Throughout the history of mankind, businesses have always had a point of sale system.
Since mankind bartered the first sheep for the first cow, there was a point of sale. Though they did not call it that at that time, the point of sale still existed.
But with the innovation created by the technological revolution, the processing of the point of sale has never been easier for a business.
There are many types of POS systems, some more complex than others.
But all have one thing in common, their purpose for existing is to make your business operate and run smoother.
What’s the Point of a Point of Sale (POS) System?
A point of sale system, or POS, is the place where your customer makes a payment for products or services at your store. Simply put, every time a customer makes a purchase at your store, they’re completing a point of sale transaction.
The POS serves as the central component for your business; it’s the hub where everything—like sales, inventory and customer management—merges.
As evident as the benefits of a POS system are, we found that 56 percent of single-store retailers are still not using one. Instead, we found, many are still using a combination of manual methods, cash registers, QuickBooks and Excel for bookkeeping.
So why have retailers not taken that step to POS yet? To begin with, implementing new technology—especially technology that’s central to your business process—can be scary and overwhelming. Retailers need to consider the negative consequences of failing to have a POS in place.
“[Retailers] run the risk of slowing down their operations and missing critical data that could help them grow their business faster. Having key insight about their customers, their inventory level and when they should order more supplies are examples of information a POS provides.”
MARYLISE TAUZIA, PRODUCT MARKETING & EVANGELISM LEAD, SQUARE
Understanding what a POS system is—its software and hardware components, as well as capabilities—will enable you to make an educated buying decision.
Software Components of a POS System
Every POS system comprises of software and hardware components that make running the daily operations of your business easier and faster. It’s important to understand what POS software options there are and what each have to offer.
“Flexibility is key. Ensure your POS vendor works with the payment processor/gateway of your choice, so that you can control cost. If you’re already using applications important to your business, make sure the POS can integrate with them seamlessly, so that you can continue using them.”
Hardware Components of a POS System
These are the common physical components required to get your POS up and running.
Monitor/tablet: Displays the product database and enables other functions, such as employee clock-in and viewing sales reports. Tablets—especially iPads—are popular for replacing bulkier monitors.
Barcode scanner: Automates the checkout process. Scanning barcodes pulls product info and adds it to the checkout total. Barcode scanners can also integrate with inventory management systems to automatically adjust stock levels.
Credit card reader: Since the EMV payment standard went live in 2015, secure and EMV-compliant credit card readers are a must-have. Non-compliant retailers face potentially huge losses on account of fraud liability.
Receipt printer: Email and text receipts may be gaining popularity, but paper receipts remain essential for providing customers with a quick snapshot of their purchase or returns.
Cash drawer: It may fade away in years to come, but cash is still king. Until then, you’ll need a secure place to store cash for transactions. Another benefit of cash: there are no associated credit card fees.
What are Common features of a POS system?
Modern POS systems include a variety of features that help you manage your day-to-day business operations. Features vary by product, but here are some of the most common POS system features:
- Payment processing: This is the hardware and software required to accept customer payments. Your POS system may include terminals, credit card readers, barcode scanners, cash drawers, and online e-commerce platforms.
- Accounting and payroll: Your POS system may include accounting services or integrate with third-party software like QuickBooks. Manage your costs, revenues, invoices, and payroll to keep track of your business and find opportunities to improve profits.
- Inventory management: Many POS systems help you keep track of your product inventory, allowing you to enter specific details about each item you sell and track your product receiving, sales, and shipping.
- Employee management: Employees can clock in, process payments, and enter product and customer information with these features. And you can track staff schedules, productivity, sales activity, and more.
- Reporting and analytics: Gain valuable insights into your business with reporting and analytic features. Dashboards give you a bird’s-eye look at important information, including sales, inventory, and revenue data. Or dive into the details with sales summaries and historical comparisons with more advanced, real-time reporting features.
- Customer relationship management (CRM): CRM features let you store information about customers to understand them better. Manage customer loyalty programs, offer discounts and gift cards, or create promotional campaigns to turn one-time customers into advocates for your business.
When do you need a POS system?
If you want to accept credit and debit card payments and have a streamlined system for tracking sales, it’s probably a good idea to invest in a POS system built for small business. Even very small small businesses benefit from a good POS system.
