The Basics of POS Systems and Finding The Best Solutions
Any enterprise that processes payments needs to invest in POS systems. Point of sale (POS) is a terminal where customers can pay for purchases. POS terminals incorporate different tools to satisfy several roles all at once. Modern-day POS software comes bundled with various components that make them all-in-one solutions. A company’s payment processing requirements determine the most efficient POS setup. In brick and mortar stores, POS systems replaced conventional cash registers. A point of sale system can also be used on an e-commerce platform through a virtual terminal. Besides executing payments, a POS also incorporates sales taxes.
A typical POS system has software and hardware elements. The software contains the frontend and backend of a payment terminal. Point of sale software registers, processes, and records transactions. POS hardware requirements vary across businesses. However, a standard system consists of a cash drawer to store daily cash float, an interface, such as a POS app to register transactions, and a card machine for credit card processing.
Common features of POS systems
POS terminals fulfill a range of roles in different sectors. Although payment processing is the main function of POS, the right system should integrate other features that streamline the customer purchasing journey. POS solutions have come a long way to offer different businesses customizable services. Whether it’s a restaurant, retail store, or boutique cafe, you can get a POS system that aligns with your business requirements. Business owners should familiarise themselves with the various POS features available in different systems if they are to get the most out of their investments. Below are basic elements to consider.
Payment processing
When talking about point of sale systems, payments come to mind. The core function of a POS system is to accept payments. POS installations facilitate payments in different ways. In an online store, a virtual terminal allows customers to pay with credit and debit cards. Some e-commerce businesses can also accept payments through mobile wallets. A physical location requires credit card readers that support multiple cards. Magstripe card readers are the most common alternatives. Alternatively, a point of sale can include a card chip reader or near-field communication (NFC) readers.
Accounting and payroll
Some of the best POS systems incorporate accounting and payroll responsibilities. Most systems support third-party integrations, thereby enabling the use of the preferred accounting software. Whether a point of sale system handles online ordering or physical transactions, it tracks a lot of information. Depending on the features, a POS system can monitor customer data, sales, and inventory. All this information helps with a company’s per month accounting requirements. POS solutions can also be customized to deal with payroll. You can tell the sales performance, employee hours, and staffing levels. This information can then be used to dispense wages.
Inventory management
POS systems streamline inventory management for small businesses that sell products. The POS set up in your business monitors every order that comes in and goes out. At any given time, the system tells you the quantity of goods present. As you sell items, the system updates in real-time. Inventory management tools vary across terminals. For example, a POS system can have a low-stock alert that informs you when to replenish supplies. Automated inventory management eliminates the need to track goods manually, hence saving time and cost per month. Additionally, improved inventory control helps small business owners get a better handle on product lines.
Employee management
The best POS systems help companies improve their relationships with employees. A point of sale terminal has multiple employee logins with different permission levels. These POS features allow the system to track workers as they carry out different duties. So, small businesses and other companies can easily monitor what the staff is up to. A POS system can have commission tracking, time monitoring, and scheduling. Therefore, you can easily evaluate employee and team performance. As mentioned earlier, you can also integrate payroll tools into the POS, thus simplifying staff management further.
Reporting and analytics
A POS system collects copious amounts of data. The minute you install a point of sale POS, it tracks every credit card payment, gift card, sale, and anything else that passes through the terminal. For this reason, SMEs can easily generate reports. A POS system creates reports automatically. You can schedule reporting per month, week, or day. Sales data and reports help business owners to make more informed decisions. They can use reports and analytics to schedule staffing and inventory according to the specific demands of the company. Consistent and customized reports allow you to analyze the financial health of the enterprise.
Customer relationship management (CRM)
The ability to monitor customer activities is one of the best management tools in POS. Businesses, whatever the size or industry, thrive on concrete customer relationships. You can only build brand loyalty if your buyers are willing to spend money and keep coming back. With a POS system, you can boost your chances. Point of sale systems simplifies customer management by providing useful data. You can track what a customer buys, the payment method used, the amount spent, and much more. Using this information, you can personalize a buyer’s experience. For instance, you can suggest products or services during online ordering based on your purchasing history.
