What is a Point of Sale Software? Use Cases & How to Choose

Learn what POS software is, the types of things it can do, and guidance on how to choose the right unified POS system for your retail business.

It's almost impossible to operate your retail store without some type of software. You'll have technology to process payments, ring up orders, and manage inventory. Point-of-sale (POS) combines all of these functions into a single tool—and in today's omnichannel retail landscape, it serves as the cornerstone of a unified commerce strategy.

But when you're searching for the best POS software, it's easy to get tied up in all of the features you might need. Each tool has different pricing tiers—some charge extra for third-party payment processors; others require integrations with other tools. How do you know which system will create a fluid experience across all sales channels?

To help you with your search, this guide shares what POS software is, the types of things it can do, and guidance on choosing a POS system that will help you build an integrated retail business where online and offline channels work together seamlessly.

What is point-of-sale software?

Point-of-sale (POS) software is the technology that powers your POS system. Think of it as the operating system for your setup. The technology lets you track inventory, ring up orders, retrieve customer data, and process payments. Some software also lets you manage other aspects of retail operations like arranging staff rotas or syncing with loyalty programs. 

POS software vs. hardware

POS hardware is the physical machinery that your POS software runs on, like a fixed countertop terminal or a mobile device. Hardware can also include a receipt printer, cash drawer, mobile card reader.

Your POS software and hardware need to be compatible. When all systems work together, you’ll spend less time doing tasks manually—like updating a product’s quantity in your inventory management system when its barcode is scanned at the checkout desk.

📌Pro tip: Compatibility between software and hardware doesn’t always lead to a complete tech overhaul. Shopify’s POS software, for example, is compatible with iPhone and Android devices. You can take mobile payments, process orders, and retrieve data from existing hardware you already know how to operate—no card terminal required.

Use Shopify Tap to Pay to process contactless payments through your smartphone.

What is POS software used for in retail?

Customer relationship management

Gone are the days of having a shopper visit your store and having to figure out what they’re interested in during the conversation. POS software can retrieve data you’ve already collected on them, so you can steer the conversation towards products you know they’ll be interested in. 

Shopify POS, for example, has an email capture feature to gather your shopper’s email address. It combines this with activity already recorded on your online store (if any), so you don’t just get to see their in-person purchase history—but also which items they’ve viewed online or returned at another store.

With the email capture feature alone, retailers already see a 5.5% increase in retail transactions, on average, for orders that are associated with customer information. It’s why you can sell up to 20% more per order with unified customer profiles. 

When paired with tools like Shopify Email, these built-in CRM features will help fuel your email marketing and loyalty programs—both of which help increase customer retention, repeat purchases, and lifetime value. 

Process transactions

Cash is no longer king. The vast majority of retail sales are digital, and shoppers who use cards spend up to three times as much as cash-only payers.

Your POS software must be capable of processing these payments either through native payment processors or integrations with third-party tools. Just bear in mind that there may be limitations on the types of payment you can accept. 

If you’re looking for an all-rounder, Shopify supports multiple options:

• Credit and debit cards
• Contactless or NFC payments 
• Mobile wallets, such as Apple Pay or Google Pay
• Buy now, pay later through Shop Pay Installments
• Gift cards (including those bought online) 

💡 TIP: Shopify Payments is included in all Shopify POS plans, no sign-up or setup fees required. Control your cash flow better and pay the same pre-negotiated rate for all credit cards, starting at 2.4%.

Loyalty points, rewards, and discounts 

POS loyalty programs incentivize repeat purchases by rewarding customers with points on every purchase. Your POS software should sync this data with all sales channels. Customers who redeem points on an online order, for example, should be able to redeem those points in-store (and vice versa).

The same concept applies to discounting. If you’re offering a 10% introductory discount for new shoppers online, can people who visit your store use the same coupon? Your POS software should pull this data, including any eligibility requirements and discounting rules, to maintain consistency. 

🤝 LOYALTY TIP: Use loyalty apps like Smile to boost customer retention and let shoppers collect and redeem points every time they shop with your brand online or in store.

Returns management

Returns are an inevitable part of operating a retail business, especially if your physical stores sit alongside an ecommerce website.

But it shouldn’t matter where the customer originally bought their item so long as they have proof of purchase (like a digital or printed receipt). POS software that integrates with the original sales channel, such as Shopify, can validate these receipts and process a cash refund to their original payment method. 

Prefer to offer store credit or exchanges in lieu of a cash refund? Your POS software should be capable of issuing these vouchers and logging the exchange in your inventory management system too.

Manage returns and exchanges using Shopify’s POS software.

