Those of us of a certain age who worked in retail or food service may remember the days before modern point of sale (POS) systems. We manually added the cost of items at a cash register -- if we were lucky, the register was a computer with the cost of the items pre-programmed into keys. We ran credit cards with a clumsy, flatbed credit card imprinter that used carbon paper. And credit card (or personal check!) transactions weren't instantaneous, and it might have been two days or more before the card charges hit the bank.
Times have changed, and now the technology to record transactions and make sales may be small enough to fit into the palm of your hand. Here's what you need to know about POS and how to choose the best for your business.
What Is a POS?
Think of a POS system as the convergence point where a customer and a business make a deal. The words "check out" or "register" may be used to refer to the POS, but these are simply stations where the transactions happen. Modern POS vary widely, from hardware for scanning credit cards that connects directly to your smartphone, to complete systems with terminals and cash drawers. Whether simple or complex, today's POS allow merchants to ring up a purchase in seconds, and do it all electronically. Sometimes the term POS may be used interchangeably with the term point of service, as customers may use the same technology to make returns.
Using POS Technology
Think about how often you use a debit or credit card for transactions -- buying gas, paying for your daily latte or groceries, or purchasing that awesome new skirt or a set of golf clubs. With the POS technology, the system's software uses the barcode on the label of the item you bought (or the key code for the particular entrée or drink, in the case of a restaurant) as an inventory regulation system as well as an efficient way to control the transaction. In theory, a company knows how many lattes, sweaters, or golf clubs left the storefront, and if any were returned. In addition, the POS system may speed up transactions -- which is critical in a restaurant or coffee shop, for example, where a long line at the counter leads to grumbling customers. More sophisticated POS software will actually compile data on purchases, customer history (so that big spenders can get premiere treatment), what items are moving well and what items stay stagnant. All of this data can help businesses to maximize profits and eliminate waste. Finally, in a restaurant or bar, a party of 10 will almost always ask to split the check. With the right POS, simple division from one ticket into 10 is easy and quick.
Mobile POS systems are also making waves as small businesses, parent-teacher associations and other groups who need episodic access to a POS system reap the benefit of an instant point of sale that doesn't require the buyer to log on to his/her bank site or PayPal account. The hardware is smaller than a silver dollar and can fit into a tablet or smartphone. The software provides nimble response times for a nominal fee per transaction -- often the seller will pass that along to the buyer. The Square Reader is the best known of these mobile POS devices, probably because it was the first product (launched in 2009), and the technology has continued to improve, but there are other mobile products, including PayPalHere, which interfaces with its big brother PayPal.
If you're implementing a POS for your business, what important features do you need? That actually depends on your business, the number of employees, the amount of transactions, and the data you want to capture. If you're looking for a simple way to allow a few (or a few dozen) people to pay for a handful of items, a mobile POS attached to a phone, laptop, or iPad you already have may be enough. Do you want your POS based in your business on your existing hardware, or are you comfortable using the Cloud? If your company has the luxury of internal technical support, purchasing software for an on-premises system might be the way to go. If you're comfortable with the Cloud and you have a robust internet provider, the software as a service (SaaS) POS may provide additional flexibility and require less on-deck staff to maintain.
Consider both the current and future needs of your business when assessing these features. Although many companies are going to credit card-only models, you may want to invest in a system that allows cash transactions. Are your employees behind a station (a bar, a coffee shop, registers) or are they moving around? You'll need to consider mobile versus stationary POS options depending on the need you have now -- and the needs you may have in the future. Many Nordstrom Rack stores combine static register POS terminals with mobile POS systems to allow employees to reduce lines at their traditional register stations -- one or two employees can clear half a dozen shoppers from a line in relatively little time. Some Red Robin Gourmet Burger restaurant locations have POS terminals at tables, so diners can both add items to their dinner and check out at their leisure -- all without hailing a server.
A system with layers of security is critical no matter how many transactions you're conducting. You'll need one that accepts cards with electronic chips (called EMV) -- these cards are meant to provide additional security to the cardholder, because the transaction avoids the easily-copied magnetic strip data in favor of a chip, which creates an individual transaction record that can't be copied.
Do you want the data? You'll want to assess what (if any) data you'd like to collect. Do you want a system that helps track inventory and sales threads? One that stores purchase data and allows you to interface with customers (perhaps sending out information about sales)? How about the ability for employees to time in and time out? Those are all available features in POS systems.
