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General discussion

How does Point of Sale work?

by Cesarjr / March 19, 2008 4:19 PM PDT

(First Post :-D)
Hi everyone. I'm not sure if this is the proper thread, but it seems to be the most adequate.

I'm interested in knowing how a transaction works when someone buys something at a store with either a debit or credit card. I know the basics: you need Point of Sale Software, Card Processing Software, and a Card Processing Terminal. What I'm interested in is how they interact with each other.

For example:
I buy $5.00 worth of merchandise. I pull out my card, slide it, in put my PIN or signature, then leave.

My question is, from a technical aspect, what happens after the moment I slide my card? Where does that information go? How does it know where to go? Once it is approved, how does the Card Terminal let the actual Point of Sale software know that the transaction is, in fact, approved.

Thanks everyone.

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In a nutshell. . .
by Coryphaeus / March 19, 2008 9:00 PM PDT

The magnetic stripe has the account number, the bank routing number, and your PIN stored, and usually encrypted. When you swipe the card, the terminal is connected to its own bank, which then routes the transaction to your bank, which debits the amount. Your bank replies back to the terminal that the money is available and will be removed from your account and credited to the merchant.

Credit cards work the same way, querying your CC account and if you're under your limit, the CC company will pay the merchant.

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Communication between components...
by Cesarjr / March 20, 2008 3:10 AM PDT
In reply to: In a nutshell. . .

Side Note: Does everyone else love three dots (ellipses) too? I love them so...

Okay. As I understand, the Magnetic Stripe Reader is a peripheral to Card Processing Software, which may or may not be included in the actual Magnetic Stripe Reader Hardware (for example: Walmart's card payment system).

So, once the Card Processing Software receive the "Approved" code, how does the actual Point of Sale Software know that the transaction was approved?

Obviously, this is assuming we ARE using Point of Sale (PoS) Software, not a standalone Card Processor.

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Can be different
by Willy / March 20, 2008 1:09 AM PDT

EBT-elect. banking term. is NOT POS=point of sale interactive 100% of the time. The POS must be capable or being EBT ready, otherwise, these are separate functions. SO, if you go into this, verify what you're getting.

tada -----Willy Happy

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EBT kind of confused me for a second...
by Cesarjr / March 20, 2008 3:14 AM PDT
In reply to: Can be different

I got kind of lost...

EBT is the program for Government Benefits, right?
And, you're saying that a Card transaction is not always coupled with PoS interaction, correct?

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What to expect
by Willy / March 20, 2008 9:27 PM PDT

EBT, is a generic term. I explained it well when I stated EBT=electronic banking terminal. Yes, the food stamp pgm. does use this term. Afterall, that govt. money is being routed from govt. pgm. to bank, treated as cash, moola, dough, scratch, ducats, longgreen, etc. Wink

POS and EBT can be separate functions, you don't need them to act together in the sense you can manually enter amounts to complete the transaction. However, they can act together on higher end POS operations like you would find in Sears, K-Mart, Krogers, etc. as you swipe the card across some kybd. or similar entry point(cashier), they're tied together. Then again, the place where you swipe your card can be a separate point for the customer to do. In other words, they can be separate or together. Whatever service you get, can provide some offering that provide a total package. POS systems tend to have scanners which in turn enter a "scanned item" to receipt until done, then to complete transaction you swipe card. If you have the total package all is provided, terminals(EBT), registers, and software. Otherwise, if you have simple store operation, you get the EBT alone, it comes configured for your final banking provider, then you enter the transaction amount and what type(CC or debit/check) it is, manually.

I believe OfficeMax or OfficeDepot provided some pamphlets to check on CC banking providers for use of CC transactions on the simple level. Banks can be service provider as well. If you google away and provide a contact, they will call you with rates, equip. offering, services, etc., and have your head spin, but beware and jot down the figures, etc. and proceed what may best suit you. I hope this all helps...

tada -----Willy Happy

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Thanks.
by Cesarjr / March 22, 2008 10:29 AM PDT
In reply to: What to expect

Oh. lol. I didn't understand. I though you meant "EBT Elect - A Bank Term" because of the abbreviation . Pardon my ignorance, haha. I'm not actually interested in purchasing POS software, hardware, or any of the sort. My correctly worded question came out in response to the gentleman-after-this-post's response.

Thank you, though.

