POS systems help retailers process sales transactions quickly and effortlessly.
Although they have existed in different forms for several years, POS devices have become complex tools that aid retail businesses in accepting all forms of payment. Relying on cash-based transactions is a sure way to send your customers to your competitors, as most people expect even the smallest businesses to accept credit and debit cards. In addition, other forms of digital payments, including digital wallet payments, have also grown popular.
A casual observation of retail stores and units reveals that many businesses still depend on older forms of payment processing, which is largely ineffective and counterproductive. This article is a complete guide to understanding a POS system and how to choose and implement it.
What is a POS system?
A POS system combines hardware and software solutions that help you accept different payment forms from your customers. A POS device is a piece of hardware that accepts debit and credit cards in addition to helping you receive cash. In most cases, it also prints receipts, scans barcodes, and relays all this data to a software tool that may or may not be connected to your ERP. POS software helps transfer funds to your bank account, measure sales and profits, and sometimes track inventory.
As more people have begun to expect seamless purchase experiences, combining online and offline payment methods with the help of an advanced retail POS system is essential. Advanced POS systems are cloud-based and help you process payments on your website. For instance, customers can purchase goods on your website and make payments on the checkout page.
Why is a retail POS so important?
According to a McKinsey Global Survey report, the COVID-19 pandemic accelerated the shift toward making and accessing digital payments. Customers no longer want to go back to the days of making cash payments, and businesses that are lagging risk losing valuable customers if they don’t accept all forms of compensation.
Among first-time contactless payment customers, an overwhelming 86% revealed that they would continue to use contactless payments. Consequently, small and large businesses should adopt advanced retail POS systems that help manage and accept different forms of payments.
Three important kinds of POS systems are:
● On-premise POS – An on-premise POS system is installed on the clients’ devices after they purchase one or more licenses. The onus for updating and maintaining the software is on the client (business owner). If the retail organization is large, the POS system may require in-house IT personnel to maintain and update it regularly. In addition to computers and tablets that a business may own, they will also need to purchase upfront hardware to process payments.
● Cloud POS – A cloud-based POS system is delivered as a Software-as-a-Service (SaaS). Businesses can download and install the POS app and access it on any device as long as it is connected to the internet. The POS vendor pushes regular software updates. Hence, business owners can easily update and maintain the POS. Cloud POS is more affordable than on-premise POS and requires minimal training.
● Hybrid POS – A hybrid solution combines the flexibility of cloud POS with the reliability of an on-premise POS system. If there are power outages or disruptions to your internet connection, you can still keep accessing payments offline. Of course, this may require the purchase of additional POS-specific hardware.
Here are the essential features of a POS system:
1. Accept payments easily, both online and offline
No matter where you set up your stores, you can bring a multichannel experience to your customers. If you have both online and offline stores, customers can pay online and pick up products at a store convenient to them. If you are a small business owner with a retail store, a POS system helps you accept all kinds of payments effortlessly so that you don’t lose any customers. A modern POS system accepts cash, credit, and debit cards and supports mobile wallets, PayPal, and other digital payment services.
2. Ability to read and scan barcodes, labels, and QR codes
A modern POS system helps quickly clear your inventory by making checkout processes smooth and seamless. This includes eliminating the long waits at the cashier’s counter. Your cashier can use a mobile POS system to quickly scan product codes and add them to the bill, while customers can use their QR codes and mobile wallets to make cashless transactions.
3. Ability to customize hotkeys
Not all products come with barcodes; some need to be added manually to the sales invoice. Hotkeys help your cashier effortlessly search for products and items and add them to the sales invoice. As a result, product details are added automatically, saving your customers the trouble of waiting at the cash counter.
4. Manage your inventory and orders
Although POS systems are associated with processing payments, a POS integrated with your other operational systems will help you better manage your inventory and warehouse.
The POS should help you efficiently manage your inventory and ensure automatic replenishment when products are sold and cleared – especially if you operate both online and offline stores and strive to provide customers with a seamless order fulfillment experience.
5. Manage your employees
POS systems should be able to implement security protocols and keep data secure. As they often store credit card and customer information, it is necessary to ensure that all data is safe. In addition, POS systems should be able to detect and eliminate employee theft, add security protocols, and manage staff payments.
6. Integrate loyalty programs
Smaller businesses have a lot to compete with, and loyalty programs are an excellent way to retain paying customers and make them revisit. Interconnected POS systems that rely on a robust Back Office application help you offer loyalty programs to your customers and redeem points they’ve earned during checkout. Sales clerks can identify buying patterns and create rewards programs that entice customers.
How to choose a retail POS system
1. Understand that you need one
The first step toward choosing a good retail POS system software is recognizing that you need one. Today, most retail Businesses are making it a priority to offer their customers a holistic shopping experience.
Whether on-premise or cloud-based, a POS system can only be a part of a headless commerce operation if it supports a multichannel shopping experience by processing cashless transactions.
2. List your needs
Determining your business needs requires brainstorming, planning, and identifying all your business processes to ensure the POS system properly operates when implemented. Some of the most important factors to consider are whether you sell online, offline, or both, whether you manufacture your products or source them from different suppliers, and the compatibility of your POS devices.
3. Set a budget
A suitable POS can seem expensive, but it helps ensure no opportunities are lost and boost revenue growth. Due to their nature, Cloud-delivered POS systems are usually more affordable than on-premise POS systems.
4. Scout for vendors
Once you have decided what you need, the next step is to look for good vendors. Try to read as much as possible and gather all the pertinent information.
5. Ask questions
Once you’ve found a vendor you like, ask guiding questions that may help you make the final decision. Some of the most pressing inquiries relate to software updates, system features, customizability, integrations, and customer support. Once satisfied, you can make the big decision and implement your POS system across your retail locations.
Choosing the right retail POS system can be daunting
An adequate POS system is necessary for every retail-oriented business. It helps minimize staff effort and enables you to implement cashless transactions across your sites. This invariably enhances customer experience and customer satisfaction metrics. There are several features you need to look for while looking for a POS:
● The ability to scan different kinds of codes
● Customizable hotkeys
● Employee management
● Data security and ensuring customer privacy
● Managing inventory and orders
● Accepting different types of payments
● Loyalty programs
In addition to the above features, you should also consider what you need from a POS. Identify your business needs, and speak to POS vendors to find answers to your questions. However, making a decision can be challenging, especially when it involves a lot of technology.