Upgrade Your Business with a POS System: The All-in-One Solution
Simplified Transactions and an Enhanced Customer Experience
There was a time when a cash register, cash drawer, and spreadsheets were all that you needed to accept payments and record transactions at your retail store. But running a modern brick-and-mortar or eCommerce store requires a lot more than that today.
You’ll need to process transactions, track sales, manage inventory, cater to post-sale customer demands, and generate monthly sales reports to name just a few. All this to say, without an efficient point of sale (POS) system, you can’t handle all those responsibilities effectively.
This article will explain everything you need to know about POS systems and give you a rundown of some of the best ones in the market today.
Let’s get started.
What Is a POS System and How Does It Work?
A POS system is any platform that lets you accept and process payments from customers for your products or services at your retail store. In its most basic form, the platform will include both hardware and software.
The hardware will read the customer’s credit card information, while the software will process the transaction and send the necessary information to your payment processor and bank. However, the needs of retail businesses go way beyond the mere processing of payment transactions.
That’s why POS systems need to be robust enough to serve as the central hub of a small business. Modern POS systems facilitate payment processing, support contactless payments, and other essential business functions to make day-to-day operations easier for small business owners.
No wonder the market size of POS software is expected to reach $42.5 billion by 2027—growing more than 3X since 2018.
The capabilities of the software component vary from one provider to another, but the hardware component can include a combination of any of the following tools:
- The POS terminal: This is the device that hosts the POS software and it can be installed onto any device with an internet connection.
- Tablet, smartphone, or desktop: Smartphones and tablets are perfect for mobile payments or on-the-go payment processing, while desktops are suitable for in-store payments.
- Barcode scanner: This is used to read the pricing details of the product the customer is buying.
- Card reader: An electronic device that lets you read debit and credit cards. It can be wireless or attached to another hardware and it works in a wide variety of ways including swipe, tap, and EMV chip.
Benefits of POS Software for Small Businesses
POS systems provide a number of benefits for small- and medium-sized businesses including:
- Centralized business management: You can manage every aspect of your business on a single POS app, thus giving you more time to focus on promoting and growing your brand.
- Automated tasks: Everything including customer order tracking, payroll, inventory management, and the monitoring of stock levels can be automated.
- Cloud-based service: All your sales data is synced in real-time across all your devices, which means a cloud-based POS system lets you conduct sales anywhere—in-store, online, or on the go.
- Personalized customer service: You will be able to build customer profiles and use that information for loyalty programs and marketing campaigns.
- Business insights: Access to sales and customer data on your POS system helps you analyze the state of your business, so you can adapt when necessary.
What Type of Businesses Can Use a Point-of-Sale System?
Whether you own a retail store, service business, or eCommerce store, you need a POS system to make the checkout process seamless for your customers at the point of sale. Simply put, every type of business that sells goods or services to customers needs a POS system to accept payments and track sales.
A micro-business like a small thrift shop may not need overly complicated POS software, but simple POS hardware like a card reader and a receipt printer will still be needed. Bigger retail businesses, for example, a candy manufacturer with multiple stores in a state, will need more complex POS software with centralized sales management modules.
POS Features That Every Small Business Should Look For
Understanding the essential components of a great POS system will help you when selecting a platform for your own business. Here are the features you must pay attention to:
The basic function of the platform is to help you process cash or digital transactions. Pretty much every POS provider out there supports credit and debit card payments as well as popular forms of online and contactless payments like Apple Pay, Google Pay, and others. The best providers offer features for detailed sales reporting that help you track how well your business is performing.
Sound inventory management is all about real-time tracking of inventory levels, so you always know when to order stock to avoid shortages or overstocking. Most POS systems let you track inventory levels, but more robust platforms include advanced features like online ordering, custom reorders, and consolidated inventory tracking.
Choose a platform with customer relationship management (CRM) features that let you collate customer contact information and purchase history to build customer profiles (name, age, birthday, contact details, email, etc.).
Your customers are the lifeblood of your small business and you want to do everything to encourage them to keep coming back. Armed with customer data from your POS, you can constantly stay in touch with them by sending personalized messages on their birthdays and other important notifications about promotions or discounts.
Most successful modern businesses rely on an ecosystem of applications and business software tools to ensure their operations run smoothly. Your POS platform must be able to integrate seamlessly into this ecosystem. This means it must support all the apps you use for marketing, accounting, human resource management, CRM, shipping, and more.
A good POS system will allow you to assign roles and limitations to each of your staff members. A more robust platform will add time clocks, employee performance tracking, scheduling, and other capabilities. The effectiveness of your staff plays a major role in the success of your store. With performance tracking data, you will know whom to coach, retain, or promote.
Reporting and analytics
Detailed and comprehensible data gives you a clear view of the state of your business at any point in time. When you always have real-time information about your customer orders, sales, inventory, and staff performance, you can consistently make business decisions with confidence.
No matter how well-built any software platform may be, you are likely to encounter technical issues at some point. That’s why you need a provider that offers 24/7 customer support. It must cover all the popular channels of communication, including phone, live chat, email, and online documentation.
Factors That Affect the Pricing of a POS System
Each POS provider offers a specific package of services and hardware, so pricing varies from one company to another. The best way to go about this is to break down the most popular types of services, software solutions, and hardware tools offered by most providers so you know how to analyze the details of the package being offered by a prospective vendor.
This can be a cloud-based system or a hybrid system.
