How to Choose the Best POS System for Your Small Business

When you’re looking for the best point-of-sale (POS) system for a small business, it’s important to understand which tools you need to help run and grow your business.

Table of contents

What is a POS?
When do you need a POS system?
Best POS system for retail
Best POS system for contractors and home repair
Best POS system for pubs and restaurants
Benefits of using a POS system for credit card processing

Intro

Looking for the best point-of-sale (POS) system for your small business? Having an understanding of the tools you need to run and grow your business is important. A good POS system for a small business lets you process every sale securely and has the right software to help you take care of administrative tasks more efficiently.

The type of business you run will dictate your sales and also the tasks you may need help with. A cafe might have different needs than a clothing boutique and a small business POS system perfect for a plumber might not make sense for a fitness studio.

For any small business, cost (initial as well as ongoing), security, PCI compliance and usability should be the top factors in choosing the best POS system. This article helps with what to look for in a POS system so you can make the right decision for your business.

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Deep Dive

What is a POS System?

A point-of-sale system (POS and alternatively known as EPOS) lets you record sales and accept payments. It’s like a till with brains, and it can be broken down into three basic components:

Hardware

A POS has hardware that allows you to accept payments. If you’re getting a new POS system, you should make sure it accepts all forms of payment including cash, debit and credit cards, and mobile payments. If it makes sense for your business, your POS system should also print receipts, store cash in cash drawers and scan barcodes.
If you’re running your Square POS software through an iPad, Square Stand is a great solution for your countertop.

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Software

POS software is your command centre. At a basic level, it allows you to find items in your library and accept a sale. More robust point-of-sale solutions also feature helpful tools such as sales reporting, customer engagement software, inventory management and more.

Payments

POS systems also make sure funds are sent to your bank account after each sale.

The right POS for your business can ensure that you capture every sale and help you streamline time-consuming administrative tasks.

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When do you need a POS system?

If you want to accept credit and debit card payments and have a streamlined system for tracking sales, it’s probably a good idea to invest in a POS system built for a small business. Even very small businesses benefit from a good POS system.

Unless you have a solid system for recording each sale electronically, it’s hard to have an accurate understanding of what you’re selling. Essentially, you’re better placed to make informed decisions for your business with more data at your disposal. Plus, having a POS system helps your small business appear more legitimate, which is especially important when you’re just starting out.

Important factors to consider when choosing a POS system:

  • Initial setup cost (time and money)
  • Payment processing costs (e.g., % of sale + charge per transaction)
  • Other monthly processing fees
  • Equipment costs/rental fees
  • POS software fees
  • PCI compliance (i.e., how you process payments, connect your systems and manage customers’ data securely)
  • Level of mobility
  • Ability to accept chip and PIN cards
  • Ability to accept NFC payments like Apple Pay, Android Pay and contactless cards
  • POS software features (e.g., invoices, ability to store customer data safely, inventory management, customer loyalty schemes, appointment management)

Benefits of using a POS system for credit card processing

While you can take card payments using a standard credit card reader, there are many benefits to using a small business point-of-sale (POS) system. For instance, every time you take a payment using a POS, all the data from the sale is tracked and recorded within the system. This is key for inventory management, which a small business POS system helps you manage.

For example, Square Point of Sale, our POS system, can send you alerts when you’re running low on an item, so you can reorder in time. Good POS systems for small businesses 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 — helpful when you’re placing an order with your bakery.

Small business POS systems often offer management for multiple locations, so you can effectively monitor the different sites your business has. 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. However, Square offers management for multiple locations free of charge.

Best POS system for retail

If you own a shop, you likely need a POS system that offers inventory management perfect for a small business. You’ll probably also need to connect to a barcode scanner and receipt printer. Square Point of Sale, our point of sale for small businesses, does all this and more.

Best POS system for contractors and home repair

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If you run a home and repair business, you’ll need a mobile POS system for small businesses that allows you to easily take secure credit card payments at the job site. Square’s small business POS system is also compatible with Square’s contactless reader. This is small enough to fit in your pocket - perfect for when you’re faced with international cards or a faulty chip and PIN card.

Want to bill customers instead? Square’s fully integrated Invoices software is free to use and is great for contract work of all kinds. You pay just 2.5% + VAT for each invoice paid securely online.

