POS terminal: what is it, and how does it work?

Today, buyers are using cash less and less, preferring to pay for purchases with bank cards. In this process, a POS terminal plays an important role, allowing you to pay with a card. Let's figure out what this device is and how it works to make shopping more convenient for both the buyer and the seller.

What is a POS terminal?

A POS terminal (Point of Sale terminal) is a device used to accept payments by bank cards at points of sale. It provides fast, convenient and secure payments, making the purchase process comfortable for both parties.

POS terminals in Kazakhstan support payments by bank cards of local banks, such as Halyk Bank of Kazakhstan, Otbasy Bank, ForteBank, Kaspi Bank, Bank CenterCredit, Eurasian Bank and others. This provides convenience for users, as they can easily make payments in the local currency, tenge (KZT), without additional conversion steps. The terminals also support international payment systems such as Visa, Mastercard, American Express and UnionPay, allowing them to serve both local and foreign customers.

How does a POS terminal work?

When a buyer taps a card on the terminal or inserts it into a slot, the device reads the card data, such as the card number, expiration date, and security code. The POS terminal then encrypts this data and sends it over a secure channel to the acquiring bank.

The acquiring bank verifies that there are sufficient funds in the buyer's account and sends a request to the payment system (for example, Visa or Mastercard) to confirm the transaction. The payment system, in turn, contacts the bank that issued the card for final confirmation. If all checks are successful - checking for sufficient funds, the absence of suspicious transactions, and the validity of the card - the bank approves the transaction.

The POS terminal receives the approval and issues a receipt for successful payment, and the money is debited from the buyer's account and transferred to the seller. This process takes only seconds, providing a fast and convenient way to pay.

Types of POS terminals

There are different types of POS terminals that are customized for different business needs. The main types include stationary, mobile, wireless and virtual POS terminals.

Stationary POS terminals

These terminals are suitable for stores with a permanent point of sale. They are connected to the power grid and the Internet via a cable connection, which ensures stability and reliability when processing payments. Such terminals are often installed at checkouts in large retail stores and supermarkets.

Mobile POS terminals

These are applications that can be installed on a smartphone or tablet and turned into a full-fledged POS terminal. Such terminals are especially convenient for small businesses, delivery services and for those who work in the field, as they allow you to accept payments anywhere using mobile Internet or Wi-Fi.

Wireless POS terminals

Wireless POS terminals operate using Bluetooth or Wi-Fi technology and are commonly used in restaurants and cafes to allow waiters to accept payments directly at customers’ tables. They are also used at exhibitions, fairs, and other temporary events where it is crucial to accept payments without being tied to a specific location. Wireless terminals provide additional flexibility for businesses that need mobility but still require a reliable and stable way to process payments.

Virtual POS terminals

These represent software that allows you to accept card payments online. They are used to conduct transactions in online stores or when selling services over the Internet. Virtual terminals provide maximum flexibility and convenience for businesses that want to accept payments remotely.

Advantages of using POS terminals

POS terminals have become an integral part of modern commerce, as they facilitate the payment of goods and services. Thanks to these devices, stores can serve customers faster, avoid errors associated with payments, and offer customers a greater choice of payment methods, including card payments, mobile acquiring, QR codes, and contactless payments via smartphones. This is especially important in situations where the client prefers to pay by card and does not have cash on them.

Convenience and security

Using POS terminals makes the payment process simpler and more transparent, reducing the likelihood of errors and increasing the level of trust between the seller and the buyer. This approach not only improves customer service but also helps businesses develop and grow by offering convenience and security at every stage of interaction with the client.

Disadvantages of using POS terminals

Despite the numerous advantages, POS terminals also have their disadvantages. Firstly, POS terminals depend on a stable internet connection or telephone line. In the event of a connection failure, payments become impossible, which can lead to inconvenience for both the seller and the buyer. Secondly, POS terminal maintenance and transactions may be accompanied by a commission charged by the bank or terminal operator, which increases the costs for the business. There is also a risk of fraud - although modern POS terminals are equipped with security, some fraudsters can use technology to steal card data.

Finally, if the terminal breaks down, payments become impossible, which also requires additional costs for repair or replacement of equipment.

Money turnover through POS terminals in Kazakhstan

In August 2024, the volume of transactions using payment cards of Kazakhstani issuers amounted to 17.7 trillion tenge, the number of transactions — 1.2 billion. At the same time, the volume of non-cash transactions increased by 19.7%, reaching 15.4 trillion tenge. The bulk of non-cash transactions were made via the Internet/mobile banking, but a significant part of transactions (about 19.6%) were made through POS terminals, which emphasizes the importance of these devices in providing flexibility and convenience for users.

Number of POS terminals in Kazakhstan

As of July 1, 2024, there were 1,163,372 POS terminals in Kazakhstan distributed across various regions of the country. The largest number of terminals were installed in the cities of Almaty and Astana - 296,284 and 134,167, respectively. There are 89,042 terminals in Shymkent, which also emphasizes the active use of non-cash payments in large cities of the country.

Regionally, the number of POS terminals was distributed as follows:

• Almaty region: 62,555 terminals

• Aktobe region: 50,897 terminals

• Atyrau region: 44,977 terminals

• East Kazakhstan region: 37,600 terminals

• Zhambyl region: 49,473 terminals

• Karagandy region: 49,698 terminals

• Kostanay region: 42,662 terminals

• Mangistau region: 40,418 terminals

• Pavlodar region: 41,874 terminals

• Turkestan region: 41,590 terminals

These data show that POS terminals are actively used not only in large cities but also in the regions, which helps to increase the availability of cashless payments throughout Kazakhstan. The distribution of terminals by region also reflects the high level of trust in banking services and the popularity of cashless payments.

Cashless payment as a key element of modern business

Cashless payments via POS terminals not only speed up customer service but also minimize the risks associated with storing and counting cash. This helps businesses focus on development rather than routine operations. In addition, the use of POS terminals simplifies accounting and allows for faster processing of sales data.

Despite existing disadvantages, such as dependence on a stable connection and the possibility of commissions, the advantages of POS terminals significantly outweigh these disadvantages.

Implementation of POS terminals contributes to business development, increased efficiency of operations and customer satisfaction, which makes them an essential element of any trading strategy in the modern market.

PAYGATE is your reliable partner in payment solutions. We offer payment acceptance services through modern POS terminals that support various payment methods, including card payments, mobile acquiring and QR codes. With us, your business will become more convenient and accessible to customers. Want to know how to implement a convenient and profitable payment system? Contact us and we will help you choose the best solution for your business and start cooperation today!