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If you’re having trouble remembering what a cash register sounds like – you’re not alone. As more American consumers reach for alternative payment methods, “hearing” a cash register transaction (cha-ching) is slowly becoming a relic of the past.

A 2018 survey revealed that one in four Americans prefer cashless payments. Since then, the pandemic has only accelerated customer gravitation to alternative payment methods. Sleek new digital wallets like Apple Pay continue to grow in popularity amongst younger generations of consumers. By the year 2023, it is estimated that consumers and businesses will make 841 billion noncash transactions globally -  a 46 percent increase from the 577 billion logged in 2018!

These statistics paint a compelling picture for today’s small business owners. Not being open to accepting new forms of payment means your business could be missing out on revenue.  For example, 85% of credit cards issued in the U.S. are EMV chip-enabled but only about 63 percent of merchants are equipped to process this form of payment.  

Modernizing your point-of-sale (POS) system is mission critical for your business. A flexible POS system is vital to running a successful business in today’s increasingly digital world.  A POS system makes it possible to quickly and securely accept nearly any form of payment your customer chooses. Accepting alternative payment methods beyond cash and check opens a world of new opportunities for your business. When business owners introduce speed, ease of use, and convenience to the checkout processes, they’re rewarded with higher sales and happier customers.

But a better buying experience is just the tip of the iceberg. POS systems evolved to help business owners do more than accept a variety of payments. The original POS system, the cash register, has transformed into a variety of digital and mobile tools that operate on cloud-based networks, and are capable of supporting many aspects of your business, like capturing new sales, reporting, accounting, invoicing and keeping tabs on your inventory.  

With so many systems and capabilities, choosing the right POS system can be a daunting task. This detailed list of questions, considerations and guidelines is designed to break down everything you need to know about point-of-sale systems.

Put your business needs first

The best way to select the right POS system is to start by considering your business's unique needs. Here are three questions to get you started.

Question #1: What kind of business do you run?

The nature of your business will ultimately determine what kind of POS system you should select. A brick-and-mortar coffee shop operates differently than a mobile food truck. A construction contractor has different needs than a small clothing boutique.

Traditional, full-service counter-top POS systems are ideally suited for retail stores or service providers such as salons, dry cleaners or fast-casual restaurants. These systems come in a variety of sizes and take up less space than clunky cash registers.

Mobile POS systems are better suited for food trucks, pay-at-the-table restaurants or a farmer’s market booth. This option offers the flexibility to process payments immediately at the point of sale, instead of making customers wait in line.

Question #2: What is the state of your business?

It’s important to consider the state of your business before you choose a POS system. New or first-time business owners should opt for a system that’s simple, easy to use and will add a level of efficiency.

If you’re an established business owner looking to upgrade from an old cash register, you may want to consider a POS system that helps track sales and eliminate discrepancies between cash register reports and matching bank account balances.

Finally, if you’re an experienced POS system user that’s wanting to switch or upgrade to a new solution, make a list about what’s not working with your current system and how a newer system could help fix these issues.

Question #3: What tasks would you like to simplify?

Small business owners are known for doing it all. But playing the roles of finance manager, CEO, director of marketing and human resources often leads to burn out.

Many POS systems offer add-on capabilities that extend beyond accepting payments to automate a variety of critical, (but time consuming) tasks faced by almost every business owner, including:

  • Inventory and employee management. Staying on top of your inventory, creating employee schedules, managing payroll, and handling time-off requests can be incredibly time consuming. Modern POS technologies can help track sales, returns and restocking – and even automate some employee management duties.
  • Accounting. POS systems can provide some extra support when tax season rolls around, by integrating directly with many commonly used accounting systems to automate certain aspects of tax preparation. 
  • Competitive data analysis. Did you know that some POS systems can compare your sales to nearby competitors? These capabilities can produce charts, graphs, heat maps and more to help you understand the health of your business in relation to industry standards.
  • Simplify sales tracking. POS systems are essential to processing credit and debit cards, but they can also analyze sales and give insights into your business. While these capabilities used to be exclusive to larger businesses, modern POS systems make it possible for small business owners to harness their data and use it to grow their business. Ideally, your system should create sales reports, complete with charts and graphs.

Once you’ve outlined your business requirements you’re ready to start shopping around. It’s helpful to identify three or four POS system models and do some comparing and contrasting.  

Six things to consider when comparing POS systems

Is it easy to use?

