If we were to ask a typical consumer or business owner “What is a Point of Sale or POS system?” we would likely be told it is the place in a store, restaurant, or other retail location where a purchase is made, or transaction is completed. Not too long ago, the answer may have simply been the cash register or, more recently, the credit/debit machine. Both of these answers would be partially correct, but a modern Point of Sale “system” is so much more.
Thanks to advances in technology, a POS system today is the central hub around which sales, inventory management, payment processing and customer relationship management revolves; activities which occur well beyond completion of the initial transaction. Powerful point of sale software connects and integrates with all of these critical business functions to help business owners and managers gain visibility into how efficiently, effectively and profitably the entire business is operating at any given point in time. And thanks again to advances in mobile technology, most of the mission critical data generated by these systems can be accessed from anywhere with mobile or Internet connectivity.
However, not all POS systems are built the same and some are better equipped to operate in specific retail situations. Obviously, the needs of a retail clothing store or bookstore are quite different from those of a restaurant or gas station. As a business owner or manager, you will need to consider a wide range of features, functionalities, and other non-technical aspects when deciding on a new or upgraded POS system.
Point of Sale Hardware
The first consideration for a point-of-sale system is the POS hardware with which your customers and staff will be interacting. There are a couple of questions you can ask about your business in order to determine what hardware will be most suitable.
1. Where will your staff and customers most often be interacting?
If your staff are serving customers at a counter, you can simply opt for a traditional register system equipped with a digital monitor, card reader and receipt generator. This being said, and depending on the counter space you have available, modern POS terminals are available that are much more compact and discreet.
However, if your staff are serving customers at a table (e.g. in a restaurant scenario) or even more remotely (e.g. out on a golf course), you will want to consider adding a mobile POS terminal with Wi-Fi or cellular connectivity. These units typically also include card or barcode readers and receipts.
A third, increasingly popular, option is an unattended POS terminals or kiosks, which enables consumers to complete their transactions 24/7 without having to interact with staff at all. These types of solutions are particularly attractive innovations for businesses like laundromats, car washes and donation kiosks for not-for-profit organizations.
Of course, many businesses implement hybrid POS hardware solutions, which enable them to offer their customers the flexibility of paying wherever and whenever they choose.
2. What types of payment do you want to accept?
The types of payment you accept will have a bearing on which hardware you choose, but there are a few other questions you want to think about in order to answer this question.
The first and most important question is, how do your customers want to pay?
If you have an older customer base, there may still be a demand for a cash payment option. However, younger, more tech-savvy customers may be looking to pay directly from their mobile devices with Apple Pay, Google Pay or some other digital wallet. The current most common credit or debit card payment include swipe, chip insert or tap to pay options. Most POS systems readily support card payments by default, but there are additional questions to consider if you want to accept cash or mobile tap to pay.
One of the primary reasons consumers and businesses alike have gravitated to credit, debit and mobile device payments is the speed with which transactions are processed. Cash, on the other hand, requires manual counting when accepting payment and making change, which in turn introduces greater potential for error.
A third question regarding payment types is, how safe/secure is each payment type?
Recent pandemic events have made consumers acutely aware of health and safety in retail environments and have caused many to demand contactless tap payment options. Many businesses will simply not accept cash for this very reason.
Further, there are ongoing concerns about identity theft and credit card fraud. These concerns are being actively met by credit card and mobile payment processing vendors. All equipment must be compliant with PCI Council standards and many safeguards have been put in place to protect the personal and credit card information of consumers. Digital wallets, for example, do not store credit card information at all, but rather receive unique authorization tokens from the credit card companies, which are effectively useless to hackers.
Finally, you may want to find out what fees/costs are associated with each payment type.
