Choosing a point-of-sale (POS) system is arguably one of the most important payment-related decisions for your business. With the right POS software and hardware, your payments setup can facilitate effortless transactions, which lead to increased revenue and customer satisfaction. But choosing the wrong POS setup can cause transactions to be riddled with friction and inefficiencies that hamper your business.
The global POS software market was valued at $11.99 billion in 2022, which is forecasted to grow by nearly 10% year over year. With such a considerable market size, it’s no surprise that businesses have an overwhelming number of POS system choices.
We’ll cover what you need to know about POS systems and key points to consider when choosing the best one for your business.
What’s in this article?
- What is a POS system?
- What kinds of businesses need a POS system?
- What to consider when choosing a POS system
What is a POS system?
A POS system is the hardware and software that allows businesses to accept payments from customers. Increasingly, though, POS systems do much more, including:
- Updating inventory
- Tracking sales
- Managing the cash drawer
- Printing receipts
- Scanning barcodes and QR codes
- Clocking employees in and out
- Running reports on sales and other analytics
- Managing customer accounts and rewards
Some POS systems are entirely software-based and don’t include physical hardware. These primarily serve online-only businesses that don’t accept any in-person payments. For POS systems that do accept in-person payments, some hardware components might include:
- Card reader
- Connected device
- Cash drawer
- Barcode scanner
- Receipt printer
POS systems can process sales, accept various payment methods, analyze sales data, generate reports, capture customer data, track inventory, and enhance customer retention and marketing efforts. This is what makes choosing the right POS system so significant—beyond just processing transactions, your POS system might take on multiple important jobs for your business.
For more information about the types of POS systems and how they work, read our POS guide.
What kinds of businesses need a POS system?
Any business that accepts payments from customers can benefit from using a POS system, but it’s especially essential for businesses that accept noncash payments.
While it’s true that any business that accepts payments probably needs some form of a POS system, each business is different and there is no hard and fast rule. Because not every POS system has the same components or features, deciding which one is right for your business requires a detailed understanding of your needs.
What to consider when choosing a POS system
As with any choice regarding your business, choosing the right POS system involves clarifying your needs, understanding what’s possible, identifying costs, and analyzing the options to decide which best fits your parameters. Here’s what to consider when researching POS solutions:
Type of hardware
Your POS hardware needs will depend on where and how your business operates, and it’s possible you won’t need any hardware at all. For example, an ecommerce retailer without any brick-and-mortar locations won’t need physical POS terminals, whereas the owner of a chain of dry cleaners will. Even for businesses that accept in-person payments, there are variations in POS hardware needs. For instance, if you run a business that provides in-home services for customers, your team of employees might need mobile POS devices that allow them to accept payments on the go.
Ease of use
If a POS system boasts impressive features and dynamic functionality but proves difficult for your team to adopt, the effort might not be worth the benefit. When vetting potential POS systems, don’t just look at what they are capable of doing for your business, but dig deeper to learn about the user experience. The right POS system will help your business run more smoothly—it should not create a new set of struggles for you and your team.
Implementation and integration
Rather than considering the merits of any POS system in a vacuum, think about how it would work within your business as it currently exists. What software, apps, and other solutions are you already using that a POS system would need to integrate with? How would you actually use it? For example, Stripe Terminal allows you to manage all your online and offline sales in one place with a single integration, since it works seamlessly with Stripe Payments, Connect, and Billing.
It’s important that any POS system is equipped to uphold Payment Card Industry (PCI) compliance rules. These were established by the PCI Security Standards Council, a collective of large companies involved in electronic payments processing that created a set of standards to help businesses protect payment data and prevent fraud around consumer card transactions. Some of the requirements include point-to-point encryption (P2PE), which uses a process called tokenization to hide sensitive cardholder information, such as the card number itself, during the transaction process. Stripe Terminal uses P2PE and is completely equipped to uphold PCI standards, an absolute must-have for any POS system you’re considering.
What tasks you need a POS system for
Most modern POS systems tout many features in addition to their core functionality of accepting payments. The process of choosing a POS system is the perfect opportunity to make a list of all the operational tasks involved in running your business, which can be divided into three categories:
- Tasks for which you already have a good solution
- Tasks for which you have a solution, but you’re not happy with it
- Tasks for which you don’t have any solution
The second and third categories are where a POS system could deliver the most value for your business. For a starting point, refer back to the short list of features and functionality listed earlier. Maybe what’s most important is a POS system that automatically updates your inventory, handles invoicing, and provides an omnichannel solution that integrates your online and in-person sales reporting. Or maybe your most pressing needs involve completely different features. The goal is to understand what features matter most for your business and find a matching solution.
Just as the POS system-related needs of every business vary, so will the associated costs. The list of must-have and nice-to-have features will prove useful when you’re comparing the respective costs of different POS providers. This stage is all about tradeoffs. For example, maybe you need POS terminals for 40 retail locations, and one provider offers favorable unit economics for businesses that are setting up at scale, but they don’t have some of the features you hoped for. Another provider might offer a high degree of customization and exceptional customer service but might cost too much for your budget. Staying firm about your essential needs and budget are vital to finding the ideal POS system for your business. Here are more details about pricing for Stripe, including Stripe Terminal.
The best payment setup is one that works for your needs today and can also grow with your business in the future. Chances are you have plans for where you want to take your business in the coming months and years. Make sure the POS system you choose will stay relevant for your business as it grows and evolves.