What are the pros and cons of POS systems?

Over the years, POS systems have evolved from simple cash registers to multi-functional platforms that handle sales, inventory management, customer relationship management, reporting, and more.

The modern POS system comes with a ton of benefits, but there are also some downsides to think about. Whether you run a little food truck, a busy restaurant, or an online agency, knowing what a POS system can and can't do will help you determine if a POS system is a good fit for your business.

Advantages of POS Systems

Imagine running a small boutique on a busy Saturday afternoon – customers are lining up, new inventory is arriving, and every transaction is flowing smoothly. That's the power of a great POS system.

POS systems speed up transactions and give you the data you need to make smart decisions. Your customers will be happier, your staff will be more productive, and your business will run smoother – it's a win-win.

1. Say goodbye to manual error

Without a POS system, you're stuck manually counting sales and double-checking receipts, which is time-consuming and prone to mistakes. One small error can impact your entire record. But with a POS system, those hassles are a thing of the past. It automatically records sales, updates your inventory, and accurately calculates discounts, taxes, and total item costs.

For instance, if you run a coffee shop and a customer orders a coffee with extra syrups and whipped cream, the POS system ensures every extra charge is correctly added to the bill, making the process smoother and more accurate.

2. Speedup checkout and boost sales

A modern POS system does more than just process transactions; it enhances the overall customer experience in many ways. By connecting with modern payment terminals, your business can easily handle swipe, insert, and tap transactions for both cards and mobile wallets. More payment options mean faster checkouts and less time waiting in line for your customers.

Not only that, many POS systems include built-in CRM tools that help manage customer information and provide insights into their purchase behavior. You'll know which products are most popular, which payment methods are used most frequently, and more. Using this information, you can offer customers discounts on their favorite products, boosting sales and customer satisfaction.

3. Never run out of stock

With a POS system, you can easily create and organize your products by category, brand, and variants like size and color.

It also tracks your inventory in real time, so you always know what's in stock, what's running low, and what needs to be reordered. When a customer makes a purchase, the POS system automatically updates your inventory.

You can also set up alerts to notify you when stock levels fall below a certain threshold, ensuring you can reorder in time and keep your shelves stocked. This means you can maintain optimal stock levels and always have the products your customers want readily available.

4. Easily monitor your business performance

POS systems provide valuable insights into your business through detailed sales reporting and analytics that manual methods simply can't match.

You can see which items are your best sellers, sorted by product, brand, or category, and identify which ones bring in the most profit. You can filter these reports by date to discover what products sell better during specific holidays. This information helps you plan your marketing strategies and manage inventory more effectively.

5. Have consistent data across all sales channels

Managing multiple store locations or sales channels can be a logistical nightmare, but a modern POS system can turn that chaos into a well-oiled machine. POS systems sync your sales, inventory, and customer data and ensure you have a unified view of your business no matter where your sales occur. Imagine looking at your phone at home, your eCommerce dashboard, and a POS monitor at your physical store, all displaying the same data.

If one store is running low on a popular item, you can quickly move inventory from another location that has excess stock, keeping your shelves filled and customers happy. With synced sales data, you can easily compare sales performance and track best-selling items across all your locations.

Disadvantages of POS systems

While POS systems offer numerous benefits, they also come with certain disadvantages that businesses need to consider.

1. Expensive setup

The initial setup costs of a POS system can vary widely based on your industry and specific needs. For businesses like retail stores and restaurants that require customized POS systems, these initial costs can be significant.

• POS hardware costs: This includes essential items like cash registers, card readers, receipt printers, barcode scanners, and tablets or touchscreen monitors. The total cost for all the POS hardware can range from $595 to $4,000.

• Server cost: If you're opting for a traditional system instead of a cloud based POS, you will also need a physical server to store your data. Purchasing a server can cost between $2,000 and $5,000, while renting a server typically costs between $70 and $300 or more per month.

• POS software costs: Some POS software comes with a one-time purchase fee, while others operate on a subscription model with monthly or annual fees. The cost of POS software can range from $0 to $200 per month. If you're a Helcim user, you can get the POS software for free.

• Installation costs: Installing the POS hardware and software can incur additional expenses. Installation fees can range from hundreds to several thousand dollars, depending on the complexity of the setup.

2. Complexity for small businesses

When most people think of POS systems, they picture the bulky, stationary setups found in supermarkets. For small businesses with straightforward operations, these hardware-heavy systems are costly, unnecessary, and difficult to navigate. Imagine running a food truck – there’s simply no room for a clunky POS system.

But here’s the good news: A POS system doesn’t have to be complicated. Helcim offers a free Point-of-Sale app that you can download on your phone, laptop or tablet. Then, all you need is a Helcim Smart Terminal to collect in-person payments. The Helcim Smart Terminal even has a built-in receipt printer, helping you save on additional costs.

Because Helcim is a cloud based POS system, there’s no need to invest in or maintain physical servers. Plus, there are no monthly fees, hidden charges, or long-term contracts – you only pay the payment processing fees.

