A point-of-sale transaction refers to when a purchase is made and recorded by the business. From traditional cash counters to online checkouts, these transactions come in different types, depending on how and where the purchase occurs.
This blog will walk you through what POS transactions are and explore their types, key features, and examples in today’s retail environment.
Point of Sale Transaction Definition
A point of sale (POS) transaction is the final step in the sales process where a business records revenue by exchanging goods or services for payment. It captures key data such as inventory levels, sales trends, and customer preferences.
There are different types of POS transactions. The systems that run them can operate in physical stores or online platforms, integrating sales, payment processing, and reporting functions.
Types of Transactions: Online vs Offline
Before the emergence of cloud systems, a customer’s retail experience was at a physical location. The completion of transactions was based on handwritten receipts, and they were carbon-copied for bookkeeping purposes.
However, now with modern POS systems, both physical retail stores and virtual spaces have transitioned to more efficient, electronic methods of processing transactions.
There are two common types of POS transactions:
- Online: These types of transactions are most commonly associated with online shopping. Where customers complete transactions online by paying through different methods. These include cash on delivery (COD), debit/credit cards, or online payment gateways.
- Offline: Such transactions occur in a physical setting. It is when a customer goes into a retail store, and there is a hardware system installed at checkout counters linked with the software.
In an offline setting, in case of internet connectivity issues, the data entered through hardware is saved on the device. Once the connection is restored, the transactional data is then synced with the central server for proper integration.
Examples of Online and Offline POS Transactions
Let’s further nurture this concept of online and offline POS transactions with examples.
Online POS transaction examples:
- Get a refund using the Pandapay option on the Foodpanda application.
- Using ride-hailing services like Indrive and paying online through their app.
- Paying utility bills through online payment platforms.
Offline POS transaction examples:
- Street food vendors use handheld POS devices that accept payments through mobile wallets.
- Convenience stores use a stand-alone POS system that scans barcodes and issues customers’ electronic receipts after the payment.
- Gas stations generally use a POS system for efficient transactions.
Having discussed the point-of-sale transactions and their types, let’s move on to the various methods of payment used in these transactions. There are several modes of payment: Cash, credit/debit cards, mobile wallets, etc.
Types of POS Transactions by Payment Methods
What are Cash point-of-sale transactions?
A customer completes a cash POS transaction by paying with physical cash at the point of sale. In a retail store, this moment occurs when the cashier scans the customer’s items. The customer is then informed about the total, pays through cash, and is issued a receipt to complete the transaction.
What are Signature point-of-sale transactions?
After cash, the most common payment methods are debit or credit cards. These are Signature POS transactions.
Signature POS refers to transactions at a point-of-sale terminal using debit or credit cards. At checkout, the customer provides authorization, typically a signature or PIN, to complete the transaction.
The two types of Signature POS are :
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What is a point-of-sale debit Card Transaction?
A debit card POS transaction is when a customer uses a debit card to pay the total amount of the transaction at the point of sale.
It works by requiring the customer to present a card at the POS terminal, if in a retail space. Then, the POS terminal sends a request to the customer’s bank to authorize the transaction. After verifying the customer’s account balance, the bank approves or declines the transaction request. Finally, the device issues a receipt confirming the transaction.
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What is a Point of Sale Credit Card Transaction?
A credit card transaction is similar to one with a debit card, except that it uses a credit card to pay the final bill of the transaction at the point of sale.
The process is also similar, but there is a difference. It is when a customer even has an insufficient balance, the bank looks at the customer’s credit limit to accept or disapprove a transaction. If the transaction meets the criteria, the POS terminal processes it and prints a receipt to complete the sale. If not, the transaction is not allowed by the system and is dropped.
Conclusion
In conclusion, businesses need to understand the different types of POS transactions to optimize their operations and cater to a diverse set of customers. To learn more about POS solutions tailored to your business needs, use our free trial or visit our website.
