On its own, a credit card terminal is transactional. Connecting a POS system gives you visibility into revenue, inventory, and performance. You can monitor sales from a POS app on your phone while employees use customer data to personalize checkouts.
See examples of terminal and mobile POS software, and learn which components are needed for a simple setup. We’ll cover costs, security basics, and benefits.
POS system: Definition and technologies
A POS system is the software and hardware that small businesses use at checkout. It processes payments, captures sales data, and syncs inventory in real time.
POS systems replace traditional cash registers for faster, more convenient transactions, in person and online. Third-party or integrated payment processors support card and contactless methods using Europay, Mastercard, Visa (EMV) and near-field communication (NFC) technology.
Most modern POS systems are cloud-based, meaning the software runs on remote servers rather than local hardware. They update software automatically and allow owners to access dashboards from any internet-connected device.
POS hardware and setup checklist
Providers offer terminal and mobile POS solutions that are customizable to business size and industry needs. Download a POS app to a smartphone or tablet for a simple setup or select a countertop terminal, display, and accessories to replace your cash register.
Cloud POS software can be fixed or mobile. A fixed solution sits on your counter, whereas a mobile POS (mPOS) is an app on a smartphone or tablet.
Core POS hardware components for in-person sales include:
- A terminal and display: Browser or app-based POS systems run on an iPad, Android tablet, or desktop computer. Alternatively, some providers offer all-in-one countertop or handheld POS terminals with touchscreen displays.
- A credit card reader: Payment devices can be portable or hardwired. Lightweight card readers connect to tablets and cell phones, while EMV terminals sit on counters. Most accept debit and credit cards, as well as digital wallets like Apple Pay.
- A receipt printer: Most printers are direct thermal for customer receipts. This style prints fast, doesn’t need ink, and uses heat-sensitive paper.
- A cash drawer: This hardware sits near the countertop terminal and must be compatible with the printer. In a transaction, the printer triggers the cash drawer to open.
- A barcode scanner: Countertop or hand-held versions read labels, coupons, and loyalty cards. These typically connect to terminals and mobile apps. You can use them to count inventory too.
- Networking: A small business POS setup runs primarily over Wi-Fi. The network must be private and separate from guest services. Accessories pair via Bluetooth, except for the cash drawer, which connects via a cable to the printer. You may use Ethernet for receipt printers.
Beyond the base setup, you can add point-of-sale hardware in kitchens and self-service counters. The terminals can double as time clocks, allowing employees to clock in and out.
Why small businesses need POS software
A POS system supports your customers' preferred payment methods, speeds up checkout procedures, and is efficient. With cloud POS solutions, you can step away from work but keep tabs on operations.
Advantages of POS systems include:
- Accurate inventory tracking and management: Use built-in inventory management tools to save time and optimize stock levels.
- Better sales and performance reporting: Turn historical and real-time data into insights to craft timely promotions and predict staffing needs.
- Fewer data errors: Keep financial records and customer information up to date with accounting, payroll, and customer relationship management (CRM) integrations.
- Scalable sales channels: Add new locations, sell on social media, or offer delivery from a central POS system.
- Enhances customer experience: Personalize in-store greetings and digital messaging using built-in loyalty and marketing tools.
Your POS system is a powerful tool with many features and available add-ons. It can help increase profits, reduce waste, and improve customer experiences. But you and your team must understand how to use it effectively.
Top POS vendors by business type
The best way to pick a small business POS system is to choose one that's purpose-built for your industry. Features and tools reflect how employees do everyday tasks, helping them work faster. Owners spend less time creating workarounds and can get reports specific to their operations.
Retail POS software systems
A POS for a retail store prioritizes inventory tracking and sales analytics. Some include customer management features and loyalty programs. For agile teams, a mobile retail POS app lets staff answer questions on the floor using real-time data. Consider:
- Lightspeed: iMac and iPad apps with online and in-store loyalty programs.
- Shopify: An online store with marketing automation and iPhone Tap to Pay or card reader.
- Square: A free POS for retail with iPad apps and in-store and online tools.
POS for restaurants
POS software designed for restaurants lets you create a floor plan that matches your on-site layout, reducing confusion for servers and hosts. Inventory systems track costs per recipe and alert employees when an entree is running low. Tableside order and payment terminals are another plus in a restaurant POS. Explore:
- Toast: Quick, full, or fast-casual systems with Toast hardware and timekeeping.
- TouchBistro: Hardware with over 50 restaurant-centric reports and menu management.
