What is a POS System & how to set one up?

A POS system lets businesses take in-store payments and manage daily operations like inventory tracking and customer records. But with quite a few hardware options and software platforms (plus third-party integrations) to consider, it can be difficult to figure out what your business needs, especially if you’re setting up a system for the first time.

This guide will outline the key components and features in a POS system and how they work, and provide a step-by-step guide for getting your own set up. There’s also an intro to Wise Business – a multi-currency account that can help with your international POS transactions.

What is a point of sale system?

A point-of-sale (POS) system is the hardware and software businesses use to process in-person sales transactions at a physical location like a retail store. It’s all the tech used when a customer goes to the checkout area and pays for the goods or services they want to buy.

There are quite a few functions that POS systems support in addition to accepting payments. They can also:

• Record sales
• Calculate GST and totals
• Track inventory
• Generate reports
• Monitor business performance

Modern POS systems are mostly cloud-based, meaning they can sync data across multiple devices and locations in real time. The Australian Taxation Office (ATO) states that businesses must keep accurate sales records for at least 5 years¹ – the functions of POS systems play a key role in compliance here.

What’s the difference between a point of sale and a POS system?

The acronym POS has two related meanings: the ‘point of sale’ is the place or moment where a customer completes a purchase, while the ‘POS system’ is the hardware and software businesses use to make it happen and process that transaction.

For example, when a customer orders coffee at a cafe, the staff member enters the order into a tablet-based POS system, which then calculates the total including GST. The customer taps their card to pay (point of sale), the payment is authorised, and sale is recorded, with inventory then updating automatically to reflect stock levels (POS system).

Types of businesses that can benefit from POS systems

POS systems are useful for pretty much every business that takes payments in-person. These include:

• Retailers
• Restaurants and cafes
• Beauty salons and barbers
• Trades and mobile service businesses
• Hotels and hospitality venues
• Market stalls and pop-up stores
• Gyms and fitness studios
• Professional service firms

POS systems vs traditional cash registers

In the past, these Australian businesses largely relied on traditional cash registers, which are older mechanical or electronic devices designed to calculate totals and store cash securely. They mostly operated offline. Modern POS systems are fully digital and can handle a much broader range of tasks, like linking payment processing to business management tools (inventory, analytics).

How do POS systems work?

We’ve already run through a brief scenario at a cafe, but let’s look in more detail at how POS systems work. Most of them follow a very similar process.

1. A customer selects products or services. First, the customer approaches the checkout, and the employee either scans the barcode or enters item details manually into the system.
2. The POS system calculates the total. Next, the POS software calculates the price of the item (or multiple items), with GST added on top – the rate is 10% for most goods and services sold in Australia².
3. The customer makes the payment. Now it’s the turn of the payment processing hardware and software to facilitate the transaction, using methods such as credit cards, mobile wallets, cash, or gift cards. The payment is authorised through the relevant banking network.
4. The transaction is completed. When everything is approved, the POS system finalises the sales and generates a printed or digital receipt, and you hand over the items to the customer.
5. Business records update automatically. Most systems update automatically after the sale is finalised, so you’ll have accurate inventory counts, customer records, sales reports, and more.

Key components in a POS system

The time from the customer approaching the checkout to the transaction being completed can take less than a minute, but there are multiple pieces of hardware and software working in tandem to make it happen quickly and efficiently. These are the most common components.

POS hardware

POS hardware is the physical devices that are used to facilitate sales. They include:

• EFTPOS machine - the hardware terminal that customers tap or enter their card into. It also communicates with banks to authorise the payment.
• Tablet or touchscreen display - a countertop computer used to manage the transaction.
• Receipt printer - to print off paper receipts.
• Barcode scanner - to get product and pricing info quickly.
• Cash drawer - cash accounted for 19% of all in-person payments in Australia in 2025³. If you plan on accepting cash, you’ll need a drawer to store it securely and provide change.
• Handheld mobile POS device - a portable system that runs on a smartphone or tablet

POS software

POS software is the digital system that connects everything together, usually cloud-based, to manage the transactions and connect them to other business operations.

• Payment processing - to securely process all your payments
• Inventory management - this updates stock levels automatically after each sale
• Sales reporting - for insights into useful metrics like revenue and buying trends
• CRM - update customer information in your CRM system and create a purchase history
• Online ordering integration - connects online sales with your in-store POS system
• Accounting integration - to sync sales data with accounting software for easier reporting

Key features to look for in a POS system

Many of these components are among the features you should be shortlisting when putting a POS system together. Look for:

• Payment processing flexibility - Contactless accounts for 94% of all in-person card payments in Australia⁴, so a good POS system should support multiple methods, including credit and debit cards, Apple Pay and Google Pay, and Buy now, pay later services (BNPL).
• Compatible and reliable hardware - the POS system must support the hardware you need, like handheld card readers or cash drawers. For retail and hospitality, durability and ease of use might be a top priority.
• Reporting and analytics - a POS system should give you tools to help monitor things like peak trading times, best-selling products, staff performance, and customer trends to improve decision making.
• Integrations - ideally, a POS system should integrate with the tools you already use. Small businesses get better value when they connect to accounting software, ecommerce platforms, payroll software, and other platforms that reduce admin work.
• Security and compliance - it should also have strong security features that protect customer payment data and reduce fraud risks (encryption, secure logins, user permissions, PCI DSS compliance).