POS Systems Costs
Before you start looking for the best POS for a small business, you should anticipate the cost of ownership. Since POS systems are not all the same, prices vary on a broad scale. Small businesses don’t have to spend more than necessary to find a POS solution. However, they might have to settle for the most basic functionalities. Companies can find pricing plans that make it easier to purchase the best POS systems. The cost of a POS system depends on the features. Also, point of sale solutions costs varies across industries. POS system expenses are more than the costs incurred per month. Below is a breakdown of the different expenses associated with the point of sale systems.
POS Software Costs
The biggest price difference in POS systems is in the software elements. Depending on the software, a POS system can perform standard roles, such as card processing and inventory management. The best POS can have advanced software with features like sales analytics and omnichannel support. So, business owners have to decide what they want out of a point of sale terminal. Point of sale software can cost anywhere between $99 and 10,000 per month. Other tools like Square POS offer free software but with transaction fees.
POS Hardware Costs
Cash drawers, receipt printers, and barcode scanners are some of the hardware components in a POS system. The type and size of a company determine the hardware requirements and, consequently, the costs. A small business, for instance, can survive with digital receipts for online ordering and an iPad POS solution. Big retail stores require several barcode scanners, readers for contactless payments, and physical terminals to accept transactions. Costs range from $350 to several thousand dollars.
Setup and Installation Costs
E-commerce businesses might not have a lot of costs when it comes to POS system installation. For example, if you only need an Android POS system for small and medium enterprises, then setup fees don’t apply. A majority of installation expenses are for hardware components. You have to hire technicians to set up cash drawers, freestanding computers, and credit card readers, among other pieces. The number of parts, location, and complexity of the POS system determine costs.
Integration Costs
Small business owners have to plan for integration costs if POS systems have to work with other applications. Depending on the POS system, you can integrate a range of third-party services, including payroll, accounting, and shopping carts. Some POS systems come with in-built integrations. The Shopify POS, for example, offers a shopping cart as well. An all-in-one point of sale solution costs more than one that supports after-market integrations.
Payment Processing Costs
How you process payments dictate the costs per month. Payment processing is the largest expense in a POS system. Most companies now require online ordering functionalities, which means increased costs. A point of sale POS can charge costs per month or per transaction, such as Square (1.75% for card transactions). The more features required, for example, contactless payments, the higher the rates. A POS system can offer in-built processing functions or require a payment processor.
Different types of POS systems
Not all point of sale terminals operates the same. Businesses have widely varying transaction processing needs. Therefore, the right POS system for one merchant might not work for another. The construction of a POS system determines the features it can handle, the peripherals used, and costs. A point of sale terminal can be as simple or as complicated as the user prefers. Learning how different systems work should help you find the most appropriate POS solution for your business. Here are the main types:
Cloud based POS systems
A POS system that is cloud-based provides transactions in person while payments are processed in the cloud. For this reason, the point of sale terminal connects to the cloud via Wi-Fi, allowing it to update data in real-time. Data is stored in a central location that enables remote access. The biggest selling of a based POS option is scalability. A growing business can easily adapt the system to facilitate resource demand. Small businesses can buy cloud-based terminals as Software-as-a-Service (SaaS). Shopify and Revel’s systems are some of the most popular POS options.
Server-based POS systems
A legacy, on-premise or server-based POS terminal is installed in a physical location. Hence, all the data is kept on physical servers. The presence of stationary hardware means that you incur maintenance costs. An on-premise POS terminal has higher upfront expenses than a cloud-based system due to the different components used. Because the servers in a legacy POS system are in a closed network, poor internet connectivity is not an issue. Also, you don’t have to pay for monthly subscriptions. Nonetheless, server maintenance is still necessary.
Hybrid POS systems
Most businesses, including restaurants, hotels, and retail stores, prefer the hybrid point of sale solutions. This type of POS system gives you the best of both works. Part of the system is cloud-based, while the other is on-premises. So, you save space because a hybrid POS system doesn’t require as much space as a legacy setup. Another advantage is that you can still scale the system according to business needs. Hybrid POS systems don’t come with the high cost of internet interruptions since it’s available offline. Restaurant POS terminals are usually hybrid, allowing orders on multiple systems and online ordering as well.
How to choose the right POS system for your business
Business owners have a dizzying selection of POS systems from which to pick. The best POS comes down to individual company requirements. A POS system influences daily operations. Therefore, it must be capable of handling the different roles that you require it to. Start by identifying what you need from POS software. Do you require inventory management? Third-party integration? Customized reports? Consider your budget, as well. The best POS system should be affordable, including any costs incurred per month. Some point of sale systems caters to general payment needs, while others are industry-specific. Below are some comparisons of popular POS systems.
