Learn what hardware and software options are available for your business.
Point-of-sale systems offer merchants the tools needed to accept payments, analyze sales and manage their business. But ask about proprietary hardware and monthly software fees.
What's in this guide?
What is a POS system?
A point of sale system allows businesses to accept payments from customers. These systems integrate with a merchant’s payment processor and is used by both brick-and-mortar stores and online sellers.
POS systems typically include both a software and hardware component. Software helps businesses track sales, manage inventory and store customer data. Hardware includes in-store staples such as barcode scanners, cash drawers and card readers.
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Here’s the hardware most businesses need to accept customer payments:
- Monitor and tablet. Display product databases, checkout totals, employee sign-ons and sales reports.
- Barcode scanner. Automate the check-out process with a scanner equipped to pull product information and add it to the checkout total. Some scanners can even adjust stock levels on the fly.
- Credit card reader. Process debit and credit card transactions in seconds. Opt for an EMV-compliant reader to keep your business safe from fraud.
- Receipt printer. Paper or digital receipts provide your customers with a transaction record. Receipt printers can help you customize receipts and track customer orders.
- Cash drawer. A secure place to keep bills, coins and receipts.
Specialized POS hardware
In addition to the POS hardware basics, your business may require some specialized hardware to streamline sales:
- Scale. Grocers and butchers selling products by weight benefit from a POS scale to help price items during the checkout process.
- Kitchen display system. Help coordinate efforts between the front and back of the house by displaying orders, tracking cook times and displaying required meal ingredients.
- Kitchen buzzer. The hustle and bustle of a busy kitchen can make it challenging to communicate. Kitchen buzzers alert kitchen staff to incoming meal tickets.
- Label printer. Aimed for retail stores, the label printer can help you ticket items for sale by name, price and barcode.
POS software is a collection of programs that help you run your business. These programs generate sales reports, help you manage inventory and track customer and employee data. POS software options vary in the programs and features they offer but all are designed to help you track and streamline sales.
Cloud-based vs. in-house POS software
POS software can be cloud-based or installed in-house. In-house systems are installed in person and through an internal network. Alternatively, cloud-based solutions use remote servers and require an Internet connection.
Cloud-based POS software is for online retailers, while in-house installation is for merchants who complete the bulk of their sales in person.
|Best for||Large storefronts||Small online retailers|
|Who maintains software?||Merchant||Software provider|
|How many devices can I use?||Typically one||Any device with an Internet connection|
How much does a POS system cost?
The cost of purchasing and maintaining a POS system depends on the scale of your business needs. According to a 2015 study by Capterra, almost half of the companies surveyed spent less than $1,500 annually on POS software.
While fees vary, here are some POS system costs you can expect to encounter:
- Hardware costs. Merchants can rent hardware like monitors, scanners, scales and printers, but purchasing outright gives you the freedom to switch providers. Card readers like Square Reader and Clover cost between $49 and $69. Third-party providers like Amazon offer competitive prices on monitors and refurbished tablets.
- Software fee. Merchants typically pay a monthly fee for cloud-based POS software. Lightspeed charges between $79 to $259 for its POS system, with the option to add registers for an extra $29 monthly.
- Setup fee. Installation of your in-house POS software, include a licensing fee for the software.
- Transaction fees. Expect between 2.2 % to 2.7% transaction fees to your payment processor for processing credit card transactions.
Will I need a separate payment processor?
You might. If your POS system provider doesn’t offer processing services, you may need to get a separate payment processor. While POS systems offer both hardware and software designed to help you accept payments from customers, the actual payment processing that occurs during a transaction is an additional service — one your POS system provider may not offer.
Some providers bundle payment processing into their POS systems — others don’t. POS providers tend to offer businesses one of three options for payment processing:
- Included and mandatory
- Available as an add-on service, but not mandatory
- Not available
If your POS provider doesn’t offer payment processing, you’ll need to shop third-party processing providers compatible with the POS system you’re interested in.
What features are available?
POS systems come with a variety of features designed to help you manage sales, marketing, inventory and more:
- Customer management. Helps you track customer data, including sales, contact information and purchase history.
- Employee reporting and management. Stay on top of employee sales figures, hours logged and top performers.
- Integration with other services. Having third-party payment processors, accounting software or email marketing may require your POS system to have flexible integration options.
- Inventory management. Tracking your product stock is an integral part of managing inventory enabling you to track inventory levels and customize automatic reorder options.
- Loyalty programs. Some POS systems come with software that enables you to offer gift card options and loyalty programs to return customers.
- Sales reporting. With a sales reporting feature, you can generate analytics based on products sold, employee sales, net profit and more.
How to choose the right POS system
Knowing how to narrow down your POS options helps you make the best call for your business:
- Ease of use. If you’ve never shopped POS systems, choose a provider with comprehensive customer support and an intuitive, easy-to-learn system.
- Free trial. A free trial helps you decide if the system works for your business.
- Integration. If you already have a third-party payment processor or marketing provider, seek a POS system that integrates with your existing services.
- Features. Are you seeking a basic POS solution? Or do you want the marketing bells and whistles of a more robust system? Decide if you want a basic POS solution or if you prefer a more robust system.
- Hardware. Some providers require you to purchase its proprietary hardware, while others accommodate open-source hardware.
- Fees. Watch for setup fees, monthly software fees, processing fees and others.
- Portability. Not all systems need to be stationary — many POS systems are mobile and work anywhere you have an internet connection.
How do I apply for and set up a POS system?
The application and setup differ between providers and depend on the size of your business and the type of system you choose.
For example, if you select a system that requires an app to operate, you can generally apply online and have any hardware shipped to you. Setup instructions are included and you’ll be guided through the process when you download the app.
If you have a large business, need a custom solution or have a complicated setup, someone may assist you with the setup for your business. Find out about the setup process before you apply so you’re comfortable with it for your business. Find out what customer support services are offered in case technical issues arise.
Frequently asked questions
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