POS systems evolved from the mechanical cash registers of the first half of the 20th century. Examples included the NCR registers, operated by a crank, and the lever-operated Burroughs registers. These cash registers recorded data on journal tapes or paper tape and required an extra step to transcribe the information into the retailer's accounting system.

Later cash registers moved to operation by electricity, such as the Universal cash register. The first computer-based systems were introduced in 1973, such as the IBM 3653 Store System and the NCR 2150. Other computer-based suppliers included Geller. 1973 also brought about the introduction of the UPC/EAN Barcode readers for POS systems.

During the late 1980s and 90s, manufacturers developed stand-alone credit card devices to easily and securely add credit card processing to POS systems. Some popular models include the Thyron MPT-500/510 and MPT-540. These relatively simple devices have evolved to handle multiple applications (credit card processing, gift card activation, age verification, employee time tracking) on one device. Some wireless POS systems for restaurants not only allow for mobile payment processing, they also allow servers to process the entire food order right at tableside.

Most retail POS systems do much more than just "point of sale" tasks. Even for smaller tier 4 & 5 retailers, many POS systems can include fully integrated accounting, stock management, open to buy forecasting, customer relation management (CRM), service management, rental, and payroll modules. Due to this wide range of functionality, vendors sometimes refer to POS solutions as retail management software or business management software.