What is POS Online Transaction: Meaning & Benefits

Online POS transactions are now everywhere you turn online: e-commerce platforms, professional service portals, influencer-blogger websites, and more. Unlike brick-and-mortar POS transactions, making a purchase online involves a standard POS online transaction process of checking out where a credit/debit card, digital card, or credit points are used.

Online transactions could be done via a desktop, tablet, or mobile phone. Opening up online payment space for millions using different payment methods (cards, digital wallets, credit points, gift cards, and more), equipment (e.g., POS), and devices (e.g., mobile phones) has only revolutionized how, when, and where payments are made and by whom.

To better understand how payment methods are changing, the global mobile POS payments transaction value is projected to hit USD 3.76 tn by 2024, with an expected annual growth rate of 12.77% and an overall volume of USD 6.08 tn by 2028.

Online POS transactions are here to stay.

So, if you are a business owner or executive manager, understanding online POS transaction meaning, and difference between POS and online transaction is crucial to managing your sales and accounting operations smoothly, quickly, efficiently, and compliantly.

This post helps you stay on track and understand what matters most to manage successful online POS transactions.

What is an Online POS Transaction?

An online POS transaction is a type of transaction performed online on, say, an online retailer, aka an e-commerce platform, where customers pay for purchases using digital payment methods such as:

• Credit/Debit Cards (e.g., Visa and Mastercard) 
• Mobile Wallets (e.g., Apple Pay, Google Pay, and Alipay)
• Peer-to-Peer (P2P) Payments (e.g., PayPal, Venmo, and Cash App)

Read Also: POS Transaction Types: Explanation With Examples

That being said, how does an online POS transaction work, anyway? Put differently, what steps need to be followed for a transaction to be considered complete?

Here is how.

Online POS Transactions Process

Online POS transactions, one example of digital payments, follow a standard process:

1. Payment Request Initiation. Customers initiate an online payment process at a checkout page on an e-commerce platform using their payment method (card, wallet, P2P, etc.) to pay for purchases collected in a designated shopping cart. 
2. Payment Authorization. The payment processor, an intermediary payment service provider, requests authorization from the customer’s bank. Once authorized, the processor verifies all payment-related information, such as the required amount and cardholder details (name on card, expiry date, and CVV), and ensures all such information matches the bank account holder’s information. Increasingly, payment processors are asking for biometric data such as fingerprints or a one-time passcode as an additional security layer.
3. Fund Transfer. Once all is good, the customer’s funds are transferred from the customer's account to the merchant's account via a national payment network of a broad coalition of banks, credit card companies, and similar institutions.

Read Also: Explaining The POS Transaction on Bank Statement

Difference Between POS and Online Transaction 

The difference between POS and online transaction is a matter of platform. That is, while a POS transaction is performed physically with customers always present in-store to pay for purchases, an online POS transaction is, by definition, made online using any digital payment form without customers necessarily being physically present.

Opting for one transaction method is not decided solely by sellers or customers. Indeed, sellers may focus more on online sales by investing in digital gateways based on market research on customer purchasing habits. Conversely, customers may opt for conventional, in-store POS, or online POS transactions for a wide range of reasons, including: 

• Convenience (more common with Generation Z customers)
• Personal shopping habits (such as in cases of pensioners or local community members)
• Access to funds (where higher-income customers have access to more credit options)

The exponential growth of digital payment adoptions, accelerated by many factors, not least and most recent of which is COVID-19, has made online POS transactions of countless benefits for millions of users everywhere. More importantly, online POS transactions represent a leap forward in integrating conventional, in-store payments with online payment gateways, which expanded customer reach to billions everywhere.

Read Also: What Does POS Debit Mean? All What You Need To Know

Benefits of Using POS Online Transaction 

Going online is a great convenience by and in itself. Using an online POS transaction is a blessing. 

As sellers, particularly on e-commerce platforms, struggle to gather, analyze, and report a wide range of transaction information from multiple parties (customers, business partners, regulatory bodies, and more), online POS transactions, made even convenient via integrations, are excellent business enablers to:

• Streamline a wide range of sales and accounting activities.
• Automate many accounting and sales activities.
• Reduce carbon footprint by minimizing the use of paper in generating reports.
• Enhance customer checkout experience.
• Enhance customer relations by a better understanding of customer pain points before, during, and after checkout.

Read Alos: How to Track POS Transactions: The Complete Guide

Best Point of Sale Systems Online 

The short answer is:

The POS system that helps you become a better business is simply the best.

The long answer is:

Enerpize online POS software has helped thousands of users achieve more productivity, less through needless complications, and more via simple and user-intuitive features.

The benefits Enerpize is set to achieve for your business are almost countless, including, but not limited to:

• Providing multi-payment methods in multiple world currencies.
• Performing fast and customer-friendly returns informed by actionable insights to act on customer’s complaints promptly.
• Offering various payment options - upfront, in installments, or by placing a deposit - so customers can choose what suits their needs and financial abilities.
• Auto calculating, generating, and reporting sales taxes based on predetermined, jurisdiction-specific tax laws and regulations.
• Managing inventory end-to-end seamlessly and quickly so you can replenish out-of-stock products or add new items.
• Grouping products as you wish to assign prices per product group better.
• Generating detailed sales reports for better customer and market insights.

Try Enerprize out to be on top of the POS game now raging across industries.  

Final Thoughts

A POS online transaction is a breakthrough in managing sales for data-intensive businesses such as e-commerce platforms. Choosing online POS transactions over conventional, in-store transactions has proven beneficial for sellers and customers.

Integration is a significant consideration when choosing your POS system. Using Enerpize, for example, not only helps integrate your POS transactions throughout but also accelerates your business growth.

Make no mistake about which systems you adopt or plug into your existing POS installations.