Long gone are the days when POS systems comprised just a cash register and maybe a card reader. Modern POS systems offer more features than you ever thought you needed, from simple payment processing, to handling your employees’ time, to inventory tracking (and emailing vendors when you’re low on stock!).
However, not every business benefits from purchasing all the bells and whistles, and sometimes it’s more trouble than it’s worth. That is why it’s of paramount importance to know what is commonly offered, what's essential and what's not and who will find the most use for each feature.
The importance of choosing a good POS system cannot be overstated if you want your business to thrive: you’ll be able to streamline the checkout process, keep all your transactions and data in one place, level up your customer service without breaking a sweat, among many other perks.
But how to choose? Read on to find out which POS systems are our favorites and for a more general guide on what to look out for.
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Shopify is one of the most popular ecommerce platforms around, so it should come as no surprise that its POS is also the go-to for many users.
The POS app, however, goes hand in hand with Shopify hardware that you can lease out at a markup - but it also works on both iOS and Android devices, making it convenient to use in both online and brick-and-mortar stores.
The POS is incredibly easy to use: sign up for an account (there’s a free 90 day trial which lets you see how Shopify fits in with your needs) and install the app. The features you get will heavily depend on the plan you select, and the differences in price are significant: the Basic Shopify plan ($29/mo) has, well, all the basics you need.
The Basic plan lacks professional reports, included in the Shopify plan ($79/mo), as well as third-party calculated shipping rates that are unique to the Advanced Shopify plan ($299/mo). The different plans also include different volumes of supported locations and staff accounts.
Additionally, the more expensive your plan, the less you’re paying in credit card and other fees. These prices (shown as a percentage, plus an amount in dollars and cents) can be very confusing to calculate, which tends to put some people off as it’s unclear whether the significantly more expensive Advanced plan will save you any money compared to, say, the middle plan.
Square’s biggest advantage is that it’s free. Of course, that’s not exactly a lucrative business model, so they make up for it by charging you a percentage of all payments through their system - more precisely, 2.6% + 10 cents per payment with a Square Terminal.
Whether or not this is a good fit for you will heavily depend on the average payment, as you might find yourself paying significantly more in fees than you would for a monthly payment plan.
The setup process for all Square hardware is easy enough for anyone to get up and running in no time, and you’ll also need to install the Android or iOS app, create an account, and start entering your inventory.
Additionally, all mobile and retail customers get a Square Reader, the most basic hardware, for free. If you want to level it up, you can choose between a Square Terminal, which lets you accept payments and print receipts, and a Square Register, which offers all the features of a fully-integrated POS system.
The low barrier to entry makes Square POS a great choice for businesses that only occasionally process credit card payments.
Compared to our previous examples, ShopKeep might appear pretty pricey, with the most basic plan starting at $69/mo.
However, this POS is not geared towards very small businesses, but rather restaurants, bars and the like.
ShopKeep delivers a quick, responsive hybrid system that can be either cloud-based or locally-installed, depending on customer preference.
Along with the Register, ShopKeep also offers a comprehensive back office that lets you handle your employees and your customers, as well as giving you an overview of your business along with reports.
As for the inventory, not only will you be able to track your items, but you can also set so-called reorder points, where you state the vendor and amount you need to order once an item is running low. It also lets you add separate items, then bundle them up together, like when you’re creating gift baskets.
As we said, pricing starts at $69/mo for the Basic plan and goes up to $199/mo for the Advanced plan, with the Essential plan coming in at $99/mo. Each of these fees is calculated per register equipped by the POS, so the amount tends to add up, especially with transaction fees and monthly minimums. This is why ShopKeep is considered the perfect option for those who can utilize all their features to the maximum (especially those they wouldn’t find elsewhere).
Lightspeed offers POS solutions for restaurant and retail businesses by taking individual needs into account (although you can get pre-made packages as well). The level of personalization that you will get will depend on what you ask from them, but this means you will need a closer cooperation with Lightspeed to make it happen - and it also means the price is calculated on a case by case basis, starting at $59/mo for restaurants and $69/mo for retail businesses.
