How to Choose the Best POS System for Your Small Business

Table of contents

• POS systems explained for small business owners
• Why and when should you invest in a POS system?
• Features to look for when choosing a POS system
• What are the benefits of using a POS system?
• How to choose a POS system for your business
• FAQ

As a business owner, the tools you rely on have a big impact on your success. Understanding what a point of sale (POS) system is and the best option for your unique business is the key to smooth operations and steady growth. Selecting a POS system may seem straightforward, but it can be daunting when you consider the array of options available and the potential costs involved. When you’re looking for a POS system in Canada, consider the tools you need to run and grow your business effectively. A reliable POS system should seamlessly process all payments and meet the core needs of your business, from advanced inventory management to offline credit card processing.

For example, retail businesses have different demands from service-oriented ones, and this could influence POS system selection. A busy cafe might have different needs than a clothing boutique, and a small business POS system that works for a plumber understandably might not make sense for a fitness studio. Choosing a restaurant POS system? Features like order and menu management will matter a lot to you.

Regardless of your industry, considering cost, security, PCI compliance and ease of use can help you choose the right POS system to meet your needs.This guide helps you understand what to look for in a POS system so you can make the best decision for your business.

POS systems explained for small business owners

A POS system empowers businesses to efficiently ring up sales and process payments. But it does more than accept those payments. It’s a central hub for all sales transactions, customer data and inventory – like a cash register with brains. The right POS system allows you to streamline operations and elevate the customer experience.

When comparing different options, consider whether a POS system integrates with some of your other tools. It also needs to provide flexible payment options that come with strong security features. Finally, look into omnichannel capabilities, especially if your business includes both online and offline revenue streams. POS systems vary in its features, but they can often be broken down into three basic components:

1. Hardware

A POS has hardware that allows you to accept payments. This includes devices like card readers, barcode scanners and receipt printers, which are all crucial for daily operations. Your POS system should allow you to accept all forms of payment, such as cash, credit cards and mobile POS options. If it makes sense for your business, your POS system should also print receipts, store cash in cash drawers and scan barcodes.

2. Software

POS software is the digital brain of your operations. At a basic level, it helps you look up items and process sales. But more robust point-of-sale solutions also feature helpful tools like sales reporting, customer engagement software, inventory management and more. Such systems are vital for offering customer loyalty programs and maintaining robust inventory reports.

Having everything on a single online platform is fantastic. No files saved on a computer. Everything is accessible in two and a half seconds with Square.
– Dimitri Chapuis, President and Business Administrator of Papillote & Cie, Quebec, Canada.

3. Payments

POS systems also take care of routing funds to your bank account. There’s often a small delay between the moment a customer pays and the moment you receive the funds. Different providers offer different payout schedule options,but the right POS for your business allows you to access your money when you need it. With Square, you can get your funds as soon as the next business day or set up a custom, recurring payout schedule.

Why and when should you invest in a POS system?

If you want to accept credit and debit card payments and have a streamlined system for tracking sales, it’s a good idea to invest in a POS system.

In North America, consumers now prefer to pay with mobile POS systems, according to a Fortune Business Insights report. And in 2023, credit card contactless payments made up 57 per cent of total contactless transactions in Canada, according to Payments Canada. Being able to offer quick, mobile and contactless payment options is crucial to keeping up with consumer expectations.

Unless you have a solid process for recording each sale electronically, it can also be hard to have an accurate understanding of what you’re selling and how you’re selling it. The more data you have about your business, the more you can make informed decisions.

Plus, having a POS system helps your business appear more legitimate, which is especially important if you’re just starting out. This emphasis on legitimacy can strengthen customer relations and brand development.

Features to look for when choosing a POS system

• Initial setup cost (time and money): POS system setup costs can vary greatly depending on the type of hardware you need, from tablets to barcode scanners and receipt printers. A small business could spend from $0 to over $300 a month for a cloud-based POS solution and from $69 to over $1,200 for hardware, according to Forbes.

• Payment processing costs (e.g., % of sale + charge per transaction): Most POS systems charge a fee per transaction, which can seem nominal but quickly adds up. Look for a POS provider that provides transparent, competitive rates. Keep your sales volume in mind, as some POS solutions have tiered pricing.

