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the evolution of pos

Progress looks like updated technology

Part 1: From knuckle busters to integrated POS systems

They say hindsight is 20/20 which is to say that we don’t always see the moment for what it is when we’re in it.  That concept especially rings true when it comes to payment processing technology for small to midsize businesses.

In this two-part series we’ll discuss some of the technologies that retail and restaurant operators used to update their credit card processing and POS systems and increase efficiency and customer satisfaction in the recent past, and what technologies business owners should be looking toward today.

The 1990s

The 1990s was a transition period from old school cash registers to the new computer-based point of sale (POS) systems and high-tech electronic cash registers.  Checks were the most popular payment type for the better part of the decade,⊃1; and check verification devices were all the rage.  Credit and debit cards were gaining traction, but checks kept the top spot as the preferred method of payment.    

Checks finally gave way to debit cards usage in 1998.⊃1; Leading up to that transformation, savvy merchants began to throw out their old credit card imprinters, not-so-affectionately called “knuckle busters,” in favor of credit card terminals. Terminals greatly simplified the credit card payment process for merchants and consumers alike, since merchants no longer had to spend valuable time manually imprinting credit cards and making hand written receipts.  

The 2000s

In the next decade, credit card terminals began to give way to the integrated POS system.  The early POS systems of the 90s gave merchants the ability to do things that weren’t possible with old cash registers and credit card terminals.  With an integrated POS system, merchants could get rid of the credit card terminal and process electronic payments directly from the POS.  That greatly simplified the reconciliation process by making it unnecessary to keep a separate total for credit card transactions and another for cash and checks. Additionally it gave merchants the ability to perform back office tasks, get instant transaction reporting, and employee management tools.   

Technologies that increased transaction speeds and customer convenience were the focus during this period.  High-speed internet was a huge improvement over the phone line for submitting transactions to the approval network. In addition to increasing the transaction time, it also freed up the phone line so merchants weren’t faced with the choice of paying for two phone lines or having constant conflict between the availability of the credit card terminal and the phone.  

Read part 2 to learn about how payment technology is evolving today.

 ⊃1; Bright Hub, The History of Debit Cards, http://www.brighthub.com/money/personal-finance/articles/42073.aspx, July 2011.


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