What Is a Point of Sale (POS) and How It Works?

Sep 30 2022 | Julie Warshaw, PayPal Editorial Staff

When a shopper is ready to make a purchase, you want to provide the smoothest checkout experience possible–especially when they're in your store with a product in hand.

That's where a point of sale (POS) system comes in. The moment browsing turns to buying, your POS should be ready to seamlessly process the transaction. Otherwise, you risk frustrating would-be customers and losing revenue.

A point of sale (POS) system is a platform that businesses use to process and complete customer payments. Comprised of hardware and software, POS systems are used when customers make a purchase online or in-store.

Before the internet age, the common POS system was a cash register. Now, shoppers expect digitally powered, contactless, and secure transactions that work as seamlessly as the other apps and devices in their life.

With the right POS system, you can accept a range of payment methods and provide easy checkout experiences. Beyond processing transactions, the right POS solution can also give you insight into your customers and operations, helping you find new, innovative ways to scale your business.

Here's a closer look at what you need to know about POS and how to find the best solution for your business needs.

How does a POS work?

Businesses of all kinds can benefit from a streamlined POS solution. They can use POS systems to process and track purchases on one platform. And, as they grow their companies, they can gather customer insights, activate special offers and discounts, and manage product inventory.

POS systems can also be particularly helpful for businesses in the food and beverage, nightlife, and retail industries. Cafes, for example, can use POS systems to send orders to their kitchens and track popular menu items. And boutique stores can use POS solutions to build customer databases and sales reports.

Let's look at a sample scenario: Leo owns a record store called Chairman of the Boards, and he uses a tablet POS system with advanced software. A shopper approaches the checkout counter to buy an album using her credit card.

Here's how the POS system would work, from start to finish:

  • A sales associate scans or selects the specific album on the store's POS-enabled tablet.
  • The system software pulls up the price of the album and adds sales tax, displaying the total amount owed.
  • The customer swipes her credit card through the card reader hardware, which uses software to send a payment request from the Chairman of the Boards to her bank.
  • The request is authorized by the customer's bank, and the record store's POS system processes the payment.
  • With payment received, Leo's POS software automatically updates his inventory data to show that a unit of that item was sold.
  • The customer chooses to receive a digital copy of her receipt and provides her email address.
  • The POS system emails the customer her receipt, and the transaction is completed.

Different types of POS hardware

POS hardware lets you accept payments in person, such as at a checkout counter, bar, or food truck.
POS hardware comes in a variety of forms and offers different functionalities. These are a few of the most common:

POS register: A Wi-Fi-connected POS cash register can help you process transactions, accept different payment methods, and track sales data.

Tablets and monitors: Connected devices—like POS tablets and iPads—provide user-friendly, touchscreen interfaces for employees and shoppers. They can be used to display prices, add tips, and choose receipt options. Since they're portable, they can also enable checkout from anywhere in your establishment.

Credit card readers: A secure, EMV-compliant card reader allows customers to quickly make purchases with the swipe, tap, or chip-enabled credit card of their choice.

Receipt printers: For shoppers who prefer printed receipts over emailed receipts, dedicated receipt printers can fulfill their requests. With a receipt in hand, customers can see a rundown of their purchases and keep a paper copy of their transaction.

Barcode scanners: With a barcode scanner connected to your POS system, a customer or employee can pull product and price information in an instant. Advanced barcode scanners will also support specialized scans, such as QR codes, which customers can use for contactless checkout and to redeem special offers.

Cash drawers: Customers who don't want to pay digitally or with a credit card should still have a fast, secure option for making their purchase. Connected cash drawers can keep your business's money safe and cash payments organized. By syncing a cash drawer with your POS system, you're able to track your cash transactions by generating data each time the drawer opens and closes.

POS software features

POS systems run on software, just like your phone or computer does. Since POS software can sync across devices and share updates in real time, it acts as the nerve center of your business.

Beyond just processing payments, comprehensive POS software systems can help you manage many other aspects of your company.

Here are some common built-in POS features:

On-premise POS vs. cloud POS
An on-premise POS or traditional POS is fixed to a static location like the checkout counter at the front or back of the shop. Most traditional POS systems store data on a local server and are updated manually.