• Other monthly processing fees (e.g., PCI-compliance fee, chargeback fees): Factor in any other recurring costs, such as PCI-compliance and chargeback fees. Some POS providers charge for specific software add-ons.

• Equipment costs/rental fees: Depending on your setup, you may need to invest in accessories like card readers for multi-location support. A flexible setup is essential, especially if you and your team need to process sales on the go. You may also be able to save on costs by using your existing laptop or smartphone.

• POS software fees: Many POS providers charge a monthly subscription fee. When weighing whether a subscription is worth it, consider scalability. Will your POS system be able to grow with your business without tons of extra costs? Square POS offers advanced features without monthly fees.

• PCI compliance (i.e., how you process payments, connect your systems, and manage customers’ data securely): Payment security is critical. If your business doesn’t comply with Payment Card Industry (PCI) standards, you could face hefty fines and penalties. Your POS system should include protections like end-to-end encryption and data tokenization to protect customer data.

• Level of mobility: Whether you sell goods at local markets or want to speed up the checkout experience by having your staff process sales on the floor, a good POS system lets you take payments anywhere. This flexibility helps you expand more easily while streamlining features like inventory management.

• Ability to accept EMV chip cards: Being able to accept chip card payments is key, as the vast majority of credit and debit cards in Canada are chip cards.

• Ability to accept NFC payments like Apple Pay, Google Pay, and contactless cards: Providing a fast, flexible check out experience is important. These days, many customers prefer checking out with digital wallets.

• POS software features (e.g., invoices, ability to store customer data safely, inventory management, customer feedback): When choosing a POS system, ease of use is paramount – you don’t want to spend hours training new team members. Take the time to map out your unique business needs. From creating loyalty programs to engaging customers with personalized promotions , the right POS can also support your marketing strategy.

What are the benefits of using a POS system?

Centralized operations

A system with efficient payment processing capabilities allows for smooth operations in both retail and service environments. It gives you a complete view of what’s going on in your business and helps you manage multiple functions without constantly switching tools.

Faster, safer transactions

Modern POS systems allow you to create a better, faster checkout experience for your customers. This reduces wait times and lets you serve more customers.

Inventory management

While card payments can be handled via standard methods, POS systems offer superior inventory management and customer data handling. This is vital for streamlining stock monitoring and overall business operations.

Sales reporting

POS systems also offer comprehensive sales analytics and data. With Square, you can see if you tend to sell more croissants or muffins on Mondays, for example — a helpful insight when you’re placing an order with your bakery.

Customer relationship management (CRM)

CRM capabilities allow you to personalize the customer experience and drive repeat business. For example, you can track past spending behaviour to create targeted offers.

Omnichannel integration

A POS system provides omnichannel support and lets you dream up and test out new offerings without friction. For example, if you operate a restaurant, you may want customers to be able to place orders on your website with ease. If you run a beauty business, you may want to reach new people through Instagram ads and have them book their appointment online.

Payment flexibility

From Apple Pay to gift cards, POS systems allow you to provide payment flexibility, which makes customers more likely to spend and return.

Employee management

POS software often allows you to manage your team’s schedule more efficiently. With Square Shifts, for example, you can use real-time data to make staffing decisions. If Tuesdays are slower, you schedule one less employee that day.

Scalability

POS systems often offer multi-location management so you can effectively monitor your business’s different branches. However, it’s worth noting that some POS systems charge extra for each additional location, which can be frustrating if you’re trying to expand. (Square offers multi-location management for free).

Regulatory compliance

A POS system can take the guesswork out of PCI compliance and keep your business protected. Square also offers sellers free chargeback protection for up to $250 each month. If a customer disputes a payment, we go to bat for you for all chargebacks and cover the cost even if the bank doesn’t rule the case in your favour.

How to choose a POS system for your business

The type of business you own also matters when it comes to choosing a POS system that will enable your success. Here are some things to keep in mind when choosing a POS system for retail, contractors and home repair businesses or bars and restaurants.