If you’re an Apple fan, you will like Lightspeed’s approach: the kit is Mac-based and all of the software was designed to run on either iOS or Mac OS, and neither Windows nor Android are currently supported.
The system is professionally integrated, meaning their consultant will come and do the setup for you, as well as give you a basic rundown of everything you’ve purchased.
If you’ve ever purchased anything online, chances are you have a PayPal account. This is one reason its POS system is so convenient: most people already have an account, it integrates well with other PayPal services, and if you’ve used the account with any regularity up until now, using its mobile POS app is quite intuitive.
You will need a PayPal card reader, purchased either through the company or select retailers, as well as the mobile app (available on the App Store and Google Play). You can choose from four different card readers, ranging from $19.99 (takes only swipe cards) to $99.99 (has a keypad for the PIN).
There are no monthly fees, but PayPal will charge you 2.7% (without an added flat fee!) of every swipe, chip, tap, and check-in payment, a 3.5% + $0.15 fee for manually entered payments, a 2.5% currency conversion fee, and a flat $20 for chargebacks (refunds cost the original transaction fee).
Another drawback is the cross-border fee on non-US cards. Plus, users have reported issues with account stability, something that not many other POS providers run into.
Choosing the Right POS hardware
We’ve mentioned that POS now goes way beyond what was offered in its initial few iterations. Nowadays, a POS system has a whole array of options and possibilities, encompassing all things payments, but often also inventory, employee time and even payroll, and customer settings. This means you need to figure out which hardware you need that can support all of these options - or at least the ones you need.
The first choice is between mobile and desktop, since both have their own advantages and drawbacks.
● Desktop. The main issue here is that desktops take up space. This means that you will need to find it a place and actually commit to it, since they’re not easy to move. This, of course, means they are the best option for brick-and-mortar businesses, since many POS providers offer more robust features on desktop, and a scaled down version on mobile.
● Mobile. On the other hand, if you’re the type of business that is constantly on the move, like door to door salesmen, you would benefit from having a mobile system like a tablet with a card reader. They’re also quite useful during busy days in the store to add extra checkout options. If your business is relatively small and/or has less inventory, you might benefit from the overall cheaper mobile version, whereas the desktop would cost you more both upfront and throughout its lifetime.
● Hybrid. There is, of course, no reason to choose if you don’t want to. Many large retailers employ both desktop and mobile POS, especially if they have several locations. If you can find a use for both, why not use the combined approach?
Once this most basic choice has been made, you still need to choose among all the different peripherals on offer. Prices depend on the manufacturer, whether or not they’re included in a monthly plan, and on their level of complexity.
● Credit card reader. This is an absolute must; many people don’t carry around cash, and you don’t want to lose out on a sale just because you don’t accept cards (as is the norm almost everywhere).
Additionally, the magnetic strip is heading towards being phased out of production (as a non-negligible number of swiped transactions turn out to be fraudulent) so that people are making the switch towards EMV chip cards, intended to reduce credit card fraud. Therefore, the card reader must also accept EMV chip payments.
● Other payment options. These include contactless payments, like tap-and-pay, and mobile payments, or near-field communication (NFC) payments. This includes not only smartphones, but also key fobs, wristbands, and tags, among others. NFC payments are considered even more secure than EMV chip transactions, as they are typically encrypted by means of tokenization.
● Cash drawer. Many people still pay in cash, and a secure cash drawer is a must for a brick-and-mortar shop.
● Receipt printers. Old-school receipts aren’t as necessary as they used to be, especially with the advent of texted and emailed receipts. The latter also pollute significantly less than their predecessors. However, some jurisdictions still require printed receipts, so check whether this applies to you before purchasing.
● Barcode scanners. Although they are not essential, especially for small- and medium-sized businesses, they are still pretty useful when you’re looking to streamline the checkout process. You can choose between a stationary scanner, where the item’s barcode needs to be passed over it, or a handheld one that is especially useful when checking out bulky items. Of course, you can also choose both, depending on your needs.
● Tablet stands. While they may seem unimportant compared to the other hardware options we’ve listed, if you’re using a mobile system, there is absolutely no need for it to be constantly held.