Best POS system for pubs and restaurants

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Pubs and restaurants are unique and require a number of specialised features in their points of sale. When shopping for a good POS system suitable for a small business, be sure to look for one that makes it easy to change menu items. You’ll also need to communicate with the kitchen or bar with item modifiers and printed kitchen tickets. Well-designed POS systems for small businesses have 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 pubs, you’ll want to easily reconcile cash sales and keep track of pay-outs so closing at the end of the night is simple. Don’t forget about built-in tipping to keep your staff happy. Square’s purpose built Restaurants POS system for small businesses does all this, and it can easily sync with great third-party apps.

FAQ

Frequently Asked Questions About Small Business POS Systems

1. Do I need to pay a monthly fee for POS software or to use a POS system?

Many POS systems for small businesses are pieced together with components from a different company, each with its own set of fees. For example, the POS software provider often charges a monthly fee. That scales based on the size of your business and how many sales you process. The hardware (a payment terminal or card reader) could come from a separate company and might have a rental fee, along with an annual contract. The payment processor might charge monthly fees and even a PCI-compliance fee in addition to a transaction rate for each credit or debit card sale.

But that’s not all. There are often extra costs for additional users, advanced reporting and management for multiple locations. Some small business POS systems even charge extra for full customer support. And that doesn’t even include credit and debit card processing fees (which often have hidden fees of their own).

Square is different. You get a fully integrated, feature-rich point of sale system for small businesses, all for one simple payment transaction price. Square’s fees are just 1.75% + VAT per contactless or Chip & PIN payment payment. That’s it. No hidden fees, long-term contracts, or commitments. We also never charge PCI compliance fees, and there are no POS software fees. Our friendly customer support team is knowledgeable about our products and you can get answers by calling our free phone number or visiting our online support centre.

Our hardware is affordable, secure and attractive, so you feel good about giving it pride of place at your payment desk.

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

If you feel you don’t need a point of sale for your small business, but still want to securely accept card payments, there are other mobile solutions.

Square Invoices is an easy way to send invoices to clients through our free POS app, Square Point of Sale. Invoices are always free to send and cost 2.5% + VAT for each invoice paid securely online. If you need to charge a client or customer on an ongoing basis, say a weekly dog-walking service or monthly catering delivery, you can set up recurring invoices. Your customers can even securely store their cards on file so recurring invoices are paid automatically. The cost for ‘Card on File’ is 2.5% + VAT per invoice paid. However, invoices aren’t suitable for all types of business, and in general could be more appropriate for repeat clients. For one-time clients, it might be better to get payment in person so you’re not caught out with a customer who chooses not to pay.

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

At their most basic level, small business POS systems include card payment hardware and a system that sends the funds to your bank account. POS systems for small businesses can also contain software to help you run and grow your entire business. This includes detailed sales reports and analytics, marketing tools, customer relationship management, loyalty schemes, eGift cards, etc.

Tills (or cash registers)l on the other hand, are simply machines that record sales, give change and store money. It’s important to keep in mind that cash registers don’t take Chip and PIN card, mobile, or contactless payments. You need a separate card reader for that. Cash registers have basic functions and can do some simple reporting, like telling you how many sales you made that day.

Square’s point of sale for small businesses, for example, can show you which are your busiest times of the day and the week. You can discover your best-selling items and what percentage of your customers are new versus returning. All of which is incredibly useful for making informed decisions about how many employees to schedule for different shifts, which products to stock and how to focus your marketing efforts.

If you choose to run your business with Square’s small business POS system, 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?

Short answer: not necessarily. PCI compliance requires that you comply with a checklist of requirements designed to ensure sellers and organisations process cardholder data safely and securely to prevent fraud or data breaches. Compliance is clearly important, but all the requirements can make it seem daunting. When choosing a point of sale for a small business, you definitely want to make sure it’s PCI compliant.

However, just because your POS software or payment processor is PCI compliant, it doesn’t guarantee that you are. For example, imagine you get a PCI-compliant POS system and card terminal. You might think you’re good to go, however, PCI compliance is about your entire payment ecosystem. How secure is your Wi-Fi network? Where do you store customer data? (Hint: Keeping debit and credit card info in a spreadsheet doesn’t meet required standards.) If your whole payment system doesn’t meet PCI-compliance requirements, then you’re not actually PCI compliant. It’s especially tricky because PCI rules can change, so with traditional POS systems, you might need to manually update the software, payment terminal, Wi-Fi or other systems in your environment to keep them compliant.

Fortunately, if you use Square as your small business POS system, we’ve got you covered. Since we provide the whole payment 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 so your customers’ data is safe from the moment the card touches our system. And because we update through the cloud, if the PCI checklist changes, you always have the current version and can rest easy knowing you’re compliant. Learn more about PCI compliance and how Square uses industry-leading PCI standards.