Modern retail has grown far beyond the realms of just accepting cash as payment.
Buying goods has been infused with FinTech and optimized for maximum efficiency and customer ease. Manual methods of performing transactions have been improved with the use of technology.
Currently, there are three main methods by which merchants receive their payments. They are through paper, plastic, and digital techniques.
Paper does not precisely mean piece; even coins and other forms of physical currency are called paper. Plastic refers to using credit and debit cards to transfer payment information to the merchant’s transaction terminal.
In contrast, digital methods include the virtual passage of money through various processors and banks. Digital techniques can be payments through mobile, virtual currencies, and transactions on websites.
Also, the use of technology has complicated stuff that needs to be understood to make the most of it. Two examples of modern technology being infused with transactions are Point of Sale or POS terminals and Credit Card terminals.
Understanding how they are different can help a merchant adequately choose what they need in their store to perform transactions and manage their finances. This article will be strictly focused on how both of these are unique in their functions.
Credit Card Machines
A credit card machine is precisely what it sounds like, a device that processes cards.
The functionality of the credit card machines is limited to accepting cards for transactions. Some credit card machines go a little further to read checks through an extension in hardware or to read gift cards. But that is where credit card machines draw their line.
Credit card machines can be used in different ways and can provide two primary options of use. You can use a portable credit card machine to go to the customer to perform the transaction. These machines are prevalent in the restaurant business as customers can pay their bills from where they are sitting. This adds positively to the customer’s experience in a restaurant.
The second way of using a credit card machine is to have a stationary terminal where the customer approaches to pay for the purchased goods or received services. These sorts of terminals are usually present in all kinds of traditional retail stores, especially grocery stores.
A credit card machine’s limited function is what differentiates it so much from a complete POS terminal.
The credit card machine is very limited in swiping a card and printing a sales receipt for the transaction. Even though sometimes extremely feasible, credit card machines, especially in situations where the customer needs to be billed at their locations, can be of trouble sometimes.
Small credit card machines are known to have signal issues and have trouble processing transactions. Also, sometimes duplication of transactions can occur, leading to chargeback or a dispute of the transaction. This can lead to the merchant paying additional fees to their payment processor in chargeback fees.
Point of Sale or POS terminals
Even in POS terminals, both the merchant and the customers’ primary focus is the credit card machine mostly integrated into the system.
The fact that it is used so frequently and is often the only feature being used in-store on the point of sale system leads to confusion about how it is different from your ordinary credit card machine. The features of credit card or debit card-based transactions are the same on a POS terminal as they are on a credit card machine.
The customer swipes their card to transfer the payment information in the device to initiate the transaction and sign off on a receipt to verify the sale. But a point of sale system can perform much more advanced functions than to complete a credit card transaction.
A point of sale system is aimed to help a business manage its finances in a much more efficient way than without it. Most of the point of sale systems have fully integrated functions that allow for a plethora of different ways to optimize the processes that need to occur for a business to function.
Below is a list of the modern POS terminal tasks and how they can benefit a merchant.
Credit Card processing: As we have discussed above in the article. Most of the POS systems have dedicated card readers to provide card-based transactions at the point of sale of a business.
Physical Till for Cash Sales: Almost all point of sale terminals feature a cash-drawer for customers who want to perform their purchasing through cash. These act as physical cash tills that are used in traditional stores.
Receipt Printer: Printing of the receipt of a purchase is a very integral part of a transaction. Many businesses need such a feature to verify the purchase in a return or a dispute. Furthermore, customers sometimes demand a sales receipt, and it gives a feeling of trust as well.
Inventory Tracker: Modern POS systems come equipped with advanced features such as a tracker of inventory. This allows for a business to know when to restock or which items to list out of stock as soon as they run out. This can help customers make better purchase decisions and help the merchant as well.
Bar/QR code scanner: This serves as an alternative to manually entering the price and codes or names of the items being purchased. It is a much quicker method and serves as a more efficient one as typing errors can cause inaccuracies in the transaction.
Employee time management: Some POS terminals also come with the added feature of a time tracker for each employee and alert the merchant when the shift of a particular employee is over or when it needs to start.
This can help the merchant know precisely how much to pay each employee and the overtime, if any, can be adequately accounted for.
Analysis and Reporting of Transactions: the POS terminals can detect customer purchase trends and allow the merchant to decide how to buy the stock according to the customers’ different buying patterns. This can both maximize profits and minimize losses at the same time.
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I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.