If you’ve ever felt lost in conversations about Point of Sale (POS) systems, you’re not alone. The world of POS technology is filled with jargon, abbreviations, and technical terms that can be confusing. However, understanding these terms is essential for business owners, managers, and anyone using POS solutions to streamline operations, process payments, and manage inventory efficiently.
In this guide, we break down the most common POS jargon terms you should know, helping you navigate the language of modern retail and hospitality transactions with confidence.
Categorised Glossary of POS Terms
General POS Terms
Point of Sale (POS) – The physical or digital location where a customer completes a purchase, whether at a retail store checkout, a restaurant payment counter, or through an online store.
POS System – A combination of hardware and software that enables businesses to process transactions, track sales, manage inventory, and generate reports. Modern POS systems often include cloud-based features and mobile capabilities.
Cloud-Based POS – A POS system that operates using cloud technology rather than being installed on a local server. This allows businesses to access sales data, inventory, and reports from any internet-connected device.
POS Terminal – The hardware component of a POS system, such as a touchscreen monitor, tablet, or dedicated checkout machine, where transactions are processed.
Integrated POS System – A POS solution that seamlessly connects with other business software, such as accounting tools, customer relationship management (CRM) software, and inventory management systems.
Mobile POS (mPOS) – A portable version of a POS system that operates on mobile devices like smartphones or tablets, allowing businesses to process payments on the go.
Payment Processing Terms
EMV (Europay, Mastercard, and Visa) – A global standard for secure card payments that uses chip-based technology instead of magnetic stripes, reducing the risk of fraud.
Near Field Communication (NFC) – A wireless technology that enables contactless payments by allowing a device (like a smartphone or contactless card) to communicate with a payment terminal when in close proximity.
Merchant Account – A type of bank account that allows businesses to accept credit and debit card payments, acting as an intermediary between the business and the card-issuing bank.
Interchange Fee – A fee paid by the business’s acquiring bank to the customer’s card-issuing bank for processing a credit or debit card transaction. This fee varies based on the card type and transaction method.
Chargeback – A reversal of a credit or debit card transaction initiated by the cardholder’s bank, typically due to disputes over fraudulent charges, product quality, or unauthorised transactions.
Tokenization – A security process that replaces sensitive payment card information with a unique, encrypted token, reducing the risk of data breaches.
PIN (Personal Identification Number) – A secure numeric code used by customers to authorise debit card transactions.
Tap and Pay – A payment method that allows customers to complete transactions by tapping their contactless card, smartphone, or smartwatch on an NFC-enabled POS terminal.
Inventory and Sales Management Terms
SKU (Stock Keeping Unit) – A unique identifier assigned to each product in a store’s inventory for tracking and managing stock levels.
UPC (Universal Product Code) – A standardised barcode used to identify and track products across different retailers and suppliers.
Barcode Scanner – A device used at the point of sale to scan barcodes on products, automatically retrieving price and inventory information.
Inventory Management System – Software that helps businesses track stock levels, manage reorders, and prevent inventory shortages or overstocking. Many modern POS systems include built-in inventory management tools.
Shrinkage – The loss of inventory due to theft, damage, or administrative errors. POS systems help reduce shrinkage by improving stock tracking.
Reorder Point – A predetermined stock level at which a new order is placed to replenish inventory before running out of stock.
Multi-Location Inventory Management – A feature in some POS systems that allows businesses with multiple locations to track stock levels across different stores or warehouses in real-time.
Security and Compliance Terms
PCI Compliance (Payment Card Industry Data Security Standard) – A set of security standards designed to ensure that businesses accepting, processing, or storing credit card information maintain a secure environment.
End-to-End Encryption (E2EE) – A security measure that encrypts payment data from the point of transaction to the payment processor, preventing unauthorised access.
Two-Factor Authentication (2FA) – A security feature that requires users to verify their identity through two forms of authentication, such as a password and a one-time code sent to their phone.
Chargeback Fraud (Friendly Fraud) – A type of fraud where a customer disputes a legitimate charge with their bank to receive a refund, despite having received the product or service.
Secure Socket Layer (SSL) Encryption – A technology that encrypts data transmitted between a website and its users to protect sensitive information, such as payment details.
Fraud Detection System – An automated system used by payment processors and POS providers to identify suspicious transactions and reduce the risk of fraudulent activity.
Industry Roles and Organisations
Value-Added Reseller (VAR) – A company that enhances existing POS solutions by adding custom features, integrations, and services before reselling them to businesses.
Independent Software Vendor (ISV) – A business or individual that develops and sells software applications that integrate with POS systems, such as accounting, loyalty programs, and reporting tools.
Merchant Service Provider (MSP) – A company that offers businesses the ability to accept credit card payments by facilitating merchant accounts, payment gateways, and processing services.
Acquirer (Acquiring Bank) – A financial institution that processes card transactions on behalf of businesses and ensures payments are securely transferred from customers to merchants.
Issuer (Issuing Bank) – The bank that provides credit and debit cards to consumers, authorising or declining transactions based on available funds and fraud checks.
Understand The Industry’s Jargon
Understanding POS terminology is essential for business owners, managers, and employees looking to optimise their sales processes and payment technology. Whether you’re choosing a new POS system, negotiating with a payment processor, or simply trying to make sense of industry jargon, this glossary provides a foundation for informed decision-making.
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