It’s often a rewarding feeling for business owners when a customer buys something.
The moment of payment, however, carries high stakes. Is payment so seamless that customers glide through hassle-free? Can they use any form of payment, whether a debit or credit card, smartphone app, or cash? Are you automatically tracking every sale so you can easily calculate changes in inventory, profit, or tax obligations with each sale? If not, it might be time to invest in a point-of-sale system. Here’s an overview of point-of-sale systems, often referred to as POS, and what working with POS companies can do for your business.
What is a POS company?
POS companies are businesses that help other companies manage payment processing, typically in real time. For example, at a grocery store, the point of sale refers to the moment the customer swipes their card at the cash register, points their smartphone at a reader, or—less often these days—hands cash to a sales clerk.
A POS company can provide a retailer with a simple system that functions as electronic cash registers. More complex software solutions, particularly those suited for ecommerce companies, analyze purchase characteristics, inventory, sales data, customer profiles, and more.
3 types of POS systems
POS systems fall into three different categories. Some companies specialize in just one type, while others offer a hybrid of categories. .
- Hardware. Some POS providers specialize in physical hardware such as cash registers, receipt printers, and bar code scanners. For decades, many retail businesses relied exclusively on hardware POS systems, which help process and tally sales.
- Software. Businesses that sell products or services online need software POS systems because there’s no personal contact with the customer. These systems give ecommerce companies the ability to accept orders and receive payments virtually, even if the customer is thousands of miles from the seller’s physical location.
- Integrated. Integrated POS combines the hardware of traditional POS systems with software. For example, a store may want an integrated POS system that will accept payments for both in-person purchases at their brick-and-mortar location and online orders from their webshop.
How to choose the right POS system for your business
When deciding on the best POS system for your company, you should, among other things, anticipate your transaction volume, and know the number of users and their locations and how much you can afford to spend. Then assess the payment plans of the various POS companies.
POS costs depend on the provider’s pricing system. Most POS systems charge a fee for each sale—usually 2% to 3% of the purchase amount. Some companies also charge flat fees of 10¢ or more for each transaction. If your average sale is on the larger side, you will probably get more for your money from POS companies that charge lower percentage fees. If your business has a large volume of small purchases, then flat fees will add up. POS companies also often charge monthly fees.
POS companies offer systems with a wide range of features. Mobile POS systems let businesses such as restaurants or pop-up stores process checkout via smartphone, while cloud-based POS systems are designed for online payments. Some POS software programs are designed for inventory management while others track the sales performance of individual employees. Some are tailored for specific industries, such as dining or ecommerce. Because the tools needed in a POS system differ for every industry, it may be helpful to make a list of what you need, then search for companies that offer the desired features.
5 top POS companies
- Shopify
- Square
- Toast
- Lightspeed
- Clover
Below are some major POS vendors, with overviews of their systems and costs.
1. Shopify
Shopify offers basic POS software at no charge to all of its subscribers, with a more advanced Pro plan that costs $89 a month. Shopify’s basic POS charges merchants 2.7% per in-person credit card transaction with no additional flat fee, making it less costly for businesses with many small transactions. A Shopify card reader is an additional $49.
Shopify POS services are designed to integrate seamlessly with existing Shopify stores, and all plans offer integrated POS services that track in-person and virtual sales. The more advanced Shopify POS system offers the ability to automatically group similar products in a business’s inventory, making it easier to analyze sales trends; unlimited cash registers; and the ability to accommodate as many as 1,000 store locations.
2. Square
Square’s POS software includes features like the ability to track customer appointments and schedule employee shifts. Square retail POS systems primarily cater to food and beverage, apparel, and beauty stores. An app for clients lets shoppers use an iPhone for contactless tap and pay. Square doesn’t charge a monthly fee for its basic POS plan. However, a fee of 10¢ per transaction on top of a 2.6% payment processing fee can make it expensive for businesses with high transaction volumes. Learn more about how Square compares to Shopify POS.
3. Toast
Toast POS is designed specifically for restaurants, coffee shops, and other food and beverage businesses. Its hardware can withstand spills, and its software accommodates menu management and online ordering. The restaurant POS software also notifies servers when diner orders are ready. Toast offers two main payment models: pay as you go and a standard plan that charges upfront. For the pay-as-you-go model, Toast’s restaurant POS systems provide free hardware (though there may be installation costs) and charge restaurant owners 15¢ and 2.99% of the order price. In the standard model, the business pays hardware costs, which start at $799, and 15¢ and 2.49% of the order price.
4. Lightspeed
Lightspeed offers POS systems designed for retail businesses, restaurants, and golf courses. The basic service charges 10¢ per transaction and a 2.6% fee, plus a monthly fee of $69 or $89 per month, depending on whether the buyer pays annually or monthly. More advanced systems cost between $119 and $199 a month, depending on the features. One cash register is included in all plans. Lightspeed is an integrated cloud-based software that works both in-person and online. Business owners using more advanced Lightspeed plans also have access to a built-in reports feature that provides customer data, employee performance data, and sales analysis. Learn more about how Lightspeed compares to Shopify POS.
5. Clover
Clover’s cloud-based POS systems are aimed primarily at retailers, though they also can be configured for restaurants and bars, as well as health care providers. Clover is known for its integration with third-party apps such as Mailchimp (for email campaigns), Docusign (for virtual document signing), and Time Clock (for employee scheduling). Rates start at $14.95, while transaction costs start at 2.3% and 10¢ per sale. Hardware, such as cash registers, touch-screen terminals, and card readers, can be bought through Clover or through its partner financial institutions, such as Citi and Wells Fargo. A mobile card reader costs $49, while a countertop system with a touchscreen costs $1,799. Learn more about how Clover compares to Shopify POS.
POS systems FAQ
How much does a POS system typically cost?
POS software companies usually charge between 2% and 3% of the purchase value of each transaction. Some POS software programs may also charge monthly fees that can range from $20 to $200—and in some cases more. Buying POS hardware without subscribing to a software can add several hundred dollars—depending on the type of device—to POS system costs.
Can I use the same POS system for multiple locations?
Yes. Shopify POS Pro, for example, lets business owners use the same POS system for as many as 1,000 different store locations. Many other POS providers accommodate multiple locations, sometimes at additional cost.
What types of businesses are best suited for POS systems?
Retail stores, restaurants, and ecommerce businesses are all well-suited for POS systems. POS systems are especially helpful for businesses that receive a large number of payments by credit card, either in-person or online.