A cloud-based system is cheaper to operate and all you need to do is download the app to your own device (iPad) and you can start processing in-person transactions. The hardware component here is the tablet you need to access the platform.
A hybrid system combines the legacy cash register with an online component. You can process payments with the register in offline mode and the data will be uploaded to the cloud as soon as you are connected to the internet.
The hardware and installation costs make the hybrid option more expensive, but it may be the right option depending on your needs. The charge can be a one-time payment or the hardware could be leased to you while you pay for it as part of your monthly or annual subscription fee.
Basic POS software is usually free, but the provider may also give you the option to scale to a more robust but premium software tier as your business grows. The pricing is typically subscription-based. Companies like Shopify that offer powerful all-in-one platforms charge a premium subscription fee outright that you must pay monthly or annually.
You should invest in a premium plan if the complexity of your business operations requires such a step or if you have simply outgrown basic software.
You need to accept and process credit cards to get your money from customers, but there is always a cost attached to each transaction.
A lot happens at the backend each time you accept payments from customers, and all the parties involved in the process charge a fee for their services. The total charge on each transaction can range from 1.5% to 3.5%, depending on your vendor.
The charge includes the interchange fee and a percentage of the transaction amount. Some providers may add a maintenance fee. This is separate from the monthly subscription fee you may be required to pay for the use of your POS software.
Transactions, where the card is physically available during the payment (card-present), tend to cost less than when customers have to manually key in the card number to make the payment (card-not-present).
5 Best POS Systems You Should Know Of
All the platforms listed below are equipped with everything you need from a POS system, but each of them excels at meeting a particular business need. That’s what we will discuss in this section.
1. Lightspeed POS (Best for customer engagement)
The platform offers everything you need to build customer loyalty. There are features for building customer profiles that can be used to offer exclusive deals, gift cards, and discounts tailored to match their purchase preferences.
You can also create and manage memberships as well as set up automated recurring payments for subscribed customers. Other essential features like inventory management, reporting and analytics, etc. are also built into the system.
- Best-in-class customer engagement features
- Assigned account manager for each customer
- Relatively expensive
- No information on hardware pricing on the company website
2. Toast (Best for restaurants)
Toast was built specifically for restaurants, cafes, and bakeries, and it’s got everything you need to run your business.
No matter how big your restaurant operation may be, whether it’s a quick-service restaurant chain, a premium upscale restaurant, or a small mom-and-pop outlet, the technology works just fine.
It also helps you optimize your restaurant operations; you will be able to turn tables much faster and the delivery commissions you have been paying can reduce by as much as 80%.
- Robust front-of-house and back-of-house tools for restaurants
- Works great offline
- Provider ties customers to long-term contracts
- Expensive upper-tier subscription plans
3. Shopify POS (Best for omnichannel retail businesses)
The platform works just as well as an eCommerce platform as it does as a point-of-sale system for brick-and-mortar businesses. Its range of features is well-optimized for businesses that combine large physical stores with thriving online stores.
The capabilities of the software for eCommerce operations and social media marketing are well-known. For physical retail, you can easily download the POS software on your iPad or use any of the company’s hardware offerings.
- Seamlessly syncs your online sales and inventory data with that of your physical store
- Shopify payments (only interchange fees, no transaction fees)
- No free subscription tier
- Relatively expensive plans
4. Clover POS (Best for hardware and integration options)
Clover offers an extensive range of hardware options that meet the needs of businesses of all sizes. Depending on your resources and business needs, there is Clover Go (card reader), Clover Mini (iPad), Clover Shop Station Solo (cash register), Clover Station Duo (robust countertop hardware), and Clover Flex that works on your phone for on-the-go transactions.
What’s more, it’s more likely than not that Clover supports all the third-party apps in your ecosystem. You can also easily get add-ons to integrate with your system from the Clover App Market.
- Extensive range of hardware and integrations
- 30-day free trial with access to full-platform functionality
- The existence of Clover partners means there are varying pricing packages
- Hardware isn’t free
5. Square POS (Best for brick-and-mortar businesses on a budget)
Subscription is forever free and the only charge you pay is the processing fee that is based on your business sales. The Square Register hardware is super-easy to operate and you get all the features you need to process in-store, on-the-go, and online payments.
- Free credit card reader and intuitive POS hardware
- Forever free plan
- The company exerts greater control over your funds and payments can be delayed
- Substantial processing fees
The Bottom Line
With the information in this article, you now have the knowledge you need to determine the features you need from a POS system and the right vendor for your business.
However, a POS platform isn’t a payment processor, and both your POS vendor and payment processor must work seamlessly together to control costs.
Payment Depot is the credit card processing company of choice for many retail businesses. We don’t charge any markup on interchange fees (saving you money), and there is no expensive termination fee that ties you down to a long-term contract.
You get everything you need to process credit card payments for a monthly subscription fee that depends on the plan you choose. To learn more, contact us today.
How much does a POS system typically cost?
The average annual cost for the first year (including software subscription fees, hardware, and installation costs) is between $0 and $7000 depending on the size of your business.
How secure is the customer data stored in a POS system?
POS data contains crucial personal and financial customer information that is valuable to criminals, so your system is always under the threat of malware and hackers. Prudent POS security measures include installing antivirus software, using encryption and two-factor verification, and also updating your POS software regularly.
Can a POS system be used on a tablet or mobile device?
Most modern POS systems have mobile POS applications that you can download to your Android or iOS smartphones and tablets for accepting payments wherever you are.