A cloud POS or mobile POS connects to other devices using Bluetooth and Wi-Fi. Since cloud POS systems are portable, they can be accessed throughout a retail location or even on the go. They also use cloud-based technology to store data, keeping people and devices connected in real time. This means that anyone using a connected device will have up-to-date inventory and customer information.

In-person payment processing

POS payment processing is one of the most important features of your software. Possible POS payment methods include:

  • Credit and debit cards
  • Digital wallets such as Google Pay and Apple Pay
  • QR codes
  • Gift cards
  • Cash
  • Contactless payments
  • Card-not-present transactions, like when you manually enter credit card information
  • Online payments through your e-commerce site

Learn more about POS payment processing and how QR code payments work.

POS integration

Modern point-of-sale systems can connect to entire ecosystems of third-party platforms to help businesses sync data and simplify their workflows. With the right integrations, you can also avoid the hassle of learning new software or migrating data.

Common POS integrations include e-commerce, accounting, and inventory management platforms. PayPal Zettle, for example, integrates seamlessly with BigCommerce, Inuit QuickBooks, Adobe, SalesVu, and WooCommerce.

Inventory management

Automatically update inventory in real time with your POS system. Some POS inventory management platforms will even alert you when stock is running low. You can use this inventory data to reorder best-selling items in advance, helping to ensure you don't run out of your most popular items.

POS reports

Your system may be able to generate POS sales reports based on customer activity and transaction data. These POS reports can provide a comprehensive view of key metrics, including total sales, cost of items sold, gross margins, and net profits. With these insights at your fingertips, you can make more informed decisions to fuel small business growth.

Staff management

Use your POS system to set up unique accounts for each employee. This way, staff members can clock in and out from one unified platform. POS employee management features can also help business owners create schedules and track staff performance.

Tipping with a POS

Make it easy for customers to show their support by providing POS tipping options at checkout. Many POS systems will prompt customers with suggested tip amounts, so they can simply tap and add the extra payment. A POS tip management feature can also help you track, organize, and distribute tips to employees as needed.

Build customer profiles

Create comprehensive customer profiles that store payment and contact information, purchase history, and loyalty status, so customers only have to share their information once. This data can be used to launch personalized marketing campaigns and distribute special offers based on each customer's interests and preferences. Sales associates and customer service representatives can also access this information to deliver more personalized assistance both online and in-store.

How to choose a POS system

Choosing the right POS system depends on the unique needs of your business. Your POS system can be a one-stop shop for accepting payments online and offline, managing customer interactions, and connecting to the most important parts of your company. There's a lot to consider.

For small businesses wondering how to choose a POS system, make sure your solution supports:         

  • Multiple payment methods for fast, contactless transactions
  • Hardware devices like card readers, barcode scanners, and cash drawers
  • On-premise and cloud-based payments
  • Integrations with third-party platforms
  • POS reports of sales, costs, and profits
  • Real-time inventory and staff management
  • Customer profiles of contact information and purchase history

The right POS system can help your small business drive sales and unlock new opportunities for growth—while giving you the tools you need to manage operations from anywhere.

If you’re shopping for a POS system, PayPal Zettle can help you streamline your transactions and business operations. Click here to learn more about our complete Point of Sale Solution.


The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision. 

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Frequently asked questions.

QuickBooks is a cloud accounting software that makes it easy to manage your books on multiple devices.

How does the integration work?

Once you've connected your QuickBooks account, PayPal Zettle automatically imports your data into the bookkeeping accounts of your choice.

We suggest that you create separate bookkeeping accounts for each set of data, making it easier to get a clear overview of payments going in and out of your PayPal Zettle account and your bank account.

The guide below is a suggestion on how to set up your connection with QuickBooks in the most straightforward way.

Unsupported plans

Certain QuickBooks plans are not supported on PayPal Zettle because of their limited functionalities. Check if you need to change your plan before connecting to PayPal Zettle.

Not supported on PayPal Zettle:

  • QuickBooks Self-Employed for sole traders
  • QuickBooks Simple Start for sole traders
  • QuickBooks Simple Start for limited companies

QuickBooks Essentials and QuickBooks Plus are supported. 