Unless you have a solid system for recording each sale electronically, it’s hard to have an accurate understanding of what you’re selling. Basically, the more data you have about your business, the better able you are to make informed decisions. Plus, having a small business POS system helps your business appear more legitimate, which is especially important if you’re just starting out.
Important factors to consider when choosing a POS system:
- Initial setup cost (time and money)
- Payment processing costs (e.g., % of sale + charge per transaction)
- Other monthly processing fees (e.g., PCI-compliance fee, chargeback fees)
- Equipment costs/rental fees
- POS software fees
- PCI compliance (i.e., how you process payments, connect your systems, and manage customers’ data securely)
- Level of mobility
- Ability to accept EMV chip cards
- Ability to accept NFC payments like Apple Pay, Google Pay, and contactless cards
- POS software features (e.g., invoices, ability to store customer data safely, inventory management, customer feedback)
Benefits of using a POS system for credit card processing
While you can take card payments using a standard credit card processor, there are a lot of benefits to using a small business point-of-sale (POS) system. For starters, every time you take a payment using a POS, all the data from the sale is tracked and recorded in the system. This is key for inventory management, which a small business POS system helps you keep track of.
For example, Square Point of Sale, our POS system, can send you alerts when you’re running low on an item, so you can reorder in time. Good POS systems for small business also offer comprehensive sales analytics and data. With Square you can see if you tend to sell more croissants or muffins on Mondays, for example — helpful when you’re placing an order with your bakery.
Small business POS systems often offer multilocation management, so you can effectively monitor your business’s different branches. However, it’s worth noting that some POS systems charge extra for each additional location, which can be frustrating if you’re trying to expand. (Square offers multilocation management free). Another perk we offer all our sellers is free chargeback protection for up to $250 each month. That means if a customer disputes a payment, we go to bat for you for all chargebacks and cover the cost even if the bank doesn’t decide the case in your favour.
Best POS system for retail
If you own a retail store, you likely need a small business POS system that offers inventory management and can connect to a barcode scanner and receipt printer. Square Point of Sale, our point of sale for small business, does all this and more.
Best POS system for contractors and home repair
If you run a home and repair business, you need a super-mobile POS system for small business that allows you to easily take secure credit card payments at the job site, even if you’re in a remote location without connectivity. Square’s small business POS system is compatible with Square’s free magstripe reader, which is small enough to fit in your pocket and plugs into the headset jack of your iOS or Android device. You can accept chip cards and contactless payments and protect your business with Square’s contactless and chip reader. iPhone 6/6s users might want to check out the Otterbox uniVERSE Case, which mounts the contactless and chip reader to your phone to take payments on the go. Definitely not something you can do with a traditional credit card terminal.
If you’re in a spot with no Wi-Fi or phone reception, you can still take card payments with Square’s magstripe reader and Offline Mode, so you can get paid wherever your business takes you. Want to bill them instead? Square’s fully integrated Invoices software is free to use and is great for contract work of all kinds. You pay just 2.9% + 30¢ for each invoice paid securely online.
Best POS system for bars and restaurants
Bars and restaurants are unique beasts and require a number of specialized features in their points of sale. When shopping for a good small business POS system, be sure to look for one that makes it easy to change menu items and communicate with the kitchen or bar with item modifiers and printed kitchen tickets. Well-designed POS systems for small business have the ability to split tickets between diners and keep open tickets for customers who want to settle their tab later on.
With any POS system for restaurants and bars, you want to easily reconcile cash sales and keep track of payouts so closing out at the end of the night is a breeze. And don’t forget about built-in tipping to keep your staff happy. Square’s POS system for small business does all this, and it syncs easily with great third-party apps like Fresh KDS. It’s easy to get set up quickly and affordably.
The best POS system is the one that is perfect for you. And today, there so many ways to customize that you really have no excuse not to put one in your business.
But here at DoorHero Systems we like to offer our point of contact (POC) technology that takes the POS system to another level.
Instead of focusing on just on the customers that you have already. Why not learn to engage of every single visitor that comes through your door, and reach way more people than just the people who were already going to buy from you anyway.