A cash register system, also known as a POS system, is software that documents a specific financial transaction of an inventory or a good. In general, the POS system describes the entirety of all clients (hardware) and associated software used that are linked to an electronic or PC cash register; this now also includes mobile devices such as smartphones and tablets. There are two types of cash register systems: for gastronomy and for retail. While POS stands for Point of Service in gastronomy, in retail it refers to the Point of Sale, i.e. the place and process of sale, purchase, payment and so-called branch logistics. This article deals exclusively with POS systems in retail.

Components of a POS system (cash register system)

When goods or services are traded, the central device during the payment process is the cash register. Since its invention in 1879, it has been used to record certain commercial data, in particular to settle cash transactions and to create vouchers or receipts. A distinction is made between open systems, which consist of standard hardware and operating system and POS software, and closed systems, in which the software does not usually use free and open-source code.
Hardware and software components of a POS system can be:

  • Thermal receipt printer
  • Barcode scanner (see Pick-by-Scan)
  • Cash drawer
  • Programmable cash register keyboard
  • Tablet, smartphone
  • EFT payment terminal
  • Label printer
  • Customer advertisement
  • Interface to the distribution center (replenishment)
  • Interface to higher-level ERP system*
  • Cash register system software

*As a rule, ERP systems are only connected to the POS system in large stores with linked online stores. This enables customers to order their goods online and pick them up locally at the store. Via these networked systems, the inventory is automatically synchronized when bookings are made.

Connection of cash register systems / branch logistics

The POS system, including the software, maps the commercial and documentarily (receipt) stored conclusion between the respective retailer and its customers. Such a system can be handled mobile or stationary. Usually, an ERP system works in the background, either cloud-based or installed locally, which, if required, is directly linked to financial accounting and the materials management or inventory management system (direct sales without middlemen) – a modern POS system can therefore also trigger replenishment within a warehouse management software, which is then referred to as store logistics in its entirety. The specific functions depend very much on the respective industry and the goods and services traded. For example, POS systems for the textile retail trade must manage sizes and colors (Stock Keeping Unit, SKU) so that reorders can be initiated automatically.

  • Another given system combination is the variant in which the POS system triggers replenishment directly from the ERP. In other words, new goods must be delivered from the logistics center to the store. The ERP orders the required goods from the warehouse management system (warehouse management).
  • Another variant could describe the local situation within the branch itself. The store logistics system functions as a WMS and, for example, orders new inventory for a designated sales area (see also Return on Floor Space) – the items may already be in the store’s inventory but are only topped up during peak periods.

The transition between the merchandise management system (MMS) and the ERP system is not clearly defined. The differentiation is usually based on the range of functions. Sind zum Beispiel Funktionen oder Module im Bereich Controlling und Materialwirtschaft integriert, spricht man eher von einem ERP als von einem WWS.

Becker, Jörg; Vering, Oliver; Winkelmann, Axel: Softwareauswahl und -einführung in Industrie und Handel. Procedure for and experience with ERP and merchandise management systems

POS system in Poland - the system is supported by a tablet and external printer
Figure 1: A modern POS system is designed to be mobile and is supported by either a tablet or smartphone. An external printer and an EC/credit card device complete the system.

Store logistics in particular will become increasingly important in the future. Goods receiving, quality control and sorting to the shelf units must be well organized. Added to this is the handling of returnsand conventional empties management. The problem: As a result of online trading, the retail trade has to reckon with losses more and more, the typical margins of ten years ago are history – but the slump in profits is reality and therefore relevant to competition. *Causes for the so-called out-of-stocks (shelf gap) are mainly found in the sphere of influence of the retail stores. These include incorrect sales forecasts, late or omitted orders, as well as delays in shelf replenishment and inefficient clearing processes on the sales floor.

*Einleitung – ‚Management der Filiallogistik im Lebensmittelhandel‘ / Florian Hofer

Looking at the logistics chain from wholesale to retail – from the ramp to the customer shelf, the proportion of the “last 30 meters” seems insignificant. But it is precisely on these last meters that high costs are incurred. The wholesale logistics usually hands over with its responsibility at the ramp of the branch. The store employees are not logisticians and yet they bear their responsibility.

I.L.P-Management Consulting

Important here are the merging points of successful store logistics and the intralogisticsbehind it. According to Florian Georg Hofer, the design of logistics concepts requires, on the one hand, the assurance of market-oriented delivery service and, on the other hand, performance within the scope of an economically justifiable expenditure. In his dissertation ‘Management der Filiallogistik im Lebensmitteleinzelhandel‘, he transfers precisely these demands to store logistics – “in relation to the requirements of providing the highest possible shelf availability, taking into account the associated effort”. In his opinion, “both targets are opposing objectives whose efficient solution lies between the two extremes”.

Payment procedure at the POS

Besides the classic payment with cash, there are numerous cashless options. They also offer ongoing technical innovations designed to simplify and accelerate the payment process and also provide customer data. This concerns a local allocation just like purchase times, habits and preferences. The most common cashless payment methods include Girocard (formerly EC/Electronic Cash) and credit card (MasterCard, Visa, American Express). Meanwhile, companies also rely on Click and Collect (see cross-channel) in conjunction with the PayPal payment service: The customer buys his inventory online, pays via PayPal and picks up his inventory directly at the point of sale (POS).


The entirety of all hardware and software components that are integrated around a PC cash register or electronic cash register is called a cash register system or POS system. It can be handled mobile and stationary and is used to map and store the business transaction between retailer and customer. In addition, an ERP system can run in the background and be linked to the POS system, enabling a modern POS system to trigger replenishment within a warehouse management software. For this connection with the merchandise management system, a POS system must fulfill different functions depending on the industry and the goods traded, as it is a relevant factor for efficient store logistics and the intralogistics behind it.

Teaser image: Author – Travelarz / CC BY-SA 3.0 PL

Figure 1: Author – Travelarz / CC BY-SA 3.0 PL

If you are interested in topics related to e-commerce and networked merchandise management systems, please also read the articles Multi-Channel and Omni-Channel.

Also available in Deutsch (German)