Choosing a POS system for retail

When evaluating a POS solution like Square, consider features that not only support POS transactions, but also enhance overall business management. For retail, a comprehensive POS system that integrates inventory management and connects to a barcode scanner and printer is essential. Square POS does all this and more. It works seamlessly to connect your in-person business with your online business if you have one and also helps manage invoices.

Choosing a POS system for contractors and home repair

If you run a home and repair business, you need a mobile POS system that allows you to easily take secure credit card payments at the job site, even if you’re in a remote location without connectivity.

You can accept chip cards and contactless payments and protect your business with Square’s contactless and chip reader. This is impossible with conventional credit card systems, highlighting the advantages of a mobile POS setup.

If you’re in a spot with no Wi-Fi or phone reception, you can still take offline card payments with Square and get paid wherever your business takes you. Want to bill your customer instead? Square Invoices is free and great for contract work of all kinds. You pay just 2.8% + 30¢ for each invoice paid securely online.

Choosing a POS system for bars and restaurants

Bars and restaurants have unique needs, requiring specialized POS system features. Look for a restaurant POS system that makes it easy to change menu items and communicate with the kitchen or bar with item modifiers and printed kitchen tickets. It should also give you the ability to split tickets between diners and keep open tickets for customers who want to settle their tab later on.

With any POS system for restaurants and bars, you want to easily reconcile cash sales and keep track of payouts so closing out at the end of the night is a breeze. And don’t forget about built-in tipping to keep your staff happy. Square POS does all this and easily syncs third-party apps like Uber Eats. Not to mention the fact that the initial set up is quick to set up: All you need is a smartphone to get started.

Frequently Asked Questions About Small Business POS Systems

1. Do I need to pay a monthly fee for POS platforms or using a POS system?

POS systems often come with monthly software fees, hardware rental costs, PCI compliance fees and other hidden charges. All this can cost anywhere from $60 a month for the most basic of POS systems to $150+ a month for software with moderate functionality. To put this into context, this would represent an additional 0.36 to 0.9% per transaction for a business with $200,000 worth of card sales.

Square is different. You get a fully integrated, feature-rich POS system for small businesses. Square’s fees are just 2.5% for all major credit cards and 0.75% + 7¢ per Interac chip and PIN or tap. See funds deposited into your bank account as fast as the next business day. That’s it. No hidden fees, long-term contracts or commitments.

2. What alternatives to a POS system can I use?

If you don’t need a full POS system but still want to accept cards, Square Invoices is available for free through Square POS. It includes unlimited invoicing and you pay 2.8% plus 30¢ for each invoice paid securely online. For recurring services, you can set up automatic billing with cards on file at 3.3% + 15¢ per invoice.

3. What’s the difference between POS systems and cash registers?

POS software platforms are versatile tools that can streamline various aspects of business, catering to specific industry needs. Small business POS systems seamlessly integrate credit card payment hardware and software, enabling comprehensive business operations and inventory control. They can also optimize staff schedules to boost efficiency and customer satisfaction.

Cash registers, on the other hand, are simply machines that record sales, give change, and store money. It’s vital to remember cash registers don’t support credit card transactions and need separate processing systems. Cash registers have basic functions and can do some simple reporting, like telling you how many sales you made that day.

If you choose to run your business with Square POS it integrates beautifully with Square’s stylish, simple hardware and can easily be connected to a cash drawer.

4. If I buy a POS system, does that make me PCI compliant?

Not necessarily. PCI compliance involves your entire payment environment, not just your POS software. If your whole payments system doesn’t meet PCI-compliance requirements, you’re not actually PCI compliant. It’s especially tricky because PCI rules can change.

Fortunately, if you use Square, we’ve got you covered. Since we provide the whole payments environment, we make PCI compliance simple. Basically, we provide an integrated solution across payments, POS hardware, software and customer data.

We use end-to-end encryption to keep your customers’ data safe from the moment the card touches our system. And because we push updates over the cloud, if the PCI checklist changes, you always have the current version and can rest easy knowing you’re compliant.

You can learn more about PCI compliance and how Square uses industry-leading PCI standards here.