POS Transaction Meaning: Point of Sale Terminals 101

POS transaction, meaning a transaction at a Point of Sale terminal, is a common way for retailers to capture customer payments.

In this article, we’re going to share everything you need to know about POS transactions, including their meaning, how they work, and the difference between POS transactions and several alternatives.

This article is part of our free series on offshore payment processing, which you can access by clicking here.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. POS Transaction Meaning
  2. POS Transactions vs Debit Transaction
  3. Frequently Asked Questions
  4. Do You Want Help Opening Bank Accounts?

POS Transaction Meaning

POS transaction, meaning a payment that is processed through a Point of Sale (POS) terminal, is an example of a financial exchange with a merchant that provides goods or services to a customer. 

In most cases, Point of Sale systems are designed to accept certain credit cards, may operate in multiple currencies, offer receipt generation, and streamline payment processing and related business operations.

Not surprisingly, Point of Sale terminals have become a critical component to generating revenue for physical businesses. Meaning POS transactions are essential to the ongoing operation of businesses.

What Is a POS System?

POS system is short form for a Point of Sale system, which is a broad term describing a hardware terminal that accepts credit and debit card payments from customers on behalf of retailers.

Of course, the hardware is also supported by the use of software, which captures the customer information and communicates with the other financial institutions involved in the processing of card payments.

POS Transactions vs Debit Transaction

The main difference between POS transactions and a debit card transaction is that POS transactions can include credit cards and debit cards while a debit card transaction only includes debit cards.

That said, a debit card transaction can also take place over the phone, online, or via an ATM, all of which would not be considered POS terminals. In other words, a debit card transaction may be classified as a POS transaction, only if it is completed using a POS terminal.

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Frequently Asked Questions

Below are a few of the most common questions we receive from people looking into the meaning of POS transactions. If you have further questions you would like to ask our team, don’t hesitate to get in touch.

What Is POS Transaction in a Debit Card?

If you see “POS Transaction” on a debit card statement, it refers to a payment for goods or services via a Point of Sale (POS) terminal. In most cases, specific details are provided after a transaction has moved from pending to completed, which will include the actual name of the vendor that processed the POS transaction with your debit card.

What Is a POS Example?

An example of a POS transaction is the process of paying for a pair of shoes. But, instead of paying cash, the transaction will need to involve a debit or credit card. When purchasing the shoes, the buyer provides the seller with their physical credit card. This credit card is then swiped, inserted, or tapped on a physical payment terminal. This terminal is called a Point of Sale terminal or POS machine.

What Is ATM vs POS Transaction?

The main difference between an ATM transaction and a POS transaction is that an ATM transaction takes place via a financial institution’s automated teller while a POS transaction takes place at a commercial entity. In other words, ATM transactions directly engage a bank while a POS transaction engages a transaction with a business.

How Do I Check My POS Transaction?

If you are running a POS terminal and need to confirm a transaction, you can log into your Point of Sale software. After logging in, navigate to transaction history. You will then need to select the time of the transaction and review the specific transaction details.

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