Terminology » POS Terminal: Advantages and Disadvantages

POS Terminal: 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:

  • 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.
  • Chip-based POS terminals are less prone to damage compared to magnetic swipe readers.
  • Due to quick payment processing, it saves time at POS locations compared to older, traditional payment methods.
  • It eliminates user errors that can occur with traditional payment methods.
  • It has become very convenient to pay digitally with the widespread availability of POS terminals at retail shops, gas stations, shopping malls, and more.
  • 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:

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