Comprehensive Report on the Point of Sale (POS) System

This report provides a comprehensive overview of Point of Sale (POS) systems, exploring their functionality, advantages, and disadvantages. It details how POS systems enhance business operations by centralizing data, facilitating decision-making, and improving customer service through faster checkout processes and accurate inventory management. The report also highlights the significance of security measures to protect sensitive customer and business data. Furthermore, it discusses suitable telecommunication options, such as LAN and WAN, for POS system implementation. The analysis covers aspects like cost, efficiency, and the impact of POS on business competitiveness, recommending its adoption for increased profitability and improved customer service. The report concludes with insights into the risks associated with POS systems and the importance of prioritizing data protection.

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POINT OF SALE SYSTEM
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ABSTRACT
Paperwork in businesses has been tedious, time consuming and space ineffective. Point
of sale system technology is a computerized system that helps to input, store and distribute
data effectively. Installation is done using a network that connects the computer to a server
that stores the information in a database. In the database the information is easily accessible by
the relevant parties especially during decision making. The system enables timely and accurate
reporting, helps the entrepreneur to access the staffs and also helps in making orders at the
right time and of the required quantity. However, the point of sale system is prone to risks that
affect the business or the customers directly. Therefore, the business should always consider to
the protection of its information and that of the customer as the highest priority. It is
recommended that business should adapt the technology for high profits and effective services
to the customers.
Keywords
Point-of-sale system, security
Contents

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LIST OF ABBREVIATIONS..............................................................................................................................3
Point of sale system....................................................................................................................................4
Introduction............................................................................................................................................4
How point-of-sale system help a business to gain competitive advantages.........................................6
Advantages of having a centralized database........................................................................................7
How point-of-sale system facilitates decision making...........................................................................7
Suitable telecommunication option for POS system.............................................................................8
Risks of POS system to a business..........................................................................................................9
Security...............................................................................................................................................9
Privacy.................................................................................................................................................9
Confidentiality...................................................................................................................................10
Conclusion.................................................................................................................................................10
Recommendations....................................................................................................................................10
References................................................................................................................................................11
LIST OF ABBREVIATIONS
POS point-of-sale
CDB centralized database
SMEs small and medium enterprises
LAN local area network
WAN wide area network

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Point of sale system
Introduction
The fact that a business is established with an aim of making a profit, most of the
entrepreneurs do not know whether they are making profits or losses. Management and
continuous running of the business does not guarantee profit. Though these two aspects are
crucial to the business performance, proper monitoring of business input and output in form of
orders and sales are vital. Many businesses conduct their activities in the traditional way. That
is, transactions done in a day are not recorded, sales are made and no stock taking is done,
orders are done by observing the products that have been sold out without considering the rate
at which it profits the business, cash can be handled by any staff in the business and no monthly
reports or monthly analysis of the business performance. The traditional method has been
ineffective in realizing profits because the business is at risk of misuse of assets by the staff
since there is low accountability, during ordering of goods, there is a probability of prioritizing
on goods that are not profiting the business by large margins and poor decisions concerning the
business may be made due to lack of or inaccurate data of the transactions. Point- of-sale
system is a technology that has been introduced in the businesses to centralize its operations.
The system manages the operations of the business and stores the transactions records for
future use. As asserted by Meagher (2014), the system is installed at the retail point of sale
check out station. That is, it is the final stage passed by the customer during the purchasing
process. The system comprises of a computer, cash drawer, receipt printer, a barcode reader
and credit and debit card readers.
Advantages and Disadvantages of point-of-sale system
The system has led to tremendous growth and success of businesses (Stotenburg et al
2009). Its ability to store accurate and timely data has enabled the entrepreneurs to make
relevant decisions pertaining the business. It makes the tracking process of data and
distribution of information easy and this facilitates the management of the business. As
according to Walker, Jorasch and VanLuchene (2003), the system is able to maintain a database
of one upsell price that helps in the exchange of customer’s change that is inform of coins with
the products purchased. During a transaction the system is in a position to update inventory

