Utilizing a point of sale (POS) system is a crucial element for many businesses that helps to maximize sales. Although many people interchangeably use POS-related terminology, each one has a different meaning. Often, words like POS transactions, POS systems, and POS terminal are used interchangeably.
1. What is POS?
The location of a transaction is referred to as the point of sale, or POS. A client and a merchant are both involved in a POS transaction, along with the good or service being purchased using the POS terminal.
2. What is a POS terminal?
A point-of-sale (POS) terminal is a piece of hardware used in retail businesses to handle card payments. Hardware includes inbuilt software for reading magnetic strips on credit and debit cards. The next generation of point-of-sale systems will consist of mobile devices (as opposed to terminals fixed to a counter), either proprietary or third-party, with contactless capabilities.
Where does the Virtual POS terminal come into play?
Retailers and establishments all around the world were in need of a more safe and more reliable way to receive payments online due to the extraordinarily quick expansion of e-commerce.
When the Internet first got started, websites would only list products that were currently available along with a phone number and other contact information. You would then contact the seller, decide on a payment method, and a few days later, the product would be waiting for you at the post office or your doorstep.
This demand has led to the development of a Virtual Terminal (VPOS). It is a system that is used by online retailers and service providers. They can manually approve card transactions started by the buyer thanks to a payment gateway.
Their payment options are substantially increased, the payment procedure takes less time, and more security is added.
Today, all you need to do to complete an online purchase is to add the items to your shopping cart on the website. Once you’ve decided which ones to buy, you’ll then be taken to the checkout page and then to the VPOS interface, where you can safely enter your credit card information and complete the transaction.
Today, VPOS or a gateway is essential if you want to run an online business and do online sales, subscriptions, etc.
It is important, however, to distinguish VPOS and a Gateway. Often times these terms are used interchangeably because each solves a similar problem.
A gateway will collect your customer’s payment data and will encrypt it as the content moves through a payment processor. The processor will transfer the payment through the credit card network and will reach the card issuer’s bank, helping to confirm or decline the transaction. The gateway also sends the signal back and will help the business collect funds from the customer.
Similar to how you could with a payment gateway, you can accept card payments with a Virtual POS. In contrast, you have total control over the system when using a virtual POS.
Your virtual POS will involve your company validating payments as they come in, as opposed to a gateway, which involves an outside entity transmitting your payment. You log into an account, go to your merchant dashboard, and enter numerous card transactions while using a virtual POS.