Here's how to connect your PayPal Zettle account with QuickBooks:

  1. Log in to your PayPal Zettle account
  2. Go to your Integrations page and find the Quickbooks integration
  3. Click Connect and read the information regarding customers and suppliers
  4. Enter your Quickbooks login details, then select which QuickBooks organisation PayPal Zettle can access and click Authorise (you can only connect one PayPal Zettle account to one QuickBooks organisation)
  5. Map the Zettle Accounts to your QuickBooks Accounts
  6. Choose a start date for when you want to retroactively export data
  7. Click Save

If everything is set up correctly, you'll see your PayPal Zettle data in QuickBooks the following day.

QuickBooks account type mapping

In order for the data to import, specify which PayPal Zettle data goes into which QuickBooks account. Each transaction type can have a dedicated account in QuickBooks.


When does the import happen?

Select up to one year in the past to start the import.

PayPal Zettle automatically imports data to QuickBooks once every night. Once you set up the integration, the first PayPal Zettle data will appear in QuickBooks the next day.

Can I change the start date after setting up the integration?

No, as it would result in duplicated data for overlapping days.

What data is shared between PayPal Zettle and QuickBooks?

When you authorise the connection between PayPal Zettle and QuickBooks, you give permission to QuickBooks to read your PayPal Zettle sales and financial data. You also give permission to PayPal Zettle to read your QuickBooks company, accounts, tax rates, customers, suppliers, invoices, bills, payments, balance sheets and bank statements.

How can I avoid double-counting purchases if I am using a POS other than PayPal Zettle and have already integrated with QuickBooks?

Switch off the “‘Synchronise sales data” option in order to avoid double-counting. In this case, you only need to sync PayPal Zettle fee data to QuickBooks. You can do this by selecting an account for “Zettle fees” to record fees as an expense (bill), and you should also select an account for “Zettle Card Payments” to record payments for the expense. The PayPal Zettle fees are subtracted from card payments upon payout from PayPal Zettle to your bank account.

The data sync has stopped and I’m missing PayPal Zettle data in QuickBooks. What can I do?

Log in to your PayPal Zettle account and go to Integrations. Verify that your connection to QuickBooks is still active, if not, your connection to QuickBooks has been deauthorised – usually due to password or permission change – and you need to connect again.

If your connection is active, go to the QuickBooks settings page and verify that you have a valid account selected for each required field. If an account is missing or has become archived in QuickBooks, you'll see an error message on the field. Make sure to select a new account and save the new settings. The integration will automatically backfill data for the missing period with the new settings from the next day.

If all settings look good on the QuickBooks page in PayPal Zettle, please check your QuickBooks account and make sure that your subscription is active.

How does the data mapping work?

Zettle sales

Account mapping

Switch to sync PayPal Zettle sales data in QuickBooks if you're using the PayPal Zettle app as your point of sale. Switch off if you're using another point-of-sale system (e.g. Lightspeed, The Good Till, Revel) that already syncs sales data in QuickBooks to prevent double counting. With the daily sales recording switched off, the PayPal Zettle integration needs to only record the fees and fee refunds (see below).

Sales are booked on a nominal account in the “Revenue” category. You can select an existing account from the dropdown. If you don’t have an account available, you need to create an account in QuickBooks for this purpose.


How does this data appear in QuickBooks?

PayPal Zettle pushes a single sales invoice to QuickBooks Online each day. This invoice represents all sales made over the course of that day. The invoice will contain one line item for each tax rate the merchant trades in, with this line item representing the total of all sales at that tax rate. If no sales have been made for a given tax rate on that day, the corresponding line item will be omitted.



Discounts in PayPal Zettle are applied to the total of the purchase once all the items have been summed up rather than at an item level. As we are splitting out items into VAT Percentage across all sales for the day, discounts need to be applied at the item level which may lead to slight rounding discrepancies compared to applying the discount at the summed level.

As per the advice of most accounting packages, we add an invoice line which will be ± 0.01 to bring the total in line with the correct total.

PayPal Zettle refunds

Account mapping

Refunds are also booked on a nominal account of type “Revenue”. It's typical to select the same account as for the PayPal Zettle sales account (see “Sales” above). However, a different account could be used if you want to report refunds separately within QuickBooks.

