenario can make you vulnerable to system crashes and technical issues — leading to checkout delays and angry customers.  

Cloud-based POS systems 

These newer POS machines and systems can process credit and debit card transactions anywhere. They store your sales data in the cloud, out of reach of fire or flood.  

If there is an online technical problem, most cloud-based systems can work offline to save you from lost sales and irate customers.   

Yoga instructor looking at income summary on his phone

Cloud-based POS systems are also often easier to use and more affordable.

What’s more, these systems are not tied to a physical location. They work with mobile-optimized POS machines to process customer payments: 

  • However they want  
  • Wherever you interact with them

Additionally, you can view and analyze your sales data from anywhere in real-time via a cloud-based dashboard. 

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Finding a versatile and transparent POS solution 

Now that you know what a POS system is and how it works, take the time to carefully weigh your options. 

You don't want to receive the hardware only to find out that it doesn't work with your online system. Or that the transaction fees are steeper than you expected. 

Look for a scalable and integrated POS software solution that lets you: 

  • Sell wherever your customers are  
  • Enables them to pay the way they want

To learn more about GoDaddy Payments and credit card processing, read How to accept credit card payments in-store and online. 

*Lowest pricing compared to leading providers Square, Stripe and Shopify for Canadian ecommerce, in-person and keyed-in transactions. 

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