Modern point of sale systems have evolved substantially since the first cash registers, which were little more than basic adding machines with an internal mechanism to record sales. In today’s retail environment, there’s a lot more to consider, including point of sale (POS) software, credit card processing, interconnected electronics such as Bluetooth scanners, and much, much more.
The best cloud-based POS setups are complex systems with capabilities ranging from inventory management and employee timekeeping to accounting and even marketing. Your choice of POS can make a big impact on your business’ ability to run a smooth and successful enterprise.
If just thinking about choosing a point of sale system is starting to give you a big headache, don’t panic. You can steer clear of most pitfalls you might encounter during the POS selection process by avoiding these no-no’s.
1. Overlooking Your Unique Business Needs
No matter what a POS company might claim, there are few, if any, “one size fits all” POS systems. Rather than choosing a POS that claims to do it all, you’ll get a better result if you select a system based on your specific business requirements.
For example, a quick-service restaurant has different POS needs than a retail boutique. The restaurant requires a speedy, simple POS; the retail shop might benefit from more complex inventory-related features and barcode scanning.
Industry suitability is not the only thing to look out for. In addition to type of business, there are many other factors that will affect your POS needs, such as business size, reliability of your internet connection, number of employees, and of course, your budget.
If you choose a POS without considering what will suit your unique business, you might end up with a slower, less functional checkout process – or even bigger headaches, like not being able to perform business-critical functions.
2. Scrimping on Customer Support
When businesses overlook customer support, they are ignoring one of the most important aspects of a POS system. Round-the-clock customer service might sound like an “extra” feature you don’t want to pay for, but when there’s a problem with your POS, a reliable customer support channel is nothing less than essential.
Even the most reliable POS system is bound to have occasional hiccups. When this happens, you need to be able to reach a competent technical support representative who will fix your problem, ASAP. Otherwise, your ability to do business could be severely impaired.
When evaluating POS systems, be sure to sign up for a free trial. During that time, make note of how responsive the company’s representatives are and how long it takes for them to get back to you. Also, be sure you check what users of that service have to say about their customer support.
3. Not Considering Hardware-Software Compatibility
In many cases, established businesses shopping for a new POS system may want to use equipment they already have. But if you just assume all of your hardware will be compatible with the new software — well, we all know what happens when we assume (and it involves a donkey).
Before purchasing a new POS, ask if the system is compatible with your existing hardware. Also, find out whether any equipment you do have to purchase for the new system will be compatible with another POS, should you decide to change things up down the road. For example, many iPad POS systems (Revel, Lightspeed, Vend, Shopify, and others) can use most of the same equipment. Other POS systems like Toast must use Android tablets, whereas a POS like Clover can only use its own proprietary equipment.
One more important note about equipment: be extra sure to choose an EMV-compliant POS — one that can accept EMV chip card payments. This may require you to update your payment terminals, but it’s important to adhere to the new industry standard to prevent fraud and potential legal fees for your business.
4. Believing in the Myth of the “One Time Fee”
Older Windows-based POS systems of yesteryear typically required a sizable one-time investment, and additional costs were only charged as needed (for upgrades, maintenance and repairs, etc.). However, popular cloud-based SaaS POS systems require little, if any, upfront investment. Rather, these systems are based on a service model wherein merchants are typically charged a monthly fee to use the POS. Some systems are still sold as “one and done” investments, but it’s very unlikely you won’t incur any further POS costs after you purchase them.
Modern POS systems undergo frequent updates, and as I talked about earlier, you’ll need customer support to help solve problems when glitches do occur. When you pay a monthly service fee, these sorts of maintenance services are typically included to keep your POS operating smoothly. If you purchase a POS with a “one-time” upfront fee, you’ll still need updates and technical assistance — but you’ll probably have to pay an arm and a leg to get them.