Order fulfillment

Retail stores give customers an opportunity to touch, feel, and interact with products. But there is no rule to say that inventory must be ready to take home there and then. 

Use POS software to cater to alternative order fulfillment options, such as:

• Ship to home. Take the customer’s payment in-store using your POS software and have their order routed to your warehouse or third-party logistics provider to pick, pack, and ship it to the customer’s home address. This can be a huge money-maker: in 2023, Shopify retailers generated $850 million in sales by shipping orders at checkout on POS. 
• Ship from store. This is ideal if customers want to buy inventory that is out of stock or on pre-order. You take payment on your POS software in-store and ship it to their home when new inventory arrives.
• Buy online, pick up in-store (BOPIS) or curbside pickup. Let customers do the reverse by paying for items online. Packing slips come through to your POS software, as well as the customer’s pick up slot, so you can have their order ready to collect.

Take the Texas-based retailer Tecovas, for example. Physical retail experiences are what the brand prides itself on, but orders aren’t always straightforward to process. In-store shoppers often buy a combination of products. Some are ready to take home instantly; others are shipped directly to their home at a later date.

“In the past, there’s been a little bit of transaction friction, where they may have to do two transactions,” Kevin Harwood, CTO at Tecovas, explains. “A customer purchasing an item that they're going to leave with, and another transaction for the item that they want to ship. But now with SplitCart functionality, we're actually able to do that in one single transaction.”

Prepare items for shipping within Shopify’s POS software.

Email carts

Not everyone who visits your store will be willing to complete an order during their visit. Perhaps they need to think about the investment or do a price comparison online to check that they’re getting a good deal. 

Avoid putting hurdles in their way when they’ve made the decision—like typing your website address in or visiting the retail store again. Instead, use your POS software to attach the products they’re interested in with a customer profile. 

📌Pro tip: Shopify’s email cart feature will send a personalized cart link directly to a shopper’s email address, ready for them to buy in a few clicks whenever they’re ready.

Inventory management

POS software can combine your records with inventory stored at other locations, allowing you to redistribute stock when necessary. (It doesn’t make much sense to have 500 units at one store and 5 at another, for example.)

For optimal efficiency, combine your POS software with POS hardware like barcode scanners. You can point the machine at a product’s label and have the quantity automatically updated in your POS software.

“Shopify's real-time and centralized inventory management is very helpful," says Anita Yeh, Director of Retail Operations at Monos. “When our online team is servicing a guest browsing the website, they can see inventory available in a local store and hold it there for the customer to pick up that same day so they don't have to wait.

“Or if a retail associate is helping a customer find an out of stock item, they can see where we have it in a warehouse and get it shipped to them before their upcoming vacation.”

It’s no wonder why Shopify POS can save 10+ hours on manual inventory management every month.

Retail employee management

You’re not the only one working in your retail store. You might have buyers, sales associates, and store managers working together. POS software can manage these schedules so that the store is always well-staffed, while reducing the odds of maxing out your labor budget on inefficient rotas.

Shopify’s POS software integrates with specialist apps like EasyTeam and Sling. Employees can use these tools—in the same POS interface they’re already familiar—with to clock in and out, check upcoming shifts, and share their availability. 

You can even integrate Shopify’s POS software with accounting software to run payroll in a few clicks, based on staff schedules saved in the dashboard.

“Having one system to manage our inventory and staff is a huge benefit for our brand,” says Doug Waldbueser, co-founder of The Inspiration Company. “Shopify POS is very simple to use and streamlines our store experience for staff and shoppers.”

Analytics and reporting

Is your store running at optimal efficiency? How happy are customers with the products on offer? Are you turning a profit? Your POS software should collect data that helps you find the answers to these questions and more.

Important data to track in your POS system include:

• Sales data. See which payment method customers prefer, each store’s turnover, and sales by product with this type of data analysis in your POS system.
• Inventory data. Compare items that are frequently returned, sold out, or least popular to make smarter inventory decisions that increase sales and reduce carrying costs.
• Customer data. See how long a customer tends to stick with you, how often they’ve bought, and how much they’ve spent. Try to increase each of these metrics to generate more profit in-store. You won’t have to spend cash to acquire new customers if you’re increasing the value of existing ones.

How does a POS for unified commerce work?

POS software doesn’t have to sit in isolation in your retail toolkit. If you’re selling online or through multiple retail locations, your POS system should integrate with those sales channels to give a unified view of your data.

