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POS stands for point of sale. A point-of-sale (POS) transaction is what takes place between a merchant and a customer when a product or service is purchased, commonly using a point of sale system to complete the transaction. To see different types of POS systems, click here. So when you’re at your favorite restaurant or retail shop, and you make a purchase, you are completing a point-of-sale (POS) or a point of purchase (POP) transaction.