What is a point-of-sale system and how to choose one for your small business

The point of sale (POS) is where your customers pay for goods or services, but today’s POS systems are far more than just a modern cash register. Nowadays a POS system includes hardware, software and support that allows it to function as a central data hub. “It has the potential to be the lifeblood of your small business,” says Wally Mlynarski, senior vice president and head of Merchant Solutions with Bank of America.

Over the last few years, consumer payment preferences have shifted from a reliance on cash and in-person cards to various forms of digital and contactless payments, according to data compiled by Bank of America, with that trend only expected to grow. It’s important for business owners to adapt to these changing consumer preferences, says Jonathan Sepulveda, senior vice president and small business product executive for Merchant Solutions with Bank of America. “Shoppers expect the businesses they frequent to accept the payment type they want to use.” That makes it all the more important to choose the right merchant services provider — one who can facilitate and streamline payment acceptance — and a POS system that offers flexibility and security.

But given the wide range of capabilities, features and costs, choosing the right POS system can be a bit tricky. To help you determine what’s best for your business, consider the following questions.

Where and how will your customers pay?

If you do any kind of in-person sales, you’ll need at least one device that can accept payments.

Here are some options:

POS terminals

These devices primarily accept card payments. While some terminals are designed to sit on countertops, there are an increasing number of portable solutions available as well — including tablets and other small handheld devices. While you can generally connect POS terminals to a printer, customers increasingly prefer (and expect) to be able to sign a screen and have an electronic receipt emailed or texted to them. Given the increasing shift toward digital and contactless payments, look for POS terminals that are set up to take a variety of payment options, including contactless cards and digital wallets.

Smart POS system

Besides accepting payments, these all-in-one devices can run software that integrates with your other business systems. Many smart POS devices have built-in screen displays and printers. Some may also include barcode scanners and cash drawers. Depending on the type of business you own, you may also need accessories that integrate with other POS devices, such as weight scales, kitchen printers or handheld scanners.

Self-service kiosks

These have become increasingly popular as an option for customers to purchase their own tickets, order food or check in at doctors’ offices.

What additional capabilities do you want?

Finding the right POS solution for your business means matching the right hardware to the right software. Consider what features your business might benefit from — a solution that can track employee timecards and schedules? One that can manage inventory? The ability to collect detailed customer data? Every business is different. A food truck, which might need to simply process payments, will have vastly different needs than an upscale restaurant chain that may benefit from a cloud-based POS system that can “talk” to each location, allowing centralized inventory management, explains Mlynarski. And don’t forget about scale: “Think about the information you’ll need to keep your business operating as you grow,” he says.

Read more: How can my business accept online payments?

Do you want an industry-specific system?

Some POS solutions are tailored to the needs of certain businesses. Retailers, for example, can opt for software that allows for easy re-pricing in the event of sales and promotions and, if they have more than one location, a stock transferring feature. “A customer might buy a product online and pick it up in a physical store or buy something in one store and return it to another,” says Sepulveda. “From the customers’ perspective, that process should be seamless.”

Read more: Retail point of sale system

Full-service restaurants, on the other hand, may benefit from a system that allows for dynamic table management, online ordering and menus that change on a regular basis — while quick-service restaurant owners may need features such as self-order kiosks and kitchen operations management.

Read more: Restaurant point of sale system

Are the devices secure?

Small business owners must be vigilant about protecting customer data — and for good reason. In the last three years, the percentage of companies with fewer than 10 employees that have experienced a cyber attack has increased from 23% to 36%, according to business insurer Hiscox. The median cost of attacks on all businesses was a little over $16,000 per incident.¹ Preventing data breaches is also crucial for maintaining customer trust, says Mlynarski. “Customers are more concerned than ever about the security of their credit card data, and they want to know their transactions are safe from cyber criminals,” he says.

Any POS device you select should be compliant with PCI standards — meaning that it adheres to the industrywide standards for security set by the Payment Card Industry (PCI) Security Standards Council. In addition, make sure your card readers can accept chip cards, which submit payment data in an encrypted format and are far more secure than the old magnetic swipe cards.

Is the system easy to use?

From the moment you turn it on, your POS solution should be simple to understand and set up and have a clear, intuitive user interface that makes it easy to train employees to use the system. Everything from accepting payments to pulling sales reports should be straightforward and seamless.

How much does it cost?

The cost of your POS solution will depend on many factors, including the size of your business, sales volume and the type of software you need. Typically, you’ll pay a one-time purchase fee for all your POS hardware and accessories, plus a monthly fee for software — though some solutions, especially ones for smaller businesses, offer both hardware and software solutions as a bundle.

Finally, don’t forget to look toward the future. While payments-only terminals might be sufficient for your current operations, they may need to be replaced in a few years as your business needs get more complex. So you may want to consider investing in a comprehensive POS system that sets you up for success not just today but also as your company grows — and ultimately leads to cost savings down the line.