Known as unified commerce, it offers the following benefits over traditional set ups:

• Smarter decision-making. Combine data from your online storefront, pop-up location, brick-and-mortar stores, marketplaces, and social media profiles in the same place. This unified view helps you find out what works (and what doesn't) across your entire business, spot growth opportunities, and better understand your customers' shopping patterns.
• Streamlined operations. Run your business more efficiently with centralized management of inventory, orders, and customer data. Your team saves time with automated processes—like when customers redeem loyalty points earned online in your store—while reducing costs by eliminating the need for multiple systems.
• Better customer experiences. Keep inventory, customer, and loyalty data consistent wherever you sell. Customers can flow between sales channels—like browsing online and buying in-store, or reserving items for in-store pickup. As a result, you can personalize their shopping experience using insights from their complete purchase history.

True unification can only occur when product, order, and customer data flow from a single source of truth. 

Frank and Oak is one retailer taking advantage of this unified commerce functionality in Shopify. With 15 brick-and-mortar stores and a thriving online business, the apparel brand migrated to Shopify to increase customer spend and ease of purchase.

“Our retail stores have historically been the number one driver of omnichannel customers who shop both online and in-person, so they are critical to our growth,” says Guillaume Jaillet, Chief Omnichannel Officer. “To continue offering shoppers a cohesive experience, we needed a POS system that offered more synergy with our ecommerce channel.”

The move to Shopify’s POS software has contributed to a 47% reduction in operating costs and close to a 3% decrease in transaction fees. Guillaume says: “We’re spending less on technology, there’s greater synergy between our sales channels, and we’re cultivating more loyalty and engagement at every level of interaction.”

How to choose POS software

Before committing to a new POS software subscription, check it’s the right platform for your retail business. You want to find POS software that integrates with your full tech stack to improve operational efficiency and lower costs.

Evaluate your POS providers:

• Ease of use. The POS software interface should be easy to learn and intuitive. Shopify, for example, has a smart grid to complete basic tasks in just one click. It’s fully customizable—add popular categories, discounts, or loyalty apps to speed up the checkout process.
• Price. Subscriptions for POS software can range from $5 to $100+ per month. There are payment processing fees to consider on top of this cost, which can vary depending on the payment method. 
• Compatibility. Whether it’s a fixed countertop POS terminal, barcode scanner, or smartphone, check that your POS software works with your existing tech set up to prevent having to buy new. For example, Shopify’s mobile app is compatible with Android and iOS devices.
• Support options. POS software has a learning curve. Having help on-hand—whether that’s product documentation, how-to videos, or an email to contact customer support—means you can quickly fix issues and prevent disruption to your store’s daily operations.
• Integrations. Modern POS systems should integrate with essential business tools including accounting software, ERP systems (SAP, NetSuite, Microsoft Dynamics), inventory management platforms, and Shopify apps for marketing, loyalty, and analytics. These integrations create a unified commerce ecosystem that automates data flow, reduces manual entry, and provides real-time visibility across your entire business operations.
• Customization. A flexible POS interface streamlines operations by giving staff quick access to all features from one familiar system, reducing training tim, and creating smoother customer experiences at checkout. Shopify's POS UI extensions turn the smart grid into a powerful command center where retailers can seamlessly integrate essential tools like loyalty rewards, inventory tracking, and team scheduling—all responding dynamically to cart changes for efficient operations.

Most importantly, make sure that your POS software provider will grow with you. Migrating platforms later down the line can be costly—not just in terms of moving your data and solving any teething issues, but friction reps experience when they’re learning a brand new interface. 

💡 PRO TIP: Only Shopify POS unifies your online and retail store data into one back office—from customer data to inventory to sales and more. View easy-to-understand reports to spot trends faster, capitalize on opportunities, and jumpstart your brand’s growth.

The POS software that will grow with you

Shopify is constantly investing in retail software and has all the features you’ll need to scale—whether you’re a small business operating your first store or an expanding business that’s opening your 50th location. 

“I've been really impressed with some of the advancements over the last few years that Shopify has been investing in on the retail point of sale front,” says Tecovas’ Kevin Harwood. 

What is POS software FAQ

Why is POS software used?

POS software helps retailers ring up customer orders, process payments, collect data, and track sales. Modern POS systems come with this software built-in (including Shopify’s countertop POS terminals), though you can download the Shopify POS app to complete these tasks from your smartphone. 

What does POS stand for in software?

POS stands for point-of-sale. It describes the software that retailers use to run their store. Everything from inventory management to payment processing and staff scheduling can be done using POS software.

What software is used for POS?

Shopify is a POS software that features to make retail management a breeze. Ring up orders, manage inventory, reference customer data, schedule employees, and generate sales reports from wherever you sell.

What is the difference between POS software and POS systems?

A POS system describes the combination of hardware and software that a retailer uses to manage its store. For example, a retailer’s point-of-sale system might include their smartphone (hardware) and the Shopify POS mobile app (software).