What is POS integration? How to use in retail?

If you are running a retail business, chances are high that you have heard of the term “POS integration.” A POS (Point of Sale) system is the pulse of transactions, processing payments, and tracking sales. So, what’s the deal when “integration” gets added to the mix? In this article, we will explore “What is POS integration,” how it functions, and its practical uses in retail.

What is POS integration?

POS integration is simply the process of connecting a POS system with other software or hardware tools. On the software side, it is linking your POS with inventory management systems, CRM platforms, or accounting software. For example, you connect the inventory database from the Shopify store with your POS. This act is “POS integration.”

On the hardware side, POS integration is pairing your POS with payment terminals and retail hardware devices. These devices can be anything from barcode scanners and receipt printers, and cash drawers to card readers.

Why use an integrated POS system?

The purpose of POS integration is to create a unified and consistent operational flow within a company’s operational ecosystem, which, in turn, drives better customer experiences and business scalability.

POS integration is common in retail. You see it in restaurants, cafes, e-commerce businesses, and omnichannel environments. Below are some key benefits of integrated POS systems:

• Offer real-time data synchronization
• Reduce manual errors
• Improve inventory accuracy
• Enable faster, more personalized service

How does integrated POS work?

POS integration works on the basis of data exchange between the POS system and external tools. Here’s a breakdown:

• Step 1: Data capture. POS records product, price, payment, and time at checkout.
• Step 2: Data transmission. Information is sent to integrated systems. The data transfer can be in real time or at scheduled intervals.
• Step 3: System action. The connected tools now use the given data to update records, trigger workflows, or generate reports, upon the type of integration.
• Step 4: Feedback loop. Updated data flows back to POS, keeping all systems aligned and up-to-date.

In the following part, we will dive into the three most common types of POS integration: POS and eCommerce integration, ERP integration, and POS payment integration.

POS and eCommerce integration

What is POS and eCommerce integration?

POS and eCommerce integration refers to the process of linking the POS system with online platforms, such as Shopify, WooCommerce, or Magento. It is a common approach for retailers managing both physical storefronts and digital sales channels. Such businesses often face problems regarding inventory discrepancies, duplicated orders, and customer data silos.

POS eCommerce integration arises as an efficient solution, allowing retailers to:

• Keep their orders, inventory, and customer information in sync across all platforms
• See all the customer orders in one place
• Make changes to pricing and product information across platforms automatically
• Offer the buyers more shopping options, such as Buy Online, Pick Up In Store (BOPIS)

How does POS eCommerce integration work?

The POS eCommerce integration works based on the principle of two-way data synchronization. In particular, you connect the two systems. They will then share key data points like product catalogs, inventory levels, customer profiles, and order information.

How to set up POS and eCommerce integration

There are two ways of setting up POS eCommerce integration:

• Native integration: Some POS providers offer built-in integrations with popular eCommerce platforms. You just need to pick a compatible POS system, activate the integration in your POS settings, log in to your eCommerce account, and authorize the connection (usually via OAuth or API credentials). Data like inventory and orders sync automatically. Many POS systems can accept payments and sync data instantly after installation without further configuration.
• Third-party middleware: This is an alternative if your POS system doesn’t support direct integration. A third-party middleware can act as a bridge between the POS and the eCommerce platform. You just have to install the tool, connect both systems via API (Application Programming Interface) keys or credentials, and set syncing rules for products, stock levels, and orders. Some widely used middleware solutions are SKU IQ and Webgility.

POS payment integration

What is POS payment integration?

POS payment integration involves connecting the POS system with payment processors or payment gateways while pairing it with compatible payment devices, such as card readers or terminals. Thus, you can take payments with a centralized system and reduce manual or double data entry.

Integrated POS payment is widely used in retail. It contributes to faster checkout experiences while reducing manual reconciliation and offering better fraud protection.

How does POS payment integration work?

The integrated POS payment system works based on real-time data transmission (between the POS software, the payment gateway, and the payment processor) and automated transaction processing. Once the customers make a purchase, the payment device will read the card information and capture the payment details. Right after that, the POS software will transmit these details to the payment processor and process the payments.

The integrated system then records and syncs the transaction data with accounting or inventory tools automatically. Confirmation is also sent to both the customer and the store system at the same time.

How to set up POS payment integration

There are two methods for connecting a POS system and the payment processor. You can either use the payment gateway’s API or SDK (Software Development Kit).

• Using the API: You’ll need to connect endpoints for actions like card authorization, payment capture, and status updates.
• Using the SDK: Some payment providers offer pre-built SDKs for easy integration. These toolkits often include ready-made components for payment flows, encryption, and error handling.

Make sure your POS system can work smoothly with the selected card readers, terminals, or NFC-enabled devices during the setup. Test all payment flows before going live.

ERP and POS integration

What is POS and ERP integration?

Integrating a POS system with an Enterprise Resource Planning (ERP) platform is the process of linking the two for streamlined operations. To those who don’t know, ERP is an all-in-one software whose key function is to manage core business activities. These activities range from inventory management, order fulfillment, financial accounting, procurement, human resources, and supply chain logistics.

The purpose of POS and ERP integration is to ensure consistency between the back end and the front end and across departments. Thanks to the synchronization of data, everyone in the operation can access the latest updates and accurate information, avoiding miscommunication and errors at best. This makes ERP-POS integration especially helpful for growing retail businesses and multi-location brands.

How does ERP and POS integration work?

The integration operates on the principle of real-time data synchronization. Essentially, the POS system captures real-time transaction data, which will then be fed to the ERP platform. Once received, ERP processes this data and provides updates on business operations.

Here’s how you can use ERP and POS integration:

• Update stock levels across all locations automatically
• Sync sales data into accounting modules for live reporting
• Track purchasing trends and automate reorders
• Fulfill online and in-store orders and manage them under one roof
• Gain a full view of business performance from a single dashboard

How do you integrate a POS system with an ERP?

There are three common approaches as follows:

• Native integration: Some ERP and POS systems come with pre-built connectors. You just enable the integration and sync core data like inventory, sales, and financials.
• Custom APIs: This method uses open APIs of both systems to build a custom bridge to transfer data and is ideal for businesses with unique workflows or system requirements.
• iPaaS Middleware: There are also iPaaS (Integration Platform as a Service) middleware solutions. These tools are helpful when you seek a more efficient, consistent, and scalable alternative. Some popular middleware tools are Zapier for basic POS-to-ERP, Celigo for enterprise-grade integration, and Amaka for automating Xero POS integration.

Choose the best POS for retail

That’s about POS integration and the common types. So, how do you choose the right type of POS based on your integration needs? Below are some practical tips and insights.

• eCommerce integration: Go for a POS that natively connects with your platforms. It should sync inventory and orders in real time and support unified catalog management. Shopify POS, Magento 2 POS are some solid picks.
• ERP integration: Choose a POS that’s compatible with your ERP. Look for open API access or middleware support to sync sales, inventory, and customer data.
• Payment integration: Consider a POS that supports popular gateways (Stripe, PayPal), contactless payments (Apple Pay, Google Pay), and complies with PCI standards. Square POS integration, Clover, and Toast are among the best choices thanks to their secure, all-in-one payment features.
• Multiple systems (ERP + eCommerce): If you’re using both ERP and eCommerce platforms, consider a POS that allows broader integration through external tools. This helps unify your systems and reduces manual coordination between platforms.

That concludes our article on POS system integration and how to use it in retail. Follow us for more insights on retail POS integration solutions in specific and payment operations in general.