What Is a POS System? Complete Guide for Australian Businesses (2026)

A point of sale (POS) system is the combination of hardware and software businesses use to process sales. Businesses use POS systems because they make transactions faster, more accurate, and easier to track, while giving owners a clear, real-time view of what's happening across their stock, staff, and sales.

Retail shops and hospitality businesses come in all different shapes and sizes. You've got your brick-and-mortar clothing stores, your online boutiques, your restaurants, bars and hotels. Online or in-store, there's one thing they've all got in common. That thing? Every shop needs to have a solid point-of-sale (POS) system.

Your POS system has an important role to play. It drives your entire checkout process. You can use it to ring up sales, take payments and make sure that every transaction is processed efficiently. 

But what is a POS system, exactly? 

How does it work? 

And where do you start with picking one for your business?

Here's the cool part: modern, cloud-based POS systems do far more than just process payments. They also handle inventory management and customer relationship management, helping you run the back-office side of your retail or hospitality business, not just the till.

In this complete guide, we’re giving you the lowdown on the inner workings of POS systems and also shedding some light on how they work. By the end, you'll know what steps to take when checking out your customers, and the important role that POS solutions (like inventory management and customer relationship management) play in managing your retail or hospitality store’s back-office operations. 

Let’s get started. 

POS systems meaning

A point of sale system (sometimes called a “POS machine” or "Point of purchase system") is the hardware and software used to make in-store and online sales at your business. It's also your record-keeping solution for transactions, letting you to track revenue, customers, inventory, and more. 

POS systems can come in a lot of different shapes and sizes. Some people could use a computer, along with some other hardware like receipt printers and cash registers. Others use mobile devices like tablet POS and iPad solutions. The right POS solution for you will depend on your business' needs and the experience you want to give your customers.

Check out our 'How to use a POS system' guide for more!

How does a POS system work?

A POS transaction might look instant to the customer, but behind the scenes, it's a little more complicated. Here are the invisible steps that lead to a completed POS sale. 

1. Product selection: The item or service is added to the sale, either by scanning a barcode, tapping a product tile on screen, or searching for it manually.

2. Payment processing: The customer pays by card, cash, or contactless/mobile wallet, and the payment terminal authorises and processes the transaction securely.

3. Receipt generation: A digital or printed receipt is created automatically, confirming the items purchased and the amount paid.

4. Inventory updates: Stock levels are adjusted in real time, so your system always reflects what's left.

5. Sales reporting: The transaction is logged and fed into your sales reports, for an up-to-date picture of revenue, best-sellers, and trends.

6. Customer data collection: If the customer is identified (e.g. through a loyalty account or online order), their purchase history is updated, for future marketing and offer purchases.

And tada! Your sale has gone through, and everything has updated automatically behind the scenes.

How modern POS systems have evolved to provide point of sale service

Modern POS systems have come a long way from the old-fashioned cash registers. For one thing, these days, they offer a whole range of services beyond just processing sales (and making the really nice ‘cha-ching’ noise as you open the drawer). They've evolved to handle everything from inventory management to customer relationships.

One big change is how they've gone digital. Instead of clunky hardware, modern POS systems often run on sleek tablets or computers, making them more versatile and easier to use. They've also gotten smarter, with built-in features like inventory tracking and real-time sales reporting, giving businesses a clear picture of their operations at all times. Plus, they're more connected than ever, integrating with other software and tools to streamline tasks like accounting and marketing.