The processing of each payment type includes fees and costs based on:
- The volume of transactions
- Payment processing services (i.e. merchant account fees, interchange fees)
- The level of risk associated with the transactions (e.g. “card not present” purchases)
- The amount of time it takes to complete the transactions (e.g. counting cash)
Point of Sale Software
As mentioned, one of the primary benefits of a modern POS system is its ability to go well beyond the initial transaction and interact with other systems to manage and inform the entire customer lifecycle as well as the overall health of a business. The primary functions of POS software include:
- Payment Processing
- Sales Reporting and Analytics
- Barcode Scanning
- Inventory Management
- E-commerce Integration
- Customer Relationship Management
The first obvious POS system software feature enables the processing of cash, card or mobile device payments. However, here too is innovation. Receipts can be forwarded to customers via email or text. Gift cards can be accepted or issued through the terminal. Reward points can be calculated, assigned and/or redeemed as part of a customer loyalty program. Each of these added functionalities is designed to build strong customer relationships and generate more revenue.
Sales Reporting and Analytics
Every business owner wants to know what is selling and what isn’t in order to better manage other aspects of the business, such as marketing and inventory. Sales reporting and analytics software enables owners and managers to stay on top of sales trends, peaks and valleys in real-time from any mobile device, so they know what to promote and/or what to order more of from suppliers.
The ability to scan barcodes of products on the fly enables sales staff to quickly access all of the info needed to quickly, accurately and safely complete a sale. This is definitely a feature worth considering in a POS system if yours is a high-volume, low-touch business.
A barcode scanner can likewise be useful in receiving and adding new products to your inventory.
As soon as a sale occurs, it’s crucial to have your inventory system updated immediately to ensure the availability of products when they are requested by your customers. This is particularly important if you manage multiple locations. Further, in certain retail environments, such as grocery stores, this functionality can be extended to keep track of items which are about to expire and which may then be offered on a discounted basis. Any solid POS systems should readily integrate with your business’s inventory management system.
For many businesses, the pandemic has created the need to look online for additional revenue streams. An e-commerce website effectively becomes another store location and, as such, must be included when considering sales trends, marketing and inventory. All systems and processes are ideally working in synch whether sales are made in-store or online, and promotions are run across multiple channels. This too can be facilitated by a robust POS system.
Customer Relationship Management
Understanding your customers’ buying patterns, needs and preferences is crucial to personalizing their experience and establishing their long-term loyalty. A POS system can enable you to capture important permission-based contact information like addresses or phone numbers, as well as record and keep track of purchase history, which you can in turn use to establish deeper relationships with your best customers. Customers who feel they are being listened to and taken care of become referral customers and revenue generators.
Point of Sale System Network Architecture
If you manage one or multiple retail locations and want to have remote, anytime access to your critical business data, you will want to select a cloud-based rather than installed POS system. SaaS or cloud-based systems allow for secure access from any Internet-enabled mobile or desktop device. User access and permissions can and should be tightly controlled to ensure only authorized members of your staff can view or edit your data.
As with any technology, you’ll also want to ask about and understand the stability of the POS system network and what service level agreements are available from your chosen provider. Any network or system outage will have a negative impact on your customers and bottom line, so you will want to know what safeguards and procedures are in place to prevent these from occurring.
Point of Sale System Support
While not directly technology-related, it is also important to inquire about the level of training and ongoing support available from any POS system provider you consider. The implementation of any new system will have a learning curve for you and your staff. Experience backed onboarding can help reduce the time to adoption and increase the overall effectiveness of the system.
Ideally, you will find and select a POS system vendor who has worked with similar businesses to yours and can recommend an optimal configuration.
More Than Meets the Eye
So, as you can see, a full POS system does far more than just process transactions and is the hybrid engine powering most successful retail operations. Business owners and managers are well-advised to do their homework and partner with a payment processing vendor who can offer them flexible solutions which will grow with them as they grow.
Author: Layal Scheirich, Head of Sales at MONEXgroup
Bio: With 18 years of experience in payment processing and merchant services, Layal has seen in-store POS technology evolve from its humble beginnings to contactless, unattended, mobile and online alternatives. Today, Layal is an inspiration to the MONEXgroup’s team and a go-to source of information related to payment processing. She is enthusiastic to share her knowledge with audiences interested in cutting-edge technologies available today, such as unattended payment for self-serve kiosks, e-commerce online payment gateways, virtual terminals, and contactless and mobile payment solutions.
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