Editor's Note: Looking for POS Systems for your company? If you would like information to help you choose the one that's right for you, use the questionnaire below to have our partner, BuyerZone, provide you with information for free:
Costs: Hardware and Software
Figuring the cost for a POS system can be tricky because most service websites want to collect your data before giving you a quote. Essentially, though, the cost of a POS can be broken out into the expense of hardware and software, and the cost of processing payments.
On the least expensive end, you can find very basic mobile POS services that provide free hardware and software, allowing you to swipe credit cards using your smartphone or tablet, with all transactions taking place in the cloud. The service charges you a payment processing fee and that's that.
On the high end, if you're investing in hardware and software to be used with multiple terminals, you'll need to consider the cost of licensing the product per terminal (upwards of $800-$1200 for a non-Cloud system), the cost of each terminal's credit card software (perhaps another $300-$500 each), and, if you don't have the terminals already, between $2,000-$3,000 per terminal.
Businesses can mitigate the cost of hardware by renting them monthly or buying refurbished terminals. You'll also want to factor in the cost of training depending on the complexity of the software and the savviness of your users. There may be costs for additional registers or equipment. In order to get the best rates, the buyer may be locked into a multi-year deal, so be aware of what you're getting. If the company doesn't have its own payment processor, you're on the hook for finding a processor compatible with the system. Finally, upgrading the system will cost you, too -- experts estimate a mid-sized to large company could spend between 15-20% yearly in maintenance and support fees.
Mobile POS systems are Cloud-based and substantially cheaper (but may be leaner in terms of extras). You may pay a small fee for the limited amount of hardware (somewhere between $30 and $50 when we researched bids). You may be able to get the hardware at no charge or with a service contract (similar to getting the newest, upgraded phone free with a contract). There may be monthly fees (generally under $100). You will be charged per card swipe.
Software as a service (SaaS) essentially allows business owners to access add-on products to existing computers over a robust internet connection, and are an economical alternative to hardware purchases. Chances are you'll pay an annual fee or a monthly subscription, but that's likely to be far cheaper than the options presented above. A point of caution: If you have a business that sells one (or only a few) things, SaaS will work well for you. If you offer many different products or services, you may not find the flexibility you need with SaaS. Like any Cloud-based product, the data your company generates is stored off-site, so security is a primary concern.
For review purposes, we've assessed the plethora of POS systems available, taking into account pricing, mobility options, customer service, consumer and expert ratings, ease of use, and the company's standing with accredited reviewing entities. We also kept the following musts in mind:
Reliability -- Will your POS system, work all the time? If you've chosen a Cloud-based system, will the POS product work if the internet is unavailable or unstable?
Affordability -- What are the up-front, monthly, and per-use costs, and are these sustainable? Are you locked in to purchasing more hardware or software options?
Flexibility -- At this point, many POS transactions are card-based, not cash-based. Finding the company that charges the least for credit card transactions is key, but you may also need a system that can accept cash or be willing to take your business cashless.
Training -- Is the system easy enough for your entire staff to use? Is there adequate training available?
Speed and mobility -- In a high-turnover arena (like a busy restaurant), does the system allow your staff to take a hand-held device around your business, or are your staff chained to a few larger machines?
Security -- Where is your data stored? Who has access? And more importantly, are the card transactions secure?
If reviewing POS systems head-to-head feels overwhelming, it might make sense for you to work with companies like POSUSA or BuyerZone -- they can do a lot of the legwork for you. If not, here are our picks for some of the best POS systems available today.
Best Point of Sale (POS) System for Small Business, Overall Winner: Square
Square is the overall winner here because the system, which was founded almost a decade ago, provides a generous package of features without monthly or start-up fees for its most basic service. Additionally, payment processing is included in the package. As soon as you receive your card reader you'll be ready to go with just a few minutes setup.
Square POS is among the easiest of the systems to set up, and it's compatible with both the Apple and Android worlds if you're using a phone for your card reader. If your business is lean and mean, or if you're episodically using the POS, you'll only pay the processing fee of 2.75% per charge for credit cards (the fee is slightly higher for cash payments). If you need an actual register station, choose from the Square Stand for card transactions ($169) or the more permanent Square Register, which costs $999 to purchase outright ( there's also a monthly lease-to-buy option).
The drag-and-drop modality on the Stand or the Register will be familiar to anyone who currently uses a computer, so training with the product is fairly simple. Square offers a relatively rich array of analytics, and the Cloud-based system also allows transactions to occur offline so there's never an outage where your POS is concerned.