How to set up POS for your Australian business

Setting up your own POS system is mostly a case of matching these features and components to your business requirements, so you get the right mix of hardware and software.

Understand your business needs

Start thinking about how your business operates and what you need your POS system to do. For a cafe or food truck, for example, a mobile POS with a handheld payment terminal is likely to make more sense than a fixed countertop setup.

Consider:

• Your industry
• How do you want to accept payments
• Your budget
• The features you need
• If you need to sell online as well - POS systems can integrate with online checkouts

Choose your POS software

Most POS platforms offer ‘all-in-one’ systems that bundle together key features like payment processing and POS software. But you might also need third-party integrations for some tasks (e.g., accounting software, international payments).

Shortlist what you need and then compare providers based on features, ease of use, ongoing costs, and integrations to find the best fit for your business.

Select compatible hardware

Depending on your setup, you’ll likely need hardware to take payments. Micro businesses might only need a smartphone and card reader, but run through the hardware options listed earlier to outline key components and then make sure it all integrates.

Configure products and tax settings

Next, you’ll need to upload your inventory. Most systems let you do this in ‘bulk’ via a .CSV file and create your own tax rules with custom rates for specific products (if required). You could apply the standard rate (10%) across all items.

Train staff and test the system

Finally, it’s a case of training and upskilling your employees so they can complete essential tasks like processing payments and handling refunds. And before going live, run through a few test transactions to make sure integrations and everything else work correctly.

How POS systems integrate with payment solutions

As contactless dominates in-person payments in Australia, POS systems play a vital role in processing cards by connecting your business with payment networks and banking infrastructure.

When a customer pays, the POS communicates with payment processors and financial institutions – a back-and-forth exchange that takes only a few seconds – to authorise and complete the transaction.

Once approved, the payment is processed through the relevant banking network (e.g, Mastercard, Visa) before the funds are settled into your business account, usually within 1-3 days.

Most modern POS systems accept payment methods, including:

• Mobile wallets
• Online checkout payments
• QR code payments
• Recurring payments
• Invoice payments
• International card payments

Common challenges associated with POS systems

There are quite a few moving parts with POS systems, each presenting unique challenges. During setup and day-to-day use, you might have to contend with:

• Upfront and ongoing costs - There’s a lot of hardware and software to sort when you get started, which can put a dent in your finances, plus ongoing subscriptions and fees to factor in. Make sure to fully cost the system beforehand.
• Integration issues - With quite a few moving parts, POS systems are reliant on integrations, but there might be times when your accounting tools or third-party apps don’t sync.
• Payment delays and disruptions - technical outages or issues with banking networks can affect payment processing.
• Internet reliance - cloud-based systems need a stable internet connection, so you’ll have to make sure your business has reliable Wi-Fi or backup connectivity to avoid disruptions.
• Regulatory requirements - all businesses processing card payments must meet PCI DSS compliance requirements in Australia⁵.
• International transactions - when selling internationally, you’ll have to manage additional challenges like currency conversion fees and settlement delays.

Wise Business: Simplifying international payments for Australian businesses

For global businesses, processing international transactions is a variable you’ll need to consider when managing a POS system. Unfortunately, managing cross-border payments with a basic setup and traditional bank account might incur extra costs and require more admin.

Instead, you could integrate your POS system with Wise Business – a multi-currency business account for all your global payments. You can create and send international invoices, receive payments using local account details (NZD, USD, and more). and hold and convert 23+ currencies. It’s the better way to manage overseas payments alongside your today-today POS transactions, with better transparency over your global cash flow.

A Wise Business account allows users to can send, receive, and hold in multiple currencies. Experience hassle-free global transactions by transacting like a local business. Here's what you get with a Wise Business account:

• Free to register — Hold and convert between 40+ currencies. Send to 140+ countries
• Debit cards for you and your team, which you can use in 150+ countries
• Multi-user access for team members, with ways to control and manage permissions
• Pay up to 1,000 recipients at once with the Wise batch payments feature
• Integrate with your favourite cloud accounting solutions like Xero, QuickBooks, and more
• Get account details to receive in 8+ currencies for a one-time fee of 65 AUD
• Earn potential returns** on your everyday money through Wise Interest

Sign up for the Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.
**Capital at risk, growth not guaranteed. Interest is the name of a custody and nominee service provided by Wise Australia Investments Pty Ltd in partnership with Franklin Templeton.

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Sources:

1. ATO gov au - Overview of record keeping rules for business
2. ATO gov au - How Australian GST works
3. RBA gov au - Cash use in Australia: What the 2025 consumer payments survey tells us
4. RBA gov au - How Australians pay
5. NAB - Payment Card Industry Data Security Standards