How this data appears in QuickBooks

PayPal Zettle pushes a single refund receipt to QuickBooks each day. This invoice represents all refunds made over the course of that day. The refund receipt contains one line item for each tax rate the merchant trades in, with this line item representing the total of all refunds at that tax rate. If no refunds have been made for a given tax rate on that day, the corresponding line item is omitted.

PayPal Zettle tipping

Account mapping

PayPal Zettle supports current and bank accounts for all payment accounts. You can select an existing account from the dropdown. If you don’t have an account available, you need to create an account in QuickBooks for this purpose.

How this data appears in QuickBooks

Gratuity is pushed to QuickBooks as part of the daily sales invoice as a separate line item.

PayPal Zettle fees

PayPal Zettle takes a percentage commission on every card transaction processed by the PayPal Zettle card reader.

The fees affect the amount deposited in your bank account, as they are subtracted from the card payment amounts upon payout. Due to this, the current account (PayPal Zettle card payments) aren't zero after completing reconciliation against the bank feed. The integration, therefore, creates a purchase invoice in QuickBooks to account for PayPal Zettle fees. The payment for PayPal Zettle fees is applied to the account used for PayPal Zettle card payments.

Account mapping

Fees are booked on a nominal account of type “Expenses” and appear in the Expense section of a profit and loss report. You can select an existing account from the dropdown. If you don’t have an account available, you need to create an account in QuickBooks for this purpose.

How this data appears in QuickBooks

PayPal Zettle pushes a single Bill to QuickBooks Online each day. This bill represents all fees taken by PayPal Zettle over the course of that day. The bill can have more than one line if there are different types of transactions that occur throughout the day.


Fee refunds

How this data appears in QuickBooks

A single bank deposit is pushed each day representing all fee refunds processed that day.

PayPal Zettle deposits

Deposits are the revenue from your sales after deducting any fees owed to PayPal Zettle.

When your money is paid out, your bank processes and deposits it in your bank account. You should reconcile the PayPal Zettle deposit transaction against the deposit amount from your bank statement on QuickBooks.

Account mapping

Deposits are booked on a nominal account that represents the bank account you’ve connected to PayPal Zettle.

Make sure the bank account that you selected on QuickBooks represents the account where you receive your PayPal Zettle deposits, which is different from the account you chose for the PayPal Zettle liquid account.

How this data appears on QuickBooks

It shows as a transfer from PayPal Zettle's liquid account to your business's bank account.

Zettle payments by card, Alipay and PayPal QR codes

Account mapping

Assign your liquid account to either a QuickBooks current or a QuickBooks bank account. If you don’t have an account available, you need to create an account in QuickBooks for this purpose.

The account configured for PayPal Zettle card payments represents the PayPal Zettle liquid account.

How this data appears in QuickBooks

PayPal Zettle pushes a single payment to QuickBooks per day per payment type which has been used that day. So if you process 10 card payments and 20 cash payments in one day, 2 payments are pushed. These payments are recorded against the daily sales invoice.

PayPal Zettle invoice

Account mapping

  • Invoice payments account – This is a current or a bank account where payments against PayPal Zettle invoices are received. As invoice payments are handled by PayPal Zettle, this account should represent the PayPal Zettle liquid account, and therefore be the same as the card payment account.
  • Invoice fees account – This is a nominal account of type "Expenses", and it appears on the expenses section of a profit and loss report. Payment fee transactions are reconciled against this account.

How this data appears in QuickBooks

An invoice is pushed to QuickBooks as normal when an invoice purchase is made, however, a payment is not immediately pushed against the invoice, so the invoice is displayed with an outstanding balance.

When the customer has made a payment against the invoice, a payment is pushed against the original invoice. This payment is booked against the Invoice payments account, which should match the PayPal Zettle liquid account as this is where invoice payments are paid into. If the payment pays the invoice in full, at this point the invoice is marked as paid in QuickBooks.

Invoice fees are pushed in a similar way to standard PayPal Zettle card fees (see "Fees" above). A bill is pushed with a single line item with the expense account set to the Invoice fees account. A single payment is simultaneously pushed for the full payment of the bill, representing the transfer of money out of the liquid account to pay the fees. This payment is taken from the Invoice payments account.

