A recent survey by Retail Consulting Partners found that 41% of retailers plan on upgrading or replacing their current point-of-sale (POS) system. Doing so could be money well-spent for small business owners. A POS system not only improves the customer experience, but it also provides business owners with data and workflows that can improve their efficiency. Additionally, the best POS systems will integrate seamlessly between brick-and-mortar stores and online platforms. They will also work with the payment processor of your choice.This article will serve as a complete guide to POS systems for small business owners, including what they are, what they’re used for, the pros and cons, and more.
What Are Point-of-Sale Systems?
A point of sale is anywhere a customer makes a purchase, such as an in-person checkout or online. A point-of-sale system is the software and hardware that makes the transaction possible. And it’s more than just a cash register. Depending on the point-of-sale software you use, the functionality may even go beyond the transaction itself — helping you manage other aspects of your business, like inventory and customer details.
What Are POS Systems Used For?
POS systems are advantageous for all business owners, no matter what type of industry they're in. Not only do point-of-sale solutions allow you to process payments, but they might also allow you to:
Analyze sales trends
Streamline inventory management so that there is never too much or too little stock
Track sales from both e-commerce and brick-and-mortar stores
Better understand customers' shopping habits
POS solutions may even be customizable, allowing business owners to fine-tune the software to meet their needs. Imagine you operate in the restaurant industry. After years of running your restaurant, you’re looking to expand and add a food truck so that you can sell your food from anywhere.With a restaurant POS system, you could monitor your sales and inventory for both the restaurant and the food truck. Having that information would help you notice sales trends and plan your ingredient ordering for both locations.A restaurant POS system could also allow for online ordering. Customers could checkout online, and the restaurant would receive notice of the pick-up or delivery order. The customer could even pay with a gift card or sign up for a loyalty program that's built into the POS software.In summary, POS systems can include a variety of functions that allow owners to better handle their business needs.
What Are the Components of a POS System?
The components of your POS system will depend on what your business needs and how you accept payments.For starters, you may pick point-of-sale software based on the type of business you have. A restaurant, a doctor’s office, and a retail store may each benefit from software built for the needs of their specific business.The POS hardware you need will also vary. For example, a retail business may need a barcode scanner, while a food truck will need to accept mobile payments on an Apple or Android smartphone or tablet.Common hardware includes:
A credit card reader
A receipt printer
A cash drawer
A device to run the POS software (such as a computer or iPad)
How Much Do Point-of-Sale Systems Cost?
The cost of POS systems can vary drastically. Some POS software can cost as much as $300 per month. And this doesn’t include the cost of hardware. But one of the costs you can usually count on, if you accept credit card payments, are processing fees. Credit card processing fees typically cost around 3.5% of the transaction. This may not seem like much, but these fees can add up over time, impacting your bottom line. Let's say, for example, that you run a retail store and sell a pair of jeans for $50. The cost of the jeans is $35, and it costs you $10 per pair to cover your overhead costs. This means that you're expecting to make $5 per pair of jeans sold. However, if a customer pays with a credit card, you pay a transaction fee of 3.5%, or $1.75, meaning your $5 profit drops to $3.25.
The Pros and Cons of POS Systems
Implementing a POS system can offer benefits that cash-only alternatives don't, though there is a drawback worth considering.
The benefits of POS systems far outweigh the drawbacks.
Eliminate Manual Accounting
If you have a cash-only system, you need to count everything by hand. You need to issue paper receipts and count the drawer at the end of the day. Additionally, you need to count inventory by hand. This can make for a lot of tedious and unnecessary back-office work.
Accept Payments Anywhere
No longer are customers limited to having to come to your store to complete transactions. Expanding out into online stores and mobile marketplaces allows you to build your customer base.
Improve the Checkout Experience
The more payment options a customer has when checking out, the more likely you are to complete a sale. More and more customers are carrying debit cards and credit cards instead of cash. You don't want to turn a customer away because they don't have any cash on hand. And with the latest contactless payment technology, customers can move through the checkout process even quicker. A transaction can be completed in a matter of seconds without a customer having to even swipe a card.
Boost Customer Relationship Management (CRM)
Business owners are constantly looking for ways to connect with their customers. A POS system allows for improved CRM by providing data about customer transactions. What is a customer most likely to buy and when? Having this information allows business owners to provide everything from targeted customer support to targeted social media and email marketing. This, in turn, improves the likelihood of recurring sales.
The only primary drawback to a POS system is that it relies on software. If there is a bug in the software or you are offline, you may have trouble completing transactions. However, even in these rare circumstances, you can still use the cash drawer to complete a sale. The benefits of POS systems far outweigh the drawbacks.
Can POS Systems Integrate With Payment Processors?
The best POS systems will let you use the payment processor of your choice. That way you can use the POS software you need to manage certain aspects of your business but still choose the credit card processor that’s right for you.For instance, if you use Nadapayments for your payment processing, it will integrate with any POS system and make it possible for you to implement a surcharge program. Remember the example from earlier where the retailer was losing $1.75 on each pair of jeans sold? That won’t happen with Nadapayments’ surcharge program. If a customer chooses to pay with a credit card, they’ll be responsible for covering the 3.5% processing fee. The customer can avoid the fee by paying with cash or a debit card instead.In addition to saving you money on transaction fees, Nadapayments offers a unified payment experience that allows you to accept payments:
In-person with a Wi-Fi-enabled EMV Quick Chip machine
Online or over the phone with a virtual terminal
On-the-go with a mobile app
Nadapayments requires nothing more than a flat monthly fee of $35. This includes the equipment and software required to accept payments, signage for the surcharge program, and integration into your POS system.
Use a Point-of-Sale System In Your Business Today
If you're looking to bring your business to the next level, you’ll want to have a POS system in place. A POS system goes beyond the cash register and allows you to run sales reports, track inventory, and manage customer data.Once you’ve picked the right POS system, you’ll need to have a payment processor, like Nadapayments, that offers a unified payment experience and saves you money. Get started with Nadapayments today.