COURSE-ON-COMPUTER-CONCEPTS-CCC / digital-financial-tools-and-applications
Overview
Understand the working of Point of Sale (POS) and mobile POS (mPOS) terminals for card-based payments and their importance in retail.
POS and mPOS Terminals for Payments
A Point of Sale (POS) terminal is a device used by merchants to process card payments at their checkout counters. When you swipe, dip, or tap your debit or credit card at a store, you are using a POS terminal.
How a POS Terminal Works:
- The customer's card is swiped (magnetic stripe), dipped (EMV chip), or tapped (NFC) on the terminal.
- The terminal reads the card data and securely transmits it to the acquiring bank.
- The acquiring bank sends the data to the card network (Visa, Mastercard, RuPay) and then to the issuing bank.
- The issuing bank approves or declines the transaction based on funds availability and security checks.
- The approval/decline message is sent back through the network to the POS terminal.
- The customer enters their PIN or signs to authenticate the transaction.
Types of POS Terminals:
- Traditional Wired POS: Connected via telephone lines or Ethernet.
- Wireless/Portable POS: Uses Wi-Fi or GPRS, allowing payments anywhere within the store.
- Mobile POS (mPOS): A smartphone or tablet acts as the terminal, connected to a small card reader via Bluetooth or audio jack. This is highly portable and cost-effective for small businesses and delivery services.
Benefits:
- Convenience: Easy for customers to pay with cards.
- Security: EMV chip and PIN technology enhance transaction security.
- Efficiency: Faster checkout process.
- Record Keeping: Digital records of all transactions.
Exam Tip:
Understand the basic function of a POS terminal and the difference between a traditional POS and an mPOS. Know that EMV chip cards are more secure than magnetic stripe cards.