Terminology » POS Terminal: 5 key Advantages and Disadvantages

POS Terminal: 5 key Advantages and Disadvantages

pos terminal electronic payment payment method retail security

This page discusses the pros and cons of POS terminals, outlining their benefits and drawbacks.

What is a POS Terminal?

“POS terminal” is short for “Point of Sale terminal.”

Introduction:

  • POS terminals are a common method for electronic payments in today’s digital world.
  • A POS terminal is an electronic device used at retail outlets to accept credit and debit card payments.
  • When a shop owner or retail worker inserts a card into the POS terminal, the terminal reads the card information and verifies the funds in the customer’s bank account.
  • If sufficient funds are available, the payment is processed.
  • A receipt of the payment can be printed immediately after the transaction is complete.

POS terminal

Figure 1: Person using a POS terminal for card payment.

Benefits or Advantages of POS Terminals

Here are the benefits of using POS terminals:

  1. It is a more secure payment method compared to swipe and contactless methods. It requires the cardholder to enter their PIN during the transaction to verify with the bank.
  2. Chip-based POS terminals are less prone to damage compared to magnetic swipe readers.
  3. Due to quick payment processing, it saves time at POS locations compared to older, traditional payment methods.
  4. It eliminates user errors that can occur with traditional payment methods.
  5. It has become very convenient to pay digitally with the widespread availability of POS terminals at retail shops, gas stations, shopping malls, and more.
  6. It eliminates the need for individuals to carry large amounts of cash when making purchases.

Drawbacks or Disadvantages of POS Terminals

Here are some disadvantages of using POS terminals:

  1. It is advisable to enter your PIN carefully, as it could be observed by someone nearby or captured using other methods.
  2. Fraudulent machines can be used to steal card details.
  3. POS terminals or systems are more expensive compared to old cash registers or manual systems.
  4. Reliable internet connectivity is essential for POS terminal operation.
  5. POS terminals can be infected with malware.