From cash register to cashless: the evolution of POS & payment systems

Although he’s not a household name, saloon owner James Jacob Ritty is one of America’s most influential innovators. It’s been more than 140 years since the Dayton, Ohio entrepreneur invented the cash register as a solution to his problem of barkeeps dipping into the till—and reducing the day’s take. And it’s possible that he never knew he’d created one of the world’s longest-lasting inventions.

The cash register itself, initially a hundred-pound hunk of ornate metal, is a near-relic today. But it paved the way for the superior digital point of sale (POS) systems we have now. The question is: Will POS systems replace registers entirely? If so, what happens to the cash, and what were the watershed moments that led up to it?

Ritty invented the cash register to “keep his bartenders honest” after he discovered employees stealing from the till. He called it Ritty’s Incorruptible Cashier.

In 1871, Ritty opened a whiskey, wine and cigar saloon in Dayton. He spent the next several years with a problem and no solution (yet): His bartenders were stealing cash, but he had no way to track the bills and coins entering and leaving his till. It would take a transatlantic voyage and an up-close look at a different technology all together that would turn on a lightbulb in his head and lead to his Eureka! Moment.

That voyage was in 1878, when, aboard a steamship bound for Europe, Ritty became fascinated with the gadgets and machines in the engine room. Amid the steam gauges, pistons and noise, he noticed a kind of tachometer machine. It was counting every revolution of the ship’s propeller.

It was the moment he’d believe he could invent something similar: a machine that counted cash instead of revolutions. He was so excited that he cut his trip short and came home to get to work. And indeed, just one year later, he patented the world’s first cash register.

The first cash register: Ritty’s Incorruptible Cashier.

He tried to start a cash register manufacturing company, but couldn’t gain traction. That’s when he sold the patent to John H. Patterson, who went on to establish the National Manufacturing Company, later to become the National Cash Register Company, or NCR, in 1884. And the rest, as they say, is history.

Over the next 70 years, technology advancements started to change payments and how those payments were taken, driving the evolution of cash register design. Those advancements included technologies like the credit card.

Once the credit card was invented in 1949, cash wasn’t the only ticket in town. The Diners Club card, the first iteration of a credit card, was born when a businessman forgot his wallet during a client lunch meeting. The first credit card was made of cardboard and could be used to pay for dining, entertainment and travel; the bill had to be fully paid at the end of every month. Over the next decade, card payments picked up with the inception of revolving credit and plastic cards.

Then, from 1960 to 1980 card and computer innovation took hold even more. In 1960, NCR invented the first low-cost, mass-marketed computer: the NCR 390. In 1962, cash registers switched from analog to electronic, and manual credit card imprinting machines were invented. All three innovations increased technological accessibility for consumers and the businesses they use frequently, like grocery stores.

Charles F. Kettering, an inventor at NCR, designs the first cash register powered by an electric motor.

The 20-year span was also when NCR went digital. Innovations like ATMs, magnetic card stripes and electronic credit card processing machines hit the market. Over the next 30 years, NCR continued to lead innovation in payment technology.

The 2010s ushered in an omnichannel world where, as you can see on NCR’s history page, “physical and digital boundaries begin to blur for the ultimate customer experience.” And finally, in 2018, plastic surpassed paper as the main form of payment among consumers, dethroning cash as king.

Cash—and cash registers—are still relevant. But today, POS systems offer a multichannel experience for both retailers and consumers. Plus, as mobile wallets, contactless payments like “tap to pay” and the use of QR codes continue to soar, so will digital and contactless-friendly POS systems.

NCR POS System today

That’s because POS systems offer a more all-encompassing business and consumer experience, and they do things that cash registers can’t. POS systems track inventory, capture customer information (including purchase history), seamlessly integrate with loyalty programs and more. POS systems also allow for contactless payment—a trend that was growing even before the pandemic. 

It’s no wonder then that, according to FinancesOnline, the global POS market is expected to hit $29.09 billion globally by 2025, compared to $15.64 billion in 2019. And each year, mobile POS (mPOS) transactions grow by more than 40 percent.

mPOS first jumped in popularity in 2014. A wireless payment system, mPOS is often in the form of a tablet or smartphone. The next year, mPOS installation was up 41 percent in North America—and they’ve been on a steady growth trail ever since. FinancesOnline reported that over the last three years, from 2017 to 2020, mobile payments grew more than 2.5x (from $368,614 to $1,017,982).

Cash use has been trending more and more over the past two years, but 2020 was the year that changed—drastically. So, for businesses to stay current, they need to go mobile.

Multichannel POS systems—including mobile payments—is where the market is headed as consumers spend more time on their phones and less time handling cash. According to the FinancesOnline report, “73 percent of consumers use less cash than in the past,” and that number will only grow along with digital payment innovation.

According to a recent study by Merchant Machine, 64 percent of smartphone owners use mobile payment options like Apple Pay and Alipay. China leads the way in mobile wallet usage, with 47 percent of smartphone owners capitalizing on the next-gen technology.

But don’t trash your cash register just yet. In some cities, like New York City, it’s actually illegal not to accept cash. A bill was passed earlier this year that prevents NYC businesses from rejecting cash.

In an interview with the New York Times, New York Councilman Ritchie Torres, the bill’s lead sponsor, said, “Consumers should have the right to choose if they want to pay in cash or not.” Although going cashless could have some positive consequences, like cutting down on minting costs and increasing transactions per hour for merchants, the bill can be discriminatory against those who largely rely on cash to make everyday purchases. “We are reining in the excesses of the digital economy,” said Torres.

A digital-first approach serves businesses across all industries and sectors well in the coming increasingly more cashless era. Businesses can bridge the gap between physical cash and digital payments by switching to hardware that speaks to both. Installing an mPOS system might be easier than you think, and a simple cash drawer can complement a POS system.

We might never go completely cashless, but the trends are clear: Digital payments are the new cash. And POS systems are the new cash register.