Definition: POS Fees are point-of-sale fees. Banks charge POS fees when you use your debit card in certain transactions. This would apply to transactions where you use your PIN number, or when you choose 'debit' on the retailer's payment machine. This does not apply to transactions where you sign for the purchase (like a credit card) or when you choose 'credit' on the retailer's payment machine.
Not all banks charge POS fees, so you should check the fine print at your bank. If your bank charges a POS fee, you should consider signing for purchases instead of using your PIN. However, you should be aware that somebody pays a fee for the transaction -- and it's probably you (whether you see it or not).
For details on the 'debit' vs 'credit' decision, see How Interchange Fees Work.
Retailers Charging Fees?
Whenever you pay with plastic, merchants pay a fee for processing your payment. Those fees eat into retailer profits, and some stores prefer to pass those fees on to customers instead of treating them as a cost of doing business. For example, you might have to pay extra to use your credit card (compared to paying with cash) or you might have to meet a minimum purchase amount before you can pay with credit.
Surcharges and minimum purchase requirements are allowed in certain states, but merchants sometimes charge consumers more than they're allowed to (and they may impose minimums when they're not supposed to). To learn more about your rights when paying with plastic, read about credit card surcharges (and minimums) and debit card minimums.
Alternate Spellings: P-O-S Fees, P.O.S Fees
Examples: My bank charges a $2 POS fee.