Advantages of using modern POS systems in your business operations

Once you’ve worked out the ins and outs of using your POS system, your company will see huge benefits like:

• Faster checkout experience: A modern hospitality or retail POS system makes the checkout process quicker and easier for both your brilliant team of cashiers and for your customers. This means that your employees can spend more time and energy on connecting with your shoppers and guests, instead of dealing with tech issues. For example, integrate your POS with Epos Now Payments and you can save up to 4 hours a month during sales.
• Greater visibility into your performance: A lot of the more modern, cloud-based point of sale systems have built-in data and analytics. This means that you'll be able to generate reports on a lot of different areas of your business. We're talking inventory data, sales data, employee data and customer data, all put into easy-to-read reports.
• A better handle on your inventory: As a retailer or hospitality business owner, your inventory is everything! It's super important to keep track of what you have in stock and manage it effectively. Luckily, with the right POS system, keeping tabs on your inventory and the physical goods you sell is totally possible. Look for a POS solution that helps you with inventory management tasks like adding products one by one or in large batches, ordering and getting new products into your inventory, and doing regular counts of your inventory to make sure everything adds up.

• Reduced manual administration: A good POS system automates tasks that would otherwise eat into your time, from end-of-day sales totals to stock reordering, eliminating time spent on manual data entry and paperwork.

The main components found in POS solutions

Now that you've got a really clear understanding of what a POS system is, let's take a look at the different elements that make them up:

POS software

POS software, or point of sale software, is basically the programme that helps run all the tasks you need to make when you’re making a sale. Think of it as the brain behind the checkout process. At its most basic level, POS software can be used to work out how much each transaction costs, keep track of your sales, and monitor inventory.

But there’s more to POS software than just the basics. A modern POS system comes with advanced features that can really enhance your business operations. Take Epos Now, for example. Our POS solutions offer features completely tailored to your specific business. We're talking loyalty programmes that keep your customer satisfaction high and keep them coming back, reporting tools that give you detailed analytics on your business processes, employee management tools and other handy apps.

POS hardware

Now, POS hardware is the physical component(s) of your POS system. Think of them as the body, while your POS software is the brain. Check out some of the most common hardware out there below:

• 🖥️ POS terminals: This is the actual device that your POS software runs on. This may be a desktop computer, a laptop or mobile device (like an iPad, tablet POS, or smartphone). POS providers like Epos Now offer specially designed, easy-to-use hardware with touchscreens that make it easy to tap the screen to take orders, process customer sales or look up prices.
• 💳 ​​Card reader: Suppose you accept credit card payments (and by the way you absolutely should, check out our blog on why), you'll need to have a credit card reader to facilitate any payment processes. The type of credit card reader you'll need depends on your POS software and your terminal. Talk to your POS system provider to make sure that you’re using card readers compatible with their POS solution. 
• 🏷️ Barcode scanner: If you're a retail shop with a big catalogue of products, a barcode scanner will likely be needed. With it, you won't have to manually type in product numbers or search for products. Instead, you'll just need to scan the barcode and your POS system automatically adds the product to the transaction. 
• 🖨️ Receipt printer: A lot of shoppers will need physical receipts. Because of this, you'll need a device to print those much-needed receipts. When connected with your POS system, the receipt printer automatically produces receipts once you've completed the transaction.
• 💷 Cash drawers (AKA cash register): This is where your cash is held. A cash drawer or cash register stores your legal tender so you can collect payments and hand out change.
• 🖥️ Customer-facing displays: A second screen facing the customer that shows the items being rung up and the total cost, giving them a clear view of their order as it's processed and helping build trust at checkout. 
• 🖨️ Kitchen printers: Essential for hospitality businesses, kitchen printers send orders straight from the till to the kitchen, so chefs get accurate, real-time tickets without staff having to relay orders by hand.

Payment terminals 

Payment processing is one of the main functions of POS systems. Every time your retail customer buys a product or pays for one of your services, your POS system will process the transaction. If the payment is made via debit or credit card, you'll need a payment terminal.

Now there's a lot of different ways a customer can pay, and you'll need to check that your payment terminal accepts the ones your business uses. These include:

• Secure online payments through your eCommerce site
• Magstripe credit cards (the ones you swipe through a reader)
• Chip cards have an embedded chip, making them more secure than traditional swipe cards
• Contactless payments - AKA contactless cards that customers can tap, or mobile wallets such as Google Pay, Apple Pay or Samsung Pay
• Card-not-present transactions occur when the customer and their credit card aren’t physically present. You manually enter their credit card information, which also happens when a customer enters their payment details while checking out online.

