POS transactions simplified: A guide for small businesses
25 February, 2025
Synopsis:
POS transactions are everyday purchases made using payment methods like cards, mobile wallets, or cash at a point of sale.
Modern ePOS transactions offer efficiency, tracking, and convenience to small businesses.
Banks are important for executing secure and seamless POS transactions of customers and businesses.
Introduction
Today, businesses use technology to simplify transactions and improve customer service. One such technology is the Point of Sale (POS) system. POS systems have become essential everywhere, from grocery stores to online shops, for managing payments, inventory, and sales.
Whether you use a Credit Card at a supermarket or scan a QR code at a café, you perform a POS transaction. This article will discuss what a point-of-sale transaction is, how it works, different transaction types, benefits, and the role of banks.
What is a POS transaction?
A POS transaction happens whenever a customer makes a payment for goods or services at the point of purchase. The term “point of sale” refers to where the transaction occurs, such as a physical location like a store or an online platform.
Common POS transactions examples include Debit and Credit Card transactions, mobile wallets, etc. These transactions are quick and secure. They are recorded digitally, making them an important part of everyday commerce. POS transactions make payment processes easier for businesses and customers, whether it is by swiping a card, scanning a code, or other methods.
How do point-of-sale transactions work?
Several steps in POS transactions ensure smooth and secure payment processing. Here’s how it works:
Initiation: The customer selects products or services and moves ahead to pay at the point of sale.
Payment method: They choose a payment method, such as a card, mobile wallet, etc.
Authorisation: If using a card or mobile wallet, the POS system sends the payment details to the customer’s bank for authorisation.
Approval or decline: The bank verifies the customer’s account balance or credit limit. If approved, the payment is processed instantly.
Completion: The transaction is recorded, and a receipt is issued.
The process is similar to online transactions. However, it involves entering payment details on a website or app. Advanced security measures like one-time passwords (OTPs) ensure secure transactions.
Types of POS transactions
Now that you have understood what a point-of-sale transaction is, here are the different POS transaction types suited to diverse business needs and customer preferences:
In-store transactions: Payments made at physical stores using card swipes or contactless methods.
Online POS transactions: Payments on e-commerce platforms or apps using digital payment gateways.
Mobile POS (mPOS): Payments through portable POS devices or smartphones integrated with payment apps.
Self-Service POS: Kiosks or self-checkout systems where customers complete transactions independently.
Refund transactions: Processing refunds for returned or faulty products, ensuring customer satisfaction and maintaining trust.
Each transaction type caters to specific scenarios, offering flexibility to businesses and consumers. For instance, mPOS systems are ideal for small enterprises, while self-service POS is popular in supermarkets and fast-food outlets.
What is an ePOS system?
An electronic Point of Sale (ePOS) system is a digital solution that simplifies sales, payments, and inventory management. Unlike traditional cash registers, ePOS systems use hardware and software to process transactions electronically. They typically include features like touchscreens, barcode scanners, and payment terminals. Their use allows businesses to track sales, monitor stock levels, and generate reports in real-time.
ePOS transactions are completed through various payment methods, including cards, mobile wallets, and QR codes. ePOS systems are designed for modern businesses, especially small enterprises looking to improve efficiency and enhance customer experience.
Benefits of ePOS for small businesses
ePOS systems offer numerous advantages to small businesses.
Efficiency: Faster transaction processing saves time for customers and staff.
Inventory management: Automatic tracking of stock levels helps avoid shortages or overstocking.
Sales reports: Detailed reports provide insights into sales trends and help make decisions.
Customer satisfaction: Accepting multiple payment methods makes transactions convenient for customers.
Cost savings: Reduces manual errors and administrative work, saving time and money.
By investing in an ePOS system, small businesses can operate more effectively, attract more customers, and compete better in the market.
POS in banking: Role and importance
Banks are important for completing POS transactions. They provide secure payment gateways and authorise payments. They ensure smooth fund transfers between customers and merchants through card swipes, mobile payments, online transactions, etc.
POS systems also allow businesses to accept payments uninterrupted, enhancing customer trust. For banks, POS services increase transaction volumes and customer engagement, creating a win-win scenario for all parties involved. POS technology builds a cashless, efficient, and secure banking environment.
Also Read: Why having a well-defined POS system is necessary for your business
Conclusion
POS transactions are vital in modern commerce, enabling fast, secure, and convenient payments for businesses and consumers. By accepting ePOS transactions, small businesses can enhance their operations and customer experience.
HDFC Bank offers different POS machine types to help businesses accept payments across different modes through secure and encrypted transactions. Upgrade your business with the right POS solution today!
Disclaimer: *Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
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