PayPal Zettle gift cards

Account mapping

  • Gift card sales: a nominal account of type “Liability”. The value of this account represents the amount of outstanding gift cards.
  • Gift card payment: Once a gift card is spent the money goes into sales and the gift card payments account, and out of the liability account.

How this data appears in QuickBooks

Bill in QuickBooks representing a payment using a gift card:


Before selling gift cards, you should set up the gift cards feature.

Set up in the PayPal Zettle app for ANDROID: 

  1. In the navigation, go to Settings
  2. Tap Gift cards
  3. Tap Set up
  4. Confirm the terms and tap Set up

Set up in the PayPal Zettle app: 

  1. In the navigation, go to Gift cards
  2. Tap Set up
  3. Tap See how it works to learn more about gift cards or Skip.

Set up in your PayPal Zettle account: 

  1. Go to Products, then click Gift cards
  2. Click Set up
  3. Click See how it works to learn more about gift cards or Skip

Whether you provide a physical gift card or send it via email, the code on the gift card should match the one that you enter into your PayPal Zettle app.

Adding codes:

You should assign a unique identifying code to each gift card for tracking and redeeming. There are 3 options for doing this:  

  • Scan a barcode from a printed card.
  • Generate a random code and write it on the card.
  • Enter a custom code.

If you're scanning plastic cards, you’ll set the barcode when ordering the cards.

If you want to create custom codes, make sure they’re a minimum of 6 letters or numbers. For example, you might decide to sell gift cards with the codes 000001, 000002 or Summer01, Birthday124, etc. We recommend that you use 8 alphanumeric characters in your codes so that you don’t have to duplicate them if you sell a lot. 

How do I sell a gift card?

Once you’ve set up the gift card feature, you’ll find a product named "gift cards" in your product library. Tap it and it will be added to your cart. Gift cards have no expiry date. 

If you have physical gift cards with a scannable code, scan the card and the alphanumeric code is automatically added. 

Steps for selling

  1. Tap Gift Card in your product library.
  2. Enter the value you want to load onto the card. The value must be at least $1.00 USD and not higher than $100.00 USD.
  3. Enter or scan a code.
  4. Process the payment from the customer.


  • Gift cards can’t be combined with other products in the same purchase. 
  • Gift cards can only be sold through the PayPal Zettle app and not online through a webstore. 
  • A customer can purchase a gift card with card or cash only. They can’t be purchased with PayPal QRC or Venmo.  
  • If a refund is issued back to a gift card and the customer can’t find it, you can locate the gift card code from the Zettle app and share it with them.

How do I redeem a gift card?

  1. Add the products the customer wants to purchase to the cart as usual.
  2. Tap All payment methods.
  3. Click Gift card. If your customer wants to split the payment using a gift card and cash or card, enter the gift card as the first payment type.
  4. Enter or scan the code (the remaining balance will be checked).
  5. Complete the payment or continue with another payment method if the gift card balance doesn’t cover the purchase amount. You can use multiple gift cards in the same payment. 

If you don't see gift cards in your list of payment methods, go to "Settings", "Payment Settings", "Gift cards" and toggle "On.".

Check a gift card balance

In the PayPal Zettle app: 

  1. Enter the gift card code in the search field.
  2. View the balance.

In your PayPal Zettle account: 

  1. Go to "Products" and choose Gift cards.
  2. Enter the gift card code in the search field.
  3. View the balance.
  4. You can click on the row to view more details.

Tracking gift cards

In the PayPal Zettle app for iOS: you can view the balance, status and any payments made with the gift card in the “gift card section”.

In your PayPal Zettle account: 

  1. After selling a gift card, it immediately appears in the gift card register ("Products", "Gift cards").  
  2. At the top, you’ll see a summary of active gift cards (cards that have been sold and have a balance remaining) and the collective value of these cards (outstanding debt).  
  3. For each card, you can view the balance, status and any payments made with the gift card. 

The different statuses are: 

  • Unredeemed: a card has been sold with a value and a code.
  • Redeemed: a card has been used and has a balance of zero.
  • Partially redeemed: the card has been used for a purchase and has a balance remaining for another purchase.
  • Returned: the card was returned by the customer who purchased it. A redeemed, partially redeemed, or expired card can’t be returned.