Choosing the right POS system for your business

There are hundreds of POS systems out there, so how do you choose? In this section, we'll run you through everything you need to know about picking out the best POS system for your company.

Types of POS devices for different businesses

One of the first things you're going to want to consider is the type of POS system you want. Gone are the days when you just had a simple, old-fashioned cash register, not designed for your business type and size. There are now so many different types of POS systems out there like:

• Cloud-based POS systems: Like the Epos Now Complete Solution, this POS system stores data in the cloud, allowing you access and changes from any internet-connected device.
• Mobile POS systems: Portable and modern solutions where the POS software operates on a mobile POS system, like tablet POS devices or smartphones.
• Legacy POS systems: Also called on-premises, these are countertop POS systems that operate differently from newer systems. They store data locally. This means that all of your transaction info is saved on specific devices within a closed network.
• Multichannel POS systems: These systems are for businesses that work across lots of different channels, like physical stores, online platforms, and mobile apps, to sync all your point-of-sale data. (You may find some cloud-based POS systems and mobile POS systems can also handle multiple channels, giving you great flexibility on choice.)

Check out our complete 'Different types of POS systems' guide for more information and to help you decide.

Compare POS providers 

So you’ve figured out which device is best for your business. Now you need to consider the full package when deciding which POS provider to go for. Consider the following:

• PCI Compliance: Look for POS providers that adhere to Payment Card Industry Data Security Standard (PCI DSS) requirements to safeguard sensitive information.
• Support: Evaluate the level of support offered by each POS provider, including availability (24/7 support is ideal), response time, and the quality of assistance provided.
• Features and functionality: Compare the features and functionality offered by different POS providers to ensure they meet your business requirements. Think about things like inventory management, reporting capabilities, integration with third-party applications, and scalability.
• Cost: Consider factors such as setup fees, transaction fees, monthly subscriptions, and any additional costs for hardware or software upgrades.
• User experience: A user-friendly interface can improve efficiency and productivity in day-to-day operations. So make sure your POS provider shows you how easy it is to learn and use the system. (You’ll be using it pretty much every day, after all!)
• Set up and delivery: If you need a device RIGHT NOW, consider how quickly it can be delivered, how much time you need to set it up for your business, and how easy it will be to switch providers if you’re already with one.

How Epos Now solves these challenges for your business

Integrating Epos Now’s POS solution with your existing business tools is straightforward and seamless. Epos Now’s system is designed to enhance your business operations and make managing different aspects of your business easier. Here's how it can fit into your current setup:

• Slow checkout queues? Epos Now's all-in-one POS system, with a built-in printer, payment terminal, and cash drawer, is designed to speed up service from day one, with intuitive software and 1-on-1 onboarding that gets your team up and running in minutes.
• Limited visibility into your business? Real-time reporting on staff performance, customer behaviour, sales, margins, and stock levels means you can check in on your business from any device, wherever you are, not just from behind the till.
• Managing sales across multiple channels or locations? Epos Now supports online, delivery, and collection services, syncing your physical and online locations so you can offer services like Click & Collect without juggling separate systems. Choose from over 100 apps in the Epos Now Appstore, including accounting software, CRM tools, and payment systems, to connect the tools you already rely on.
• Need help when something goes wrong? Epos Now provides 24/7 technical support in their premium package, plus unlimited training, ensuring that you always have the help you need. Their expert advice and resources, like a comprehensive blog portal, help you get the most out of your POS system.
• Running a retail or hospitality business with specific needs? Epos Now offers tailored features and accessories for your industry:

- Real-time inventory management 

- Powerful instant reporting

- Kitchen management with a kitchen display system

- Online ordering

- Table and QR code ordering

-  And more!