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and compile a sales history. This reduces the process of analyzing the sales history that is
normally done manually at the closure time in businesses that have not adopted the system. In
manual accounting process, many inventory units are used and this complicates the retrieval of
information and increases paperwork. The system reduces the inventory units and this reduces
the paperwork. As stated by Lambert, Wheeler and Rosenblatt (2007), enhancement in the
point-of-sale system has enabled the system to provide the customer with rebate on purchase.
This may encourage purchasing which indicates more sales ad high profits to the business. The
system provides a receipt of the purchased good. This help in minimizing losses that may be
caused by a cashier giving wrong balances to the customer. More often the customers check on
the total cost of the goods and the balance and therefore are able to detect an error and give
back the excess money. The use of barcode reader enables fast input of transaction and
therefore reduces the time a customer takes to check out (Xian, Ellis, Good and Zhu 2013).
From the sales history, the entrepreneur is in a position to make accurate orders and also able
to identify the products that are more profitable. This helps him to maximize on the most
profitable products. the regular storage and compiling of information enables timely reporting
and this enables the managers to effectively run the business operations. The system also helps
to access the cashiers’ performance. However, the system installation fee is high. Therefore,
small and medium businesses find it difficult to invest in it. The operation of the system
requires an individual who is computer literate. The training required for cashiers to learn the
system may cost the business extra cost and time. The regular updating of the software and
hardware of this system makes a business to incur extra cost. In case a customer opts to use a
credit or debit card, there is a possibility of the customers Pin to be viewed by other customer.
This possess a security risk. Though the system has many advantages, the disadvantages should
also be considered during the installation and methods to avoid the disadvantages to be
developed.
How point-of-sale system help a business to gain competitive advantages
The ability of the system to enhance the customer check out speed ensures that the
customer’s time spend in the store is relatively short. A business that maximizes on this
advantage usually encourages customers to be purchasing in their store than from stores where

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checkout process is slow. As according to Moitra and Ganesh (2005), the system enables an
enterprise to determine when to give promotions (p. 928). A business that offers promotions
often encourages customers to be checking in for promotions chances. This earns more
customers to the business hence high profits. As asserted by Teece (2010), the business reports
enable a business to develop models and strategies that enhances productivity (p.186). The
timely and accurate information obtained from the system enables the managers to develop
strategies that gives them an upper hand in the competitive market. The high profits realized
from the use of POS due to minimized risk of theft from the staffs can be channeled to
advertisement of the business which creates a bigger market and increases the business
popularity. For businesses that advances the POS system to a point that a customer can
purchase and make payments of goods by using his mobile phone and the goods are delivered,
this motivates more customers to use this method due to time limitations and hence earns
more customers for the business (Qawami,Talaich and Farrell 2014).
Advantages of having a centralized database
A centralized database (CDB), that is, a database that is located, stored and maintained
in a single location effectively facilitates the operations of a business. It makes it easy to access
business information from a single source than from several databases. This help to save time
and also reduces the risk of multiple or repeated data which could provide in accurate
information to decision makers and hence affect the type of decisions made for the running of
the business. As according to Garcia (2011), the data integrity is maintained in a CDB. That is,
the database ensures that there is no redundancy of data. The CDB is also cost effective to a
business. The process of installing multiple databases is relatively high compared to centralize
since more materials and experts are required to maintain and run the systems (Ozsu and
Valduriez 2011). Therefore, SMEs are in a position to develop this type of database in their
businesses. From a centralized database it is easy to monitor transactions done by the cashiers
and this therefore reduces errors during reporting. The CDB enables easy updating of data
since the changes are visible by all users. This helps a business to save time and money. It also
enables easy control of the data security. As stated by Berger et al (2008), an administrator can

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easily implement security policies of a centralized database than of a multiple one. From a CDB
it is easy to obtain information and make reports that are used during decision making.
How point-of-sale system facilitates decision making
The ability of the system too input data through a barcode reader and record the
transaction in an inventory unit in the database, and also to keep the stock records and issue
orders for additional stock helps to effectively run the business operations. The information
stored in the system can easily be accessed by the relevant people in the business. As according
to Laudon (2016), it is easy to access information stored in pint-of-sale system by using a search
tool. Since huge transactions are done it will be impossible to track information from this
system manually. This will take a lot of time and increase paperwork. Search tools are therefore
used to effectively access the information. The information from this system can be used to
answer questions about the business. For instance, it can answer how much a business has
made as profit for a given period of time? What is the quantity of stock required to be ordered?
Which product is making more profit? At what rate are the products being bought? Therefore,
the information is used to make decisions about the business. It can help to develop strategies
that will be implemented to increase competitiveness in the market by either giving
promotions, it also helps the decision makers to know the products to order in large quantities
in terms of profit gain and this can help the business to develop.
Suitable telecommunication option for POS system
It is very important for the businesses that consider installing point of sale system to
consider the type of network to use. The interconnection of the computers within the business
premises requires a local area network (LAN). The LAN connects computers over a short
distance. It allows sharing of information among computers under one building. There are two
types of media that can be used to transmit data in this POS. the wired medium which uses
cables to transmit information. They include coaxial cables, fiber optic cables and twisted pair
cables which are in two forms: shielded and unshielded twisted pair cables. The wired
technology is less expensive compared to wireless connection; it is reliable since there is no
interference as seen in the wireless technology. Though mobility is limited it ensures the
security of the information of the business. Unshielded twisted pair cabling is most efficient in