Bookkeeping gift cards

In your PayPal Zettle account, the reports section shows the status of gift cards. 

When a gift card is sold, it’s not counted as a sale. That means it won’t show up in the total sales and sales channels section until it's been redeemed. For information on the gift cards you’ve sold, check your gift card report on my.zettle.com under Reports.

Record gift cards in your accounting service according to the regulations of your local tax authority. The sale of gift cards should be accounted as liability, while the redemption of gift cards should be accounted as revenue. 

Gift cards are sales tax exclusive for multipurpose vouchers, meaning tax is only applied on products purchased with a gift card, not on the sale of a gift card.

Single purpose voucher versus multipurpose vouchers

PayPal Zettle’s gift card service only supports multipurpose vouchers. We don’t recommend this service if you’re offering single purpose vouchers.  

What is a single-purpose voucher?  

If all the products or services you sell have a single tax rate, then tax is due at the time the gift card is sold.

What is a multipurpose voucher?  

If you sell products or services with different tax rates, then tax is due when the gift card is redeemed for a specific product or service. 

Importing and exporting gift cards

Our gift card service doesn’t currently support the importing and exporting of gift card codes. If you’re migrating from an existing POS system to the PayPal Zettle app, any existing gift cards with redeemable balances can’t be transferred at this time. 

Discounting gift cards

You can’t currently apply a discount to the sale of a gift card.

We permit U.S.-only transactions for certain sexually oriented physical goods that are physically delivered to the customer. Videos, DVDs, and magazines are examples of physical goods. (We don’t allow transactions for such goods outside the U.S.)

We don’t permit PayPal account holders to buy or sell:

  • Sexually oriented digital goods or content delivered through a digital medium. Downloadable pictures or videos and website subscriptions are examples of digital goods.
  • Sexually oriented goods or services that involve, or appear to involve, minors.
  • Services whose purpose is to facilitate meetings for sexually oriented activities.

Sexual preferences and viewpoints aren’t factors in determining what our policy prohibits.

In deciding what sexually oriented goods and services to allow, we consider:

  • What regulations or restrictions are placed on the purchase or sale of the product.
  • How the product is classified by a recognized ratings board.
  • Whether the product describes or depicts sexual conduct in a patently offensive way.
  • The dominant theme of the product material or website.
  • The literary, artistic, political, or scientific value of the product.
  • Potential medicinal or educational uses for the product.
  • The product’s impact on the safety of our customers.
The Store Cash campaign program introduces a new set of features and costs.

How can I find out more about Store Cash?
Please see What are Store offers and how do they work?

When do the changes take effect?
The changes will take effect on February 14, 2022.

What am I getting?
New campaign features let you:
  • Customize discounts, redemptions, purchase limits, and campaign schedule details.
  • Send offers to customers who added cart items but never checked out, or to customer who haven't bought from you lately.
  • Set stringent spending limits so campaigns can automatically end either on a specific date or when spending limit is reached.

What are the costs?
Store Cash costs are strictly Pay for Perfomance. For all campaigns, an 8% campaign fee applies. 
Here's what you need to know about the fee:
  • When customers make a purchase using Store Cash, you pay 8% of each gross sale made during your campaign after discounts are taken. Gross sales exclude sales tax, shipping, gift wrap and insurance charges (if applicable) if the data is passed to PayPal.
  • Seller Fees also apply.
  • This fee is only applied on sales made. If you sell nothing, you pay nothing.
For more information on Seller fees, please visit the Fees page.

What else is happening with the changes?
  • We're phasing out campaigns launched before February 14, 2022. This is to help ensure a consistent experience for all merchants.
  • Any active campaigns will be canceled as of February 14, 2022. We understand this may not be ideal, but we hope you'll be excited about the new, improved campaigns you'll launch and will bear with us.
  • Your customers will still have 7 days to redeem offers in their wallets without campaign fees after your campaign is canceled.
  • The campaign creation process is the same - you'll just need to agree to the new Terms and Conditions before creating a new campaign.

We hope that PayPal Store Cash continues to be a cost-efficient tool for you. Thank you for being a PayPal valued merchant.

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