What is a 'Point of Purchase - POP'?

A point of purchase (POP) is a place where a sales transaction occurs. On a macro level, a point of purchase may be a mall, market or city. On a micro-level, retailers consider a point of purchase to be the location of checkout, which can be in-store or online. It is also known as the "point of sale."

BREAKING DOWN 'Point of Purchase - POP'

In recent years, the point of purchase for products and services is an area of focus for marketers. Points of purchase may be real, as in the case of a "brick and mortar" store, or virtual, as in the case of an electronic retailer that sells goods and services online. At the point of purchase, the merchant typically creates an invoice or sales order. After receiving payment, the seller creates a receipt that is given to the buyer. Such receipts have traditionally been printed but, increasingly, receipts are delivered electronically.

Point-of-sales Systems

POP systems, more typically called point-of-sale or POS systems, frequently use hardware or software tailored to the particular industry or business. Although some small retailers use off-the-shelf cash registers to calculate payment amounts and issue receipts, most POS systems today are computer-based, digital, and incorporate other devices or peripherals such as printers, bar code scanners, scales and touch screens. In some cases, customers perform the duties that were previously performed only by check-out clerks such as scanning bar codes, weighing items that are sold by weight, operating POS terminals by tapping their fingers against touch screens and making payments by swiping their credit cards or inserting cash into machines.

In addition, POS software is increasingly used for accounting, warehousing and management functions. Software may be used to manage inventory, alerting warehouses when shelves run low or creating purchase orders that are automatically sent to suppliers. POS software may assist management in deterring theft and employee fraud. It may be integrated with a business's accounting system to enter the day's sales directly into the company's books.

POS Innovation

Modern POS systems are commonly programmable or allow enhancement with third-party software programs. These systems can be tailored to meet specific needs. For example, many retailers use POS systems to manage membership programs that award points to frequent buyers and issue discounts on future purchases.

Cloud-based POS systems are increasingly in use today, particularly for large online merchants. Cloud-based systems can greatly reduce the upfront costs of implementing a POS system for many businesses. Another trend is toward allowing customers to interact directly with POS systems, particularly in the hospitality industry. This is often referred to as location-based technology. At many restaurants, customers can view menus and place orders on terminals located at tables. In hotels, customers use similar terminals to place orders for room service or pay hotel bills.

RELATED TERMS
  1. Point Of Sale - POS

    A point of sale (POS) is where customers execute payments for ...
  2. Point-of-Service Plan (POS)

    A point-of-service plan (POS) is a managed-care health insurance ...
  3. SEC POS AM Filing

    An SEC POS AM filing is a filing that is made by companies which ...
  4. Merchant Discount Rate

    The merchant discount rate is the rate charged to a merchant ...
  5. EMV

    EMV is a global standard relating to integrated circuit cards, ...
  6. Receipt

    A receipt is a written acknowledgment that something of value ...
Related Articles
  1. Insights

    Inside National Payment Systems

    Investopedia explains: The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
  2. Investing

    First Data Expands Point-of-Sale Devices to Europe

    The tech company debuts its Clover Mini and Clover Mobile POS terminals in the U.K.
  3. Tech

    Decred: A Cryptocurrency That Combines PoW, PoS

    Decred combines PoW and PoS to remedy centralization problems of bitcoin, says Jake Yocom-Piatta.
  4. Personal Finance

    A Day In The Life Of A System Trader

    Systems traders divide their time between trading, developing, backtesting, optimizing and forward testing, to create viable and high-probability trading systems.
  5. Investing

    Nordstrom Connects Online Shoppers to Salespeople

    Nordstrom (NYSE: JWN) wants to bring its well-liked in-store experience to its online shoppers. The high-end department store has a strong reputation for delivering quality customer service, ...
  6. Trading

    Trading Systems Coding

    Automate your trades by translating your strategy into a language your computer can implement in this hands-free approach to investing.
  7. Tech

    What is Casper, the Latest Ethereum Upgrade?

    Casper is a new proof-of-stake consensus mechanism.
RELATED FAQS
  1. What is the Difference Between a Capitalist System and a Free Market System?

    Learn how capitalism and free market systems work, along with their differences. Read Answer >>
  2. What's the difference between cash-on-delivery differ and delivery against payment?

    Find out more about cash on delivery and delivery versus payment transactions and the difference between these two types ... Read Answer >>
  3. How is investing in a corporate bond different from buying shares of the company's ...

    Learn what the just in time, or JIT, inventory system is by contrasting it with the just in case inventory system and reviewing ... Read Answer >>
  4. What happens when my bank account is debited?

    A debit to your account happens when you use funds to purchase goods or services. Understand the process that takes place ... Read Answer >>
  5. How Should You View a Balance of Payments Deficit?

    Discover how it might be possible to run a balance of payments deficit, what causes them in international trade and whether ... Read Answer >>
Trading Center