3. System downtime and interruption

Most modern POS systems are cloud-based, which means they depend heavily on the provider's server. If the POS provider experiences technical issues or power outages, your business may be unable to accept payments, leading to frustrated customers and lost sales.

Additionally, your POS system relies on a stable internet connection to function. Since these systems store data online and process transactions via the Internet, any disruption in your internet connection can impact your operation.

4. Security Risks

POS systems handle sensitive customer information, such as credit card numbers and personal details. If this data is not properly secured, it can be vulnerable to hackers. Last year, 52 million Americans experienced fraudulent charges on their credit or debit cards, resulting in unauthorized purchases totaling over $5 billion.

To ensure your sensitive information is protected, use a system with advanced encryption and robust security measures. For example, Helcim Point-of-Sale systems utilize AES-256 encryption, the strongest encryption standard available, to safeguard all sensitive merchant and cardholder data.

While encryption can protect your data from external attacks, it is not sufficient alone to prevent all threats. Phishing attacks, where hackers trick employees into clicking suspicious links, can grant them access to your system.

That’s why it's essential to train your staff to recognize and avoid phishing attempts. This way, even if hackers try to gain access through an internal source, your business remains secure.

5. Costly system updates

POS software is continuously updated to add new features and provide your business with more tools to accept payments and manage operations efficiently. If you are using legacy POS systems, keeping up with the latest software and hardware upgrades can be challenging and costly. This can involve purchasing new hardware, subscribing to updated software versions, or paying for professional installation services.

However, if you use a cloud based POS system like Helcim, upgrades are free and can be completed in minutes. Simply download the latest POS software or click the “Update” button in the App Store or Google Play to install the latest version of the app.

How to get your POS system.

Ready to take your business to the next level with a POS system? Here’s how you can get started:

1. Sign Up for a Helcim Merchant Account: It’s quick and easy, with no paperwork, contracts, or signatures required.
2. Download the Helcim POS App: Install the app on your laptop, tablet, or phone.
3. Collect payments: Set up your Helcim card reader for in-person payments, or utilize Helcim’s free online payment tools for digital transactions.

Switching from another processor? Helcim’s Merchant Buyout Program makes the transition smooth and hassle-free:

• Receive step-by-step support on migrating your products, customer data, and tokenized card information to Helcim.
• We’ll waive up to $500 in processing fees to cover your cancellation costs, including early termination fees or equipment leases.
• Save around 25% on processing fees with our interchange-plus pricing and enjoy customer service that cares about your business.

Break up with your current provider for better service, lower fees, and many free payment tools. Switch to Helcim with our Merchant Buyout Program.

Break up with bad rates.

Feeling stuck with your provider? We'll waive $500 of your processing fees when you switch to Helcim.

Learn more

FAQ

How hard is it to learn using a point of sale (POS) system?

Learning how to use a POS system is simple because most modern systems have user-friendly interfaces. For first-time users, POS providers often include interactive tutorials within the app to help you onboard quickly. Additionally, many providers offer comprehensive tutorials on their learning pages, making mastering a POS system straightforward and efficient.

Do you need wifi for the point of sale system?

Most modern POS systems require a stable internet connection to process transactions, update stock level in inventory management, and sync data across multiple devices and locations. Without Wi-Fi, these POS features might be limited.

Are POS systems secure?

Yes, POS systems are secure because they use advanced encryption, follow PCI DSS guidelines, and regularly update their software to fix vulnerabilities. Using secure networks, implementing two-factor authentication, and training your staff to avoid phishing attacks can make your POS system even more secure.

What is the common problem in POS systems?

One common problem in POS systems is server downtime that can disrupt business operations. Additionally, issues with the merchant’s internet connection can disrupt payment processing.

What hardware do you need for a point of sale system?

The hardware needed for a POS system typically includes:

• Card Reader: To accept credit and debit card payments.
• Receipt Printer: To print customer receipts.
• Cash Drawer: For handling cash transactions.
• Barcode Scanner: To quickly add items to a sale and manage inventory.
• POS Terminal or Monitor: A touchscreen or computer to run the POS software.
• Tablet or Mobile Device: Used with apps to create mobile POS system for accepting payment on the go.
• Kitchen Display System (for restaurants): To send orders directly to the kitchen.
• Cash register (for legacy system): To handle cash transactions, track cash sales, store money securely, and provide change to customers.

Depending on your business needs, you might not need all these components. Learn more about what hardware you need in this article.

If your business primarily operates online, you can use an online point of sale system (virtual terminal) to seamlessly collect payments.

What data does a POS system collect?

A POS system collects a variety of data to help you run and manage your business effectively. Here are the key types of data most POS systems gather: Sales Data: Information on each transaction, including date, time, items sold, quantities, prices, discounts, and total sales amounts.

• Inventory Data: Details about stock levels, item descriptions, SKU numbers, and inventory changes are stored in the inventory management.
• Customer Data: Customer names, contact information, purchase history, and loyalty program details.
• Payment Data: Types of payments accepted (credit card, debit card, cash), payment processing details, and transaction statuses.
• Reports and Analytics: Reporting on sales trends, best-selling items, and financial performance.