For a $29 per month subscription and a per-employee rate with Square Payroll, you can pay employees and contractors, handle federal tax forms, track overtime, file payroll deductions, and directly deposit both employees' and contractors' paychecks.
See our Square POS System Review
Best Point of Sale (POS) System for Restaurants: Toast
Toast was purpose-built for the restaurant industry. With Toast, you're buying a basic package starting at $79 per terminal, with some discounts added for volume users. Toast's hard-wired terminals mean you won't have to worry about Wi-Fi, and they're guaranteed to work even if your internet connection goes down.
The proprietary hardware is Android-based and includes both a standing terminal and hand-held Toast Go POS terminals (for an additional fee), which allow servers to input orders directly from the table. That feature is a key for busy restaurants: Toast Go also means servers can run customer credit cards right at the table and have the receipt emailed to them.
Toast's software can help businesses with data collection at a macro level -- what entrées and items are flying out of the saucepans, and which items are still sitting in the walk-in. On a micro level, restaurateurs can track customers' individual orders over time and direct-market sales and specials to them.
See our Toast Review
Best Point of Sale System (POS) for Retail Businesses: Shopkeep
Shopkeep is our pick because when compared with the competition, the product is a little easier to use, costs a little less, comes with robust 24/7 customer service, and is appropriate for small to mid-sized retailers. Shopkeep uses a pricing-by-quote system, so you'll have to spend time with a representative on the phone to get the data you want. When we called for pricing for a combo online/in-store retail shop, the price given was $69 per month with a 1 year contract for software for one iPad, which included a basic back-office package. For $99 per month (also a year-long contract), a retailer gets a more robust back-office package that tracks sizes, additional options for gift cards, automatic triggers for when a product is running low, and most of the features that you'd need to run a business from both a storefront and online.
Shopkeep also sells hardware products; it's not necessary to buy their hardware as Shopkeep's software will run from your newer generation iPad. However, if you are a start-up, or you have older machines that aren't compliant with the electronic chip (EMV) debit or credit cards, the package might be worth the investment.
As with any hybrid POS (part software, part Cloud) that relies on a consistent and robust data stream, if your business has problems with connectivity, you may have issues. However, Shopkeep's software will continue to work if your connection is lost and will back up when connectivity is re-established.
See our Shopkeep Review
Best Point of Sale (POS) System for iPads: SalesVu
SalesVu does a lot for the money -- and in some cases, very little money. Start by creating your free account. If you only need a POS product with a few features (software, a check-in function, purchase invoicing, a waitlist feature and gift cards, for example), the product is completely free. If you need reporting, accounting, and remote access, there's SalesVu Cloud Basic, for a monthly fee of $79 per location. Need to add inventory management and a web and Facebook store? Want to track customer purchasing and direct mail campaigns targeted to particular groups of customers? SalesVu Cloud Advanced at $150 per location per month gets you where you need to go.
If you're unsure about committing, try the Cloud Basic or Cloud Advanced free for 15 days. SalesVu doesn't force your company into an extended contract. The company's transparency in pricing is pretty refreshing especially when you consider that other providers aren't always as upfront about costs.
See our SalesVu Review
Best Point of Sale (POS) System for eCommerce/Online Retailers: Shopify
Shopify's Cloud-based system works well for small- to mid-size businesses, although the company offers Shopify Plus for customers doing over $1 million in annual sales. On the company's website, Shopify touts that this is the product that works for you whether you "sell online, on social media, in a store, or out of the trunk of your car," and that seems pretty accurate.
There are multiple levels of service: Shopify Lite at $9 a month works if you only want to sell your goods on social media or an existing website. You'll get a quality display that includes the highly-desirable "buy" buttons on social media, the ability to create custom orders and invoices, along with the same 24/7 service offered with more expensive packages.
If you want Shopify to build your e-commerce platform from the ground up, choose from three options, starting with the Basic package at $29 per month to Advanced Shopify from $299 per month. Your per-transaction fees are waived if you use Shopify's payment gateway -- Shopify's per-transaction charge is a fairly modest 2% for Basic, down to 0.5% for Advanced. Need a mobile POS for your brick-and-mortar store or hardware to accept cash and credit cards and print receipts? Upgrade to Shopify Retail for an additional $49 per month for the Basic through Advanced plans. And you can try the product free for two weeks without providing your credit card number.
See our Shopify Review