POS
The abbreviation POS stands for Point of Sale and has several meanings. In general, it refers to a point of sale. When it comes to the payment sector, a terminal device is referred to as a POS, which is required for credit card or EC card payments in retail stores. In online payment, there is also a point of sale, but it is referred to as a virtual terminal or EPOS, since in this case there is no hardware through which the card is swiped.
How POS payment works?
A POS payment facilitates cashless payment transactions. The payee has a POS terminal, which it provides either virtually via the Internet or in the form of a device. The payment provider has a matching card; in most cases these are credit cards and EC cards. The cardholder authenticates himself, whereupon the payment is executed automatically on both sides. At the payment provider’s end, the amount is debited either to the credit card account or to the checking account. The payment can be authorized either by the chip card itself or by appropriate authorization systems of the card-issuing bank.
Advantages of POS payment
POS payment has advantages for both parties involved. The system is widespread, so consumers can rely on being able to pay with their debit or credit card in a majority of online and offline stores. The speed of the POS process is also advantageous: paying with a card takes hardly any longer than paying with cash. For the consumer, cashless payment transactions are also associated with convenience. Authentication does not require a great deal of effort, but offers both merchants and shoppers a high level of security. Consumer security is also enhanced by the fact that carrying a credit or debit card means that only small amounts of cash need to be carried. For the merchant, payment via POS has the additional advantage of a payment guarantee. There can be neither payment defaults nor returned direct debits.
Partners involved
A POS transaction involves not only the cardholder and the merchant, but also a large number of other parties. In order to process a transaction successfully, the technical service of the authorization system operated by the card-issuing institution is required. Also necessary are the network operator and the merchant institution in order to complete a POS transaction.
Fees for a POS payment
For the buyer, a POS payment is usually free of charge. Only card payments abroad may be subject to foreign transaction fees, depending on the institution. The merchant, on the other hand, pays a small fee for each transaction. This amounts to a uniform 0.3 percent of the balance owed at all authorization partners. The minimum fee is 8 cents per transaction. Separate fees apply to the petroleum sector, where only 0.2 percent of the balance owed or a maximum of 4 cents per POS transaction is charged on amounts up to 51.13 euros.