Systems that force you to purchase everything upfront are financially riskier than SaaS software because they require a huge initial investment and leave you with little to no recourse if the POS doesn’t work out. For that reason, I almost always recommend that merchants use a cloud-based POS with no contract, non-proprietary hardware (e.g., an iPad and cash drawer that can be used with other systems), and a reasonable monthly fee. This way, you’ll be able to switch to another system with little hassle, if need be.
5. Ignoring the Fine Print of Your Contract
By ignoring the fine print of your merchant services contract, you may be tacitly agreeing to things like early termination fees and other undesirable policies. Make sure you know what you are signing up for, what you should expect to receive for your money, and what, if any, repercussions will occur if you decide to stop using the service before your contract ends.
6. Choosing the Wrong Credit Card Processor
Credit card processing is an important aspect of POS, and is something you must take into consideration when choosing a new vendor. In some cases, you can only use the POS provider’s in-house credit card processing system. In others, you can choose between many credit card processors, or perhaps select from one or two processors that work with the system.
In any case, you should research the credit card processing options available to you when evaluating a POS system, and try to negotiate the lowest credit card processing rates. Sometimes, a POS provider with in-house processing will offer to match the rates you could get from an outside processor.
One more thing to keep in mind here is that while credit card processing fees are important, they are not everything when it comes to choosing a credit card processor. Rather than simply choosing the processor with the lowest fees, you want to find one that is reliable and provides quality customer support. For example, processors that use an “aggregate merchant account” rather than giving you your own individual merchant account are less reliable and more prone to withhold funds and freeze accounts unexpectedly.
7. Forgetting to Try before You Buy
Almost all POS software providers offer a limited free trial (typically about two weeks). Often, you can test out a POS without even having to give up your credit card information. If the POS system you’re interested in does not offer a free trial, you should at least be able to get a demo of the system so you can see the POS in action.
Never buy a POS sight-unseen! If you can’t even get a demo of the system, then something fishy is probably afoot.
Questions to Ask When Choosing a POS
- Does the POS provider have expertise in your industry?
- What is their technical support policy? (Is support included without an extra charge? Does it include 24/7 phone support?)
- What are the hardware requirements for this POS?
- Is the POS equipment compatible with any other systems?
- What is the upfront cost to set up the POS?
- Are software updates included?
- What are your credit card processing options with this POS? Can you get lower swipe fees from another provider?
- Will you get your own merchant account or an aggregate merchant account?
- Will POS provider or the credit card processor handle payment-related support issues?
- Is the POS EMV-compliant?
- What is the total monthly cost? (including the base fee, plus any add-ons or other fees)
- Is there a long-term contract or early termination fee?
- Is there a free trial available to test?
By avoiding the seven biggest POS mistakes and asking the questions above, you will soon be well on your way to finding an excellent POS for your small business.
About the Author
Shannon Vissers is a writer for Merchant Maverick, a comparison site that reviews and rates credit card processors, POS software companies, shopping carts, mobile payments services, and small business software.
Customer support is always important. It is not just about making a sale but also making your customers feel that you are there for them even after they spend their money.
I had to agree about the one-time fee. One time, I tried a software that says free for life until they upgraded it later into another version without me having any access to it.
It’s good to know that it is important to consider both the hardware and software. It sounds like it is a lot like buying a computer; it’s important that you don’t get PC hardware if you want to run the Mac operating system! In my opinion, you should probably research the types of POS systems you like the most before looking for hardware. Then you can choose the system that will be with compatible with all the software you like.
I agree with all the points, but number 1 is my favorite. I sell POS systems and I see people purchasing systems all the time because they are cheaper, not necessarily because they actually have the features they need to operate efficiently and effectively. A POS system is the heart of your business, so don’t make it your last thought before opening a business and you’ve already run out of money because you splurged on a custom salt water fish tank with an active underwater volcano…becauase it looks cool. And then you have lease a $500 cash register that ends up costing you $5k. Research, research, research and get an onsite or online demo and try to work with someone local that you can call when you need help, especially if you are not computer savvy.
These are great tips. Thank you for sharing them, Cathy!