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the wiring of the network since it eliminates electromagnetic interference; it is cheap and
affordable and facilitates high data transmission. However, in areas where there is high
electromagnetic interference, shielded twisted pair cabling should be used. for businesses that
will implement the mobile phone use as a point of sale wide area network (WAN) is suitable
where the media should be wireless. A wireless network uses radio waves to transmit data.
There are several types of wireless technology. The satellite communication, infrared
communication, microwave communication and Wi-Fi. They are not limited to distance and
allow one to be connected from any location.
Risks of POS system to a business
Security
The POS system is very prone to hacking (Williams 2009). This poses a risk to the
business information being accessed with a wrong motive. When customers’ information is
hacked, it might be used for fraudulent purposes. This therefore calls the business to ensure
that their system is secured. They should ensure the operating system of the POS system is
updated regularly, the security system of the POS should be checked regularly and the system
password should be changed from the manufacturer default password to personal password.
Privacy
In cases of credit or debit card use during payments, the customer feeds his pin in the
card reader. The pin may be visible to other customers who may end up frauding the customer.
Perhaps the business should set aside a private space for feeding the cards details that enables
the customer to feed the pin without being surrounded by other customers. For the business to
ensure that their operations and information are private they should limit access to the
information by indicating the level by which a cashier can reach the POS system (Popovic and
Hocenski 2009, p. 347). That is, the cashier should not be in a position to access any information
from the system.

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Confidentiality
Accessibility of information pertaining the business by untrusted staff or people poses a
risk of theft and loss of assets. The business should ensure that there is an administration
password that is only used by the manager to access the information.
Conclusion
The POS system is a technology that has brought tremendous growth to businesses.
Though it is expensive to install, it has many advantages. Proper installation is important and
use of the best cables is vital. However, the system is prone to insecurity and therefore the
business should ensure it protects its information and that of their customers.
Recommendations
I highly recommend the adoption of this POS technology in all businesses for maximum
profit gains.

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References
Berger, S., Cáceres, R., Pendarakis, D., Sailer, R., Valdez, E., Perez, R., Schildhauer, W. and
Srinivasan, D., 2008. TVDc: managing security in the trusted virtual datacenter. ACM SIGOPS
Operating Systems Review, 42(1), pp.40-47.
Garcia-Molina, H., 2011, February. A concurrency control mechanism for distributed databases
which uses centralized locking controllers. In BERKELEY CONFERENCE.
Lambert, G., Wheeler, A. and Rosenblatt, C., Capital One Financial Corp, 2007. Enhanced system
and method for point of sale cash rebates. U.S. Patent Application 11/173,651.
Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education India.
Meagher, M., Metrologic Instruments Inc, 2014. Bioptical point of sale (POS) checkout system
employing a retractable weigh platter support subsystem. U.S. Patent 8,822,848.
Moitra, D. and Ganesh, J., 2005. Web services and flexible business processes: towards the
adaptive enterprise. Information & Management, 42(7), pp.921-933.
Özsu, M.T. and Valduriez, P., 2011. Principles of distributed database systems. Springer Science
& Business Media.
Popović, K. and Hocenski, Ž., 2010, May. Cloud computing security issues and challenges.
In MIPRO, 2010 proceedings of the 33rd international convention (pp. 344-349). IEEE.
Qawami, B., Talaich, B.Z. and Farrell, M.J., Koin Inc, 2014. Enabling a merchant's storefront POS
(point of sale) system to accept a payment transaction verified by SMS messaging with
buyer's mobile phone. U.S. Patent 8,751,317.
Stoutenburg, E., Mollett, C.J., Price, J., Fillinger, C.A., Nelson, E.M., Seifert, D.A. and Singleton, J.,
First Data Corp and Western Union Co, 2009. Systems and methods for performing transactions
at a point-of-sale. U.S. Patent 7,600,673.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range
planning, 43(2-3), pp.172-194.

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Walker, J.S., Jorasch, J.A. and Van Luchene, A.S., Walker Digital LLC, 2003. Method and system
for processing supplementary product sales at a point-of-sale terminal. U.S. Patent 6,598,024.
Williams, C., First Data Corp, 2009. System for managing risk of financial transactions with
location information. U.S. Patent 7,500,607.
Xian, T., Ellis, D., Good, T. and Zhu, X., Metrologic Instruments Inc, 2013. Bar code symbol
reading system supporting visual or/and audible display of product scan speed for throughput
optimization in point of sale (POS) environments. U.S. Patent 8,448,863.