Specific features you can choose from
Once you have your hardware selected, you still need to choose between the different approaches, including different payment plans, software integrations, and niche features that may not be supported by all providers.
● Cloud-based vs on-premise systems. The latter option is going out of style quickly, due to the advantages cloud-based systems offer. Cloud-based systems offer you access from anywhere, provided you have an internet connection, and don’t need any extra upkeep from you, meaning you can run your business remotely if necessary. However, you also depend on a good internet connection (although some providers also offer offline mode, but this is certainly not the norm). You should keep in mind, however, that very few customer-facing businesses benefit from the perks of on-premise systems, especially when considering the costs and requirements of setup and upkeep.
● Software-as-a-Service (SaaS) vs Software License. This is the choice between paying a monthly fee for the SaaS version, which goes hand in hand with cloud-based systems, and getting all the updates and improvements as they roll out, versus purchasing a software license that gets you the product as-is, making you the owner of it, but without the continuous support SaaS offers. Plus, many providers require you to renew your license periodically, so any savings you may make even out in the long run.
● Customer support. Many POS system providers will charge you extra for continuous customer support, but if you don’t have a dedicated IT team that can handle at least the most common issues, you may benefit from paying extra for peace of mind. However, ideally, the provider won’t charge you for customer support at all - if possible, look for this option.
● Different software integrations. You may believe you don’t really need any of the following, but if you use them on a regular basis, having them integrated with your POS system can make your life significantly easier down the road. For example, many systems integrate with accounting tools, while a business that wants to expand into an online shop should look into ecommerce integrations as well. Maybe you would even benefit from implementing a loyalty program for your customers to keep them coming back to you - in this way, the POS system with these added features pays off more than you may initially expect.
● Niche features. A restaurant or bakery could benefit from having a system that delivers an alert when stock is low, while some POS systems even let you set the contact info of your vendor and order a new shipment automatically. If your coffee shop, for example, has some relatively common orders, you can also pre-set those so that you don’t have to enter each item manually.
Retail analytics also come in handy if you want to track which items do better than others in order to adjust the pricing accordingly, or even to know which road to take when you’re expanding your business.
Common pitfalls to watch out for
Unfortunately, like everything else, choosing the perfect POS system for your business comes with some relatively common pitfalls - either those that you can walk into owing to inexperience, or those that were put there by design to lure you in and take advantage of you. Both should be evaded, but the latter is the more insidious option of the two. Knowing what these are goes a long way to prevent you from potentially committing some costly mistakes.
● Hidden and/or high fees. Many payment processors will charge you fees on credit card payments, especially if they’re not charging you any monthly fees at all. Most common are the fees that take a percentage of each transaction, plus a flat fee (usually 10 to 40 dollar cents, depending on the provider).
If you’re handling a lot of small transactions, for example selling souvenirs, the added flat fee can cost you more than it’s worth. In that case, look for fees that are only percentages. Yet, those are usually the enemy of a business selling expensive items.
The key here is recognizing them and adapting, based on your situation. Some providers will charge you for customer support, which can be a nasty shock if you were not aware of this beforehand. Last but not least, don’t forget to check whether your local tax is included into the monthly price or not.
● Long contracts. It may seem cheaper than a monthly subscription, but it usually pays off in the long run. Providers offering long contracts usually set their credit card processing fees higher than the industry standard, increase the fees for support and/or some basic features, and charge you extra (by a wide margin) for early termination. In most cases, getting a monthly plan with a SaaS POS provider is the best course of action.
● Owning outright. There are very few benefits to owning your POS outright rather than renting it on a monthly (or even annual) basis unless you’re a 500+ employee factory that does not work with end customers. You risk paying an exorbitant amount of money only for the software developer to discontinue that product or even go out of business, a new law forces you to update your software at an even higher cost, or the POS system just isn’t a good fit for your business (which can be difficult to evaluate before it’s routinely used). All of these are very real dangers that can cost you more than you had anticipated, and the savings you make compared to monthly renting are quickly lost.