- Cake: Quick and full-service systems with Cake hardware and waitlists.
POS for service providers
POS tools for service-based businesses support on-premises and online appointments. Scheduling features ensure no double bookings, and you can customize your service and product offerings. Like restaurant POS systems, service software allows tipping. Examine:
- Clover: Clover hardware with bookings, shift management, and a services catalog.
- Vibe Retail POS: Runs on any device for bookings, staff schedules, and SMS reminders.
POS system security and compliance basics
Customer data and payment details reside in POS systems, which is why it’s crucial to secure your network and tools. Modern platforms with payment processing meet the Payment Card Industry Data Security Standard (PCI DSS) and offer EMV and NFC-enabled card readers.
Automatic software and patch updates also help reduce vulnerabilities. But the best POS systems for small businesses provide internal fraud-fighting features.
Keep these POS security tips in mind:
- Use a private Wi-Fi network. A stable internet connection and a private Wi-Fi network are essential for security and compliance. Check your setup and, if necessary, create a separate network from your public guest network.
- Set up role-based user permissions. Give every employee a login and set the permission level for their role. Review the settings to limit access to discount, void, or refund tools.
- Enable exception reporting. This feature records activities that fall outside the norm. Commonly tracked actions include no sales (cash drawer opens), discounts, and voids. Some also pick up on patterns in employee behavior.
Types of POS systems for small businesses
Modern POS platforms evolved significantly from the old-school cash registers of years ago. Today, most small businesses use an internet-based POS system. These have mostly replaced on-premises models.
Mobile, tablet, and cloud-based POS systems streamline user training, have minimal startup costs, and scale seamlessly.
Let’s see how these POS systems compare:
- Mobile POS apps: With this type of POS, personal or business smartphones transform into a complete POS system. Android and iOS apps provide POS and payment functionality, enabling inventory and sales tracking, along with payment acceptance anywhere.
- Tablet POS solutions: Like mobile options, tablet-based platforms use existing hardware with iOS or Android apps. You can build a POS station by adding tablet stands and cash drawers or attaching a wireless card reader for tableside payments.
- Cloud-based POS systems: This broad category includes mobile app and browser-based POS software for computers or tablets and dedicated POS hardware. Restaurant and retail POS systems offer all-in-one terminals, while professional service devices are field-tested for durability.
- On-premises or traditional POS: Legacy systems are rare among small businesses. The software resides on hardware components but isn’t online. This approach offers more data control but means you can’t run your company from a smartphone.
POS system pricing
POS software ranges from free to over $200 monthly. Starter plans are generally limited to one store or channel (in person or online), with few industry-specific tools. Mid plans are where it’s at feature-wise, but these packages typically cost just under $100 monthly.
Many POS providers include payment processing with the service. Credit card fees are similar to those in other flat-rate models. Some vendors reduce the per-transaction fee slightly if you subscribe to a higher-tier plan.
Businesses can buy POS hardware for a one-time fee, use existing hardware (like an iPad or mobile phone), or lease equipment. POS hardware bundles for fixed placement can cost over $2,000, while a credit card reader is under $200. You can rent or lease hardware from some vendors. Other providers offer installment or payment plans so you can pay over time.
How to choose a POS platform
Consider where you ring up customers (online, in store, or in the field). Then decide what type of hardware you need and how much you can spend.
Other considerations include the following:
- Sales channels: Where does your POS need to work? Options may include your website, online store, physical business, mobile phone, social media, and marketplaces.
- Integrations: What platforms should your POS connect to? These may include your accounting, inventory, e-commerce, invoicing, business phone system, and CRM programs.
- Hardware: Do you want a fixed, mobile, or combo system? Some POS vendors supply POS terminals, whereas others let you use iPads or tablets.
- Features: What tools do your team and customers need? Create a must-have POS feature list to use while comparing products.
POS best practices for efficiency
Your POS system is a powerful tool with many features and available add-ons. It can help increase profits, reduce waste, and improve customer experiences. But you and your team must understand how to use it effectively.
Put your POS to work by doing the following:
- Use your POS for multiple processes when it makes financial sense. POS systems can handle customer, inventory, loyalty, delivery, and gift card data, so staff can enter or look up information on a single platform.
- Integrate your POS software with business tools. Synchronize your POS with accounting, invoicing, and CRM software to reduce manual data entry and generate more robust analytics.
- Work with vendor representatives to learn the software. Take advantage of free training or customer support to learn about reporting options, user interface customization, and more to get the most out of your POS software.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
