Retail businesses have come a long way since the days of the mechanical cash register.
When processing a transaction now, business owners have tons of options for point-of-sale systems, or POS systems.
There are chip readers and mobile payment processing services.
There are completely online POS systems.
There are some which let you build a local network and others that store all your data in the cloud.
All told, it’s a lot to consider.
In this article, we’ll help you understand POS systems and walk you through the process of finding the right POS solution for your business.
We’ll also look at five POS systems we recommend, which will not only allow you to accept multiple payment methods but foster great customer relationships as well.
- What Is a POS System?
- The Right POS System for Your Small Business
- 5 POS Systems We Recommend
- Frequently Asked Questions
- Picking the Right POS System For Your Business
What Is a POS System?
Point-of-sale systems (sometimes called point-of-sale solutions, or POS solutions) are machines, apps, or software that allow you to process sales securely.
These systems will add up items’ costs, calculate appropriate taxes, take in payment, and then create a receipt.
A simple, mechanical cash register with a cash drawer is the classic example of a POS system, but they have grown dramatically in sophistication recently.
A retail POS system will now often include a barcode scanner, a touchscreen or computer monitor, and a receipt printer.
Functionality on these systems has improved, too.
POS systems can now process credit card and debit card payments, accept gift cards, and process mobile payments from cell phones.
Many will integrate with QuickBooks to let you track inventory, get sales reports, and keep your business operations running smoothly.
Cloud-Based POS Systems
A new trend in point-of-sale systems is to sell a simple credit card reader — which can be placed on an employee’s cell phone or to a tablet owned by the business — and have the entire POS process conducted online and in the cloud.
With this technology, any mobile device can become a POS machine with the simple addition of a card reader.
First, customers can swipe a card.
Then the point-of-sale software will process the sale, charge the card, and track what occurred with an online inventory management system.
These systems are growing in popularity quickly because of the ease of setup and low initial investment.
The Right POS System for Your Small Business
Before we get to some popular POS systems out on the market today, there are a few things you should consider when making your choice.
Owning vs. Leasing Equipment
Many of these services will offer you “free” POS hardware if you sign a contract with them.
Sadly, this usually isn’t free. It is almost always baked into the agreement as a leasing fee that you need to pay off.
For expensive systems, these agreements can last up to five years, and even if you close your business, you may be responsible to keep paying off the equipment.
They also can continue charging a recurring lease fee if you don’t cancel the lease agreement, meaning you’ll end up continuing to pay for the equipment you could have paid off long ago.
For this reason, we usually recommend buying the equipment up front.
The exception: For some cloud-based POS systems, with small card readers that just attach to a cell phone, they may offer you a free card reader for signing a deal.
Double check that there’s no lease agreement on the card reader, but in this instance, it’s fine to take a “free” piece of equipment.
POS Software Features and Plans
Always check out key features that your POS software plans will offer.
Good POS software plans will offer customer support to help you quickly if the software isn’t working.
They’ll also provide regular updates to make sure the system is secure and debugged at all times.
For payment plans, we usually recommend a month-to-month software subscription.
This allows you the freedom to change it up if you don’t think the system is a good fit for you.
Companies will often try to get you to take a discount by paying for a long time in advance, but we always recommend trying out any software for a few months before committing.
Some companies charge you to “buy” the software upfront, then ask you to continue to pay fees each month for customer support, updates, etc.
This is usually more expensive.
See if they have a monthly subscription fee, preferably one you can cancel, as this will give you more flexibility.
Setup and Integration Costs
For major POS systems — say, in a large grocery store — the setup and installation of a POS system can be an expensive and laborious process.
For a retail outlet using a tablet POS system, there may not be the need for any setup at all.
Understanding these fees to get started can be helpful in pricing out the best system for you.
Whatever you commit to, make sure you’re trained on a POS system’s functionality.
If you’re transferring from one POS system to a new one, also make sure that the company will help you configure the new hardware and migrate data over.
Payment Processing Costs
Credit card companies charge fees for every transaction, and choosing the right credit card processing company to work with can save a business tons of money over the course of a year.
The best POS systems will give you the choice of processing companies, so you have more control over your processing fees and transaction fees.
For businesses now, we recommend going with systems that can process many different types of transactions, including EMV chip cards and NFC mobile payments like Android Pay and Apple Pay.
5 POS Systems We Recommend
We’ve covered what POS systems are and what they do.
Let’s get to some systems we recommend.
Square is a popular, user-friendly POS system which uses a simple card reader that can be attached as an add-on to an iPad, iPhone, or Android phone.
The system is beloved for its ease of use and simple setup process.
Sign up, create a business profile, and they’ll send you card readers in the mail.
All your employees need to do is download an app, link it to your business profile, and they can start to accept cards and process payments right away.
It also functions as a mobile POS system, letting employees interact with customers across a store and process their payment wherever they are.
Square can work with traditional cash registers and process cash payments as well.
They also sell systems to process mobile payments.
Shopkeep is an iPad-based POS system that promises everything you need for your business, acting as your cash register and back office all at once.
Shopkeep offers inventory management and bookkeeping but also works as an employee time tracking tool, letting employees clock in directly through the system.
They offer personalized onboarding and setup as well as 24/7/365 customer support.
Shopify is a totally online point-of-sale system.
If you only have a digital presence, Shopify will not only allow you to have a functioning, secure POS system online, they’ll also build your entire online store.
Their software keeps track of customer data, lets users build customer profiles, and even helps with social media and email marketing.
If you don’t have a web presence yet, you can streamline the process and build your entire website through Shopify.
Revel is a hybrid system that stores your data in the cloud but also uses a local network to sync up all your data between iPads.
This has a huge benefit for areas with spotty internet service — you can continue to make sales even if your Wi-Fi goes down with.
It comes with 24/7 customer service as well as customer management and employee management tools.
The one downside: Revel insists on a three-year contract with no month-to-month options.
Vend is specifically designed for brick-and-mortar retail stores.
They use iPad systems and stand out for their variety of integrations which let you customize the software based on your business needs.
They also have specialty service options for businesses such as clothing stores, sporting goods stores, or even car washes.
Frequently Asked Questions
We’ve covered POS systems, how they work, and recommendations for systems to use.
Let’s get to some FAQs.
1. Will a POS system be able to process coupons or gift cards?
The good ones should be able to, absolutely.
If you have an existing coupon system or loyalty program in place already, double-check with the company about migrating those existing coupons over and how they can help you with that process.
2. I’m just starting a company. How soon do I actually need a POS system?
If you want to accept payment from customers directly and not just invoice them, you’ll want one right away.
For many businesses, you may just need an e-commerce system like Shopify or even PayPal to accept payments quickly and securely.
If you want to open a retail store, however, your business needs a POS system that can do more.
Good systems will help with inventory management, timecard management, and tracking real-time sales happening in the store or on a website.
3. What if I want to accept cash? Do these online systems allow that?
Almost all of these systems have options to integrate a cash drawer.
(Shopify is totally online, so they don’t.)
Just ask when signing up.
Picking the Right POS System For Your Business
Finding the right POS system is a process that can be overwhelming, but armed with the right information, you can find the perfect solution for your small business.
These solutions will help run your business more smoothly, track inventory smartly, and help your business thrive.