It goes without saying that your POS system should be user-friendly (you shouldn’t need to have a degree in computer science). The system should be intuitive enough to use that you don’t need to consult your manual on a regular basis.

Is 24/7 support included?

Even the most tech-savvy business owners need access to customer support. If you run into issues or need assistance setting up your system, it’s nice to have 24/7 support available via phone, live chat or email. 

How much hardware will I need?

Some POS system providers sell all-in-one payment processing systems and pre-configured kits. Some providers offer POS systems with a la cart add-ons like printers, cash drawers, readers or stands.

The type and size of your business will determine the types of POS hardware you will need. Smaller retailers may only need a tablet, card reader and cash box. Larger operations will likely require multiple terminals, barcode scanners, receipt printers and more.

Is it secure and compliant?

Payment security is critical for small business owners. Over 40% of cyberattacks target small businesses and 60% of small companies fail within six months of a cyberattack.

Your POS system should use data tokenization and end-to-end encryption to further safeguard your customer’s payment data.  Your system must also be compliant with the Payment Card Industry’s (PCI) data security standards.

Can the software meet my business needs?

A POS system’s software does the bulk of the heavy lifting, so be sure to carefully examine all the capabilities to confirm they meet your business needs.  You may already use a variety of apps on your smartphone to make life easier. POS systems come with apps to help you run your business.  For example, modern systems can automatically pull your supply chain and logistical data to update inventory and order information. Check to see what apps and add-ons each merchant services provider offers.

How much money should I invest?

Cost is an obvious consideration. Cloud-based POS systems tend to have the most flexible pricing through a tiered pricing model.  The number of stores, customers, products, terminals and features determines the level of investment.

It’s also important to consider operational costs, like card processing fees. Card processing fees are comprised of a small percentage of the total sale amount plus a flat, nominal fee. Higher processing fees can be incurred when cards are manually entered (instead of swiped or dipped). It’s best to choose a merchant services provider that allows you to select your credit card processor. Otherwise, your business may be stuck paying higher processing fees to whoever the merchant services provider selects.

Carefully evaluate each merchant services provider’s pricing tiers and card processing fees to see which options deliver the best ROI for your business.

Don’t forget to look beyond the product

You may have considered all the core elements of a POS system, but it’s also important to look beyond the product.  

  • Get reviews from other business owners. After you’ve narrowed down your list of potential systems, find some business owners using the same solutions. It never hurts to ask other business owners to share their experiences. As you collect your references, make sure they’re using the same software version you’re evaluating.
  • Book a demo. Most merchant services providers and POS vendors offer demos or free trials. Take advantage of these offerings so you can test features and get hands-on experience with how the overall system functions. Take notes of what aspects you like, or if you encounter any problems. Share the list with the merchant services provider, to see their approach to addressing your concerns.
  • Do your homework on the merchant services provider, too. When you purchase a POS system, you’re also doing business with the merchant services provider. Don’t forget to spend some time researching what others are saying about the company, its products and level of service. Read through recent positive and negative reviews to identify potential red flags. These two questions can help you choose the right provider:

1.    “Is your company financially stable?” A struggling provider that may not be around next year is a risk to your business.

2.    “What experience do you have serving my industry? Consider whether the company is used to helping businesses like yours. If not, this could be a red flag.

  • Will this system easily scale with your business? Every entrepreneur intends to grow their business, which means you must constantly be thinking ahead. Remember to consider your future business needs – one, five and ten years from now. Your expectations for growth can help determine your long-term POS needs. Can you easily add new features to your system? What is the process to upgrade systems and is there a cost? Will you need to eventually switch POS systems?

The right POS system can enhance your competitive edge

Technology moves fast and the payments landscape continues to rapidly evolve. Having the latest tools helps your business stay competitive. A POS system is one of the most important investments you can make. Be sure to consider all aspects of your business before committing to any single solution.

Once you decide on a POS system, you may want to keep it simple in the beginning. As you become more familiar using your system, start exploring all your system has to offer and look for ways in which you can optimize the platform to improve your business.

Also, remember to ask your employees for feedback. Use their input to improve the overall experience for themselves and your customers.

It’s also important to maintain your relationship with your merchant services provider. Don’t let communication end at the point of purchase. Staying in touch with your provider is the best way to learn about new products, features, and updates designed to maximize your investment and business success. Taking these steps will help ensure you find the right POS for your business.

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