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What is Cloud POS System and 12 Functional Benefits

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Ryleigh Stangness | February 28, 2022

“Cloud point-of-sale systems are easy to setup, use and scale. Find out why businesses are choosing cloud POS over legacy.”
5 min read

    When it comes to running your business, you're always looking to optimize your profits and streamline operations (for the best price) - which is why you're looking into POS systems. Now you're wondering what is a cloud-based POS, what features does it have to help me run my business, and how is it different from a traditional legacy system?

    We've broken it down for you so you can understand what we mean when we say "cloud," the difference between a cloud-based POS system and a legacy system, and the functional benefits of a cloud POS system offers.

    Quick: What is a POS system?

    Let's dive in: A POS purchase refers to when a customer pays for goods or services from a merchant or business - you do this every time you buy a coffee, pump your gas, or cover the bill for dinner.

    The POS system facilitates this purchase by processing payments and storing the data on a local server, network or via the internet. POS systems often do more than just process payments and store data, they also store product information, SKUs, customer information in a card vault, transaction history, emailed and printed receipts, invoicing and much more. The type of POS system a merchant uses determines whether they will have access to certain capabilities and features- which brings us to:

    Types of POS systems: Legacy POS vs. retail cloud POS setups

    When we talk about POS systems, there are two main types: Legacy /traditional, and cloud-based POS systems. These systems can look very different but are comprised of all the software, servers, and equipment involved in completing a POS purchase.

    The main components of a POS system include (but are not limited to):

    • Local server or internal network (or Cloud-based) connectivity
    • Desktop computer and keyboard, tablet, or phone
    • Cash register
    • Card reader or terminal
    • Receipt printer.
    • Barcode scanner

    The setup and system will vary depending on your business needs and does not necessarily require all of these components- but more on that later.

    A cloud-based POS system may use a traditional setup of a desktop and register, or modern devices such as a mobile phone or Ipad/tablet. A merchant could even connect the mobile setup to a card reader and receipt printer to complete purchases.

    So what is a legacy or traditional POS system?

    Legacy POS systems differ from cloud POS systems in that they complete POS purchases through a local server, a closed network or PC, and in-store hardware.

    This method requires storing data on a local server and maintenance to keep all your information uncorrupted. This data includes information such as:

    • Pricing and inventory
    • Client card or member information
    • Transaction receipts

    Maintaining this system and all of this dense data can add up in costs for storage and IT maintenance.

    Since everything is processed and stored on a local server, purchases are restricted to on-site. Every time a merchant wants to update their inventory, make an update to a menu item, check on a transfer status or review a customer transaction, they have to head into work to do so, which can be limiting when trying to handle all the different aspects of the industry.

    What is a cloud-based POS system, and what do we mean when we say "cloud"?

    Cloud POS systems, otherwise known as SaaS (Software-as-a-Service) or internet-based POS systems, allow you to process payments using the internet, meaning no physical server is required.

    This is great for merchants who are processing online or virtual payments through a virtual terminal or who want to be able to oversee things without having to visit their store in person to tap into their server.

    This is comparable to how you may access Google Drive rather than a Word document saved to your computer, which may only be accessible from your home, for example.

    As we already mentioned, the main difference between Cloud-based and traditional POS systems is collecting, processing, and storing the data. All the data is stored off-site, which frees up many of the concerns associated with legacy systems. However, there are many other benefits that make a cloud POS so appealing to industries like restaurants, clinics, and goods and services.

    Scalability & 11 Other Benefits of a Cloud Point of Sales

    Aside from offloading some of the major concerns of legacy POS systems, Cloud-based POS systems are becoming increasingly popular due to their customization capabilities and convenience.

    Here are just a few reasons why so many merchants use this Saas platform:

    • Scalability- The ability to add users or purchase more equipment without having to rejig your whole setup
    • Relatively inexpensive pricing and easy to set up
    • Easy to maintain and update
    • Virtual payments and invoicing
    • Off-site data hosting (lower costs, accessibility and security)
    • Immediate transaction records
    • User customization
    • Accessible data
    • Remote business operations
    • Store and update customer information and purchase history
    • Customized to your business industry needs
    • Flexible POS setup with mobile compatibility

    Being remotely accessible and mobile compatible is a massive point of interest for cloud POS systems, which is ideal for e-commerce and brick-and-mortar businesses alike that don't thrive with a traditional checkout counter but are on the go or can optimize using mobile devices. The entire experience is customizable, from the user interface to the physical hardware and software setup in-store.

    When Cloud POS is The Right Choice for Your Business

    As a business owner, you optimize operations to enhance your staff and the customer experience in every aspect of your business. What often goes overlooked is the checkout process, choosing the right POS system for you.

    While traditional POS systems do offer the same functionality of making POS purchases to some degree, they don't provide the same ease and flexibility as cloud-based POS systems. There are several considerations when factoring in what best suits your business needs:

    • Budget
    • Employees/ Users
    • Scalability
    • Nature of your industry
    • Set up time
    • Security and protection
    • Customization
    • Multiple location synchronization
    • Data storage and hosting
    • Added features


    What are the different types of POS systems?

    Aside from traditional, cloud-based terminal, mobile and desktop POS systems, there are a few other types, such as self-service kiosks and open-source POS systems.

    Which industries can benefit from a cloud-based POS system?

    The main advantage of a cloud POS system is mobility. A multitude of businesses such as retail, restaurants, services, or anywhere with multiple or remote locations benefit from this feature.

    Why is a POS system important?

    A POS system is important for creating and ensuring safe, secure transactions for your customers and ensuring PCI compliance. It can also add significant value in streamlining your checkout process and offers a unique opportunity to optimize operations while gaining insight into sales and customer trends and data, which you can leverage for marketing and business development.

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