Retail or restaurant POS software
A restaurant POS might not necessarily work for a retail business. With both options, the point of sale setup includes cash drawers, credit card readers, and receipt printers. However, a restaurant POS system requires other tools. For example, if it provides online ordering, the system will need a virtual gateway. Additionally, the POS system will have industry-specific features like a kitchen display system, takeout services, and ingredient tracking. A retail POS terminal offers the basics – credit card processing, inventory management, and customer management. E-commerce is critical for retail point of sale systems. Both solutions can include loyalty programs.
Apple or Android devices
For a small business offering contactless payments, Android and iOS systems are the primary choices. A contactless card reader plugs into an iPhone, iPad, or Android device. Alternatively, providers offer swipe card readers. Both iOS and Android systems have their advantages. Android has the benefit of supporting a multitude of devices. With iOS, the options are either iPhone or iPad. On the other hand, iOS comes with stronger security measures than Android. The final choice ultimately comes down to preference.
Important POS System Features
POS software is more than a payment processor. For that reason, you must ensure that it aligns with business goals. One way to find that is to compare POS systems based on their features. How much you get from a POS system depends on its functionalities. So, decide what matters most in a POS. Some features are standard, while others are specific to certain industries. Below are some of the aspects to consider.
Inventory Management
All POS terminals have inventory management tools. With this feature, a business can monitor stock in real-time. Therefore, you can tell when levels go down and when to restock. A system can also have a purchase order feature, thus minimizing mistakes. Employees also don’t have to count inventory by hand.
Customer Management
The best POS should provide basic customer relationship management capabilities. Using these tools, a business can track crucial customer data. Knowing more about your buyers helps you to improve the purchasing journey. Through CRM, you can identify which audiences to focus certain marketing campaigns on. A POS system can also allow you to communicate with customers.
Loyalty Programs
An effective way to show appreciation to your customers is through loyalty programs. Rewarding buyers when they spend money builds trust and, consequently, customer loyalty. A POS can help you develop a loyalty program that corresponds to customer profiles. Note that you might have to pay more to incorporate a loyalty program.
Employee Management
POS software comes with user permissions. Thus, administrators can restrict the functions to which employees have access. The system makes tracking workers uncomplicated. It can monitor sales commissions, working hours, and tips. With this information, you can evaluate employee performance. Additionally, the system can help find out about staffing requirements.
Reporting
Most POS terminals have reporting capabilities. Given all the information collected across the different features, businesses should be able to leverage it. A POS system has a dashboard where you can retrieve reports and analytics. Others also provide the option to export reports. The type of reports and customization abilities depend on the point of sale software.
Add-ons and Integrations
Some sectors require more than standard POS offerings. If you need to integrate other applications, such as accounting, payroll, and marketing tools, then the POs software you get should accommodate the different products. A small business might also have use for add ons. For example, a food and beverage terminal could include a delivery and takeout service.
Customer Support
Even the most sophisticated POS system can fail. A system malfunction could mean that you can’t process debit or credit cards. Therefore, ensure that the POS you buy offers dependable customer support. Check if a provider has live support during business hours. Also, ask about emergency services. The support staff should be knowledgeable as well.
Buying vs. Leasing POS Hardware
Before deciding whether to get Revel systems or Shopify POS, you have to weigh the choice between buying and leasing. So, what are the plus points of purchasing a POS system outright? For one, it gives you unfettered control of the system. You can customize add ons, third-party apps, and other components as the business require. Also, a small business doesn’t get tied to a contract. The argument for renting is that you don’t have to shoulder large upfront costs. Hence, new enterprises don’t have to overspend. Rentals come with lower liabilities because the supplier is responsible for equipment maintenance.
Conclusion
Every business that processes payments must invest in a point of sale solution. The system carries out various functions that influence overall company operations. Whether you offer credit card payments or accept Apple Pay, POS software ensures that you can manage transactions efficiently. Small business owners also get to capitalize on an array of other functions. Regardless if it’s a cloud-based, server-based, or hybrid terminal depends on the business. Remember to consider your budget as well when searching for the best POS. Cost-effectiveness, reliability, and accuracy are the elements to look for in the best POS systems.