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point of sale
by shadowworks / March 22, 2008 2:28 AM PDT

its more than you think, but the posts are close....point of sale... is in simple terms, a suit of programs, that does to a point interact with other programs, behind the seens like wal-mart for example... starting with you... you buying a product, point of sale takes that product code, and reduces the inventory count, the inventory count changes the ordering count that goes to the distrabution center, that basicaly does the same thing there, that report goes to the head office then to the buying personal, so they know what to keep in stock, what to let go as discontinued product ( cause it isn't bringing in a quota for sales), each store has at least 2 servers, 1 for instore( LAN: local area network) and one for WAN: Wide area Network, the WAN can talk to all the other stores and to the head offices on encripted land line or satalites. ok... so you go in and buy something, the regester takes what you buy and its retail cost taxes and transactions and sends it to the LAN server the lan server to WAN to head office, then back down to regester, when you swipe your card the card reader sends the info to the regester then back into the LAN and WAN, the head office then takes that transaction to another server, we will call it the banker, that banker looks at the info, calles up you bank, has an exchange and handshake before you info is passes( all networks regardless what kind has this handshake & exchange)once the info is recieved it goes back into the main servers at head office, charted as sale ( retail + tax ( splits tax and stored in another location) retail - cost = proffit) back to WAN then LAN then register to conferm your transaction. every business uses sometype of this layout, maybe not as big, but even in a small store, it still uses point of sale for ordering inventory, whats in inventory, and still has a chatt with your bank, ever notice employees walking around the store with the little scanners??? they are a portable "Node" that talks to the LAN server, they are scanning for price changes, whats in inventory and on shelf stock, the bigger people once or twice a year have a specialty team come in and literly count every item on every shelf, collect that data and transmits that to the head office directly, they take that info, and say look, we sent the store 500 of this item, but they only sold 250 of them, they should have 250 left but the count given is 225, there are no reports of store use( a right off of a product used in the store)no returns ( yes all thats added in to it all) so that means that 25 of the items were taken without payment ( theft) theft is subtracted from proffit, proffets pays the bills, paychecks and whatnot,,, each big store must maintain an account for payroll, store use, and its own bills, so lets say that comes to 45,000-100,000 a month, that store is required to sale at least 20% above that, or get cut offs to compensate the anual % of projected sales and proffits. so, point of sale is the very heart of any business, it is a string of many programs that constantly is split up to do a job then get back with return information and conformation, all in the atempt of under 30 seconds.... don't let others tell you its simple, cause it is far from it, there is constant talking on whatever network used, the little programs that make up "point of sale" is doin it double time,,, by the way... did Ive worked on these systems in the past?? or that I have one of my own??? ooppss sorry... hope this sheds light on you question.

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Very interesting.... yet....
by Cesarjr / March 22, 2008 10:24 AM PDT
In reply to: point of sale

Shadowworks, that was a very interesting post. Thanks for the feedback. Yet, I can't seem to get my question across correctly.

I'm trying, basically, to figure out if there's a way to improve the whole purchase transaction process. Specifically, the card purchases. It might sound crazy, but that's not the point. Happy So, I'm trying to figure out how a Card interacts with a Magstripe Reader, how, in turn, the Magstripe Reader Interacts with the Card Processing Software, and how the Credit Card Processing Software interacts with the Point of sale software.

To make something better, one first has to duplicate it, then work from there.

Eventually, my goal is to get a small group of interested people and make a reader, write the necessary software for it to function, and go from there. (So if anyone is interested!!!) But, as of now, I barely came up with this idea, so I'm trying to find info everywhere I can.

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RE:Choosing a good Point of Sales System
by dottisupre / August 8, 2009 1:20 AM PDT

I was going to add, since some people thinking about purchasing POS systems are likely to read your post, whatever you do, DONT go for a free/cheap system.

Also, DONT go for a linear system like QuickBook, MYOB, or Microsoft POS.

Radiant Systems Aloha is good but OVERPRICED (nearly double price). The best is ChikPOS.

ChikPOS has been fantastic. I've had NO problems with it whatsoever. It's a Jeremy Shum Invent so its a quality Aussie product too - helping the economy. The features are also endless... multi-language support, managerial decision making reports, not locked to hardware, fully multi-touch (like iphone), external monitor support, xbrl compliant, auto-generation of online store, can advertise "related products", corporate chat support, show time/date/news on external screen... it's just top stuff. AND it's Windows 7 compatible!

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