Things to Consider When Buying a Retail POS (Point of Sales) System

What is a Retail POS System?

A retail point of sale is a place where customers make payments for products/services. A retail pos system has become a necessity for retail businesses that want to leverage modern technologies to improve efficiency and boost productivity. A POS system provides retail businesses with the tools they need to effectively manage sales, administration, employees and marketing. The POS is the core component of any retail business and more like a hub where inventory, sales and customer management merge.

Despite all the benefits associated with POS systems, almost half of single-store businesses still don’t use one. Instead, they rely on a combination of traditional methods such as cash registers, Excel and QuickBooks for bookkeeping. Although implementing a new technology can be overwhelming for small businesses, they should also consider the negative consequences of not having a POS system.

We have covered some of the best POS systems in detail in a separate post so you might want to have a look at that for more details. Here we’ll cover some important things to consider when choosing a POS system and its key components.

Components of a POS System

A POS system is comprised of two main components i.e. software and hardware. Things are pretty straight forward when it comes to hardware, but the software options can be a bit tricky to understand. Another thing to consider is that some vendors offer both POS hardware and software, while others only provide the software.

Choosing between the two depends on business requirements. Bundled offerings usually provide better integration, support and compatibility. But they are not the best option for businesses that want to customize the solution and use hardware/software form other vendors.


The two software options for POS include on-premises and cloud-based software and each has its own pros and cons. On-premises means the software is installed on a local machine and although it might be connected to the internet, it runs locally.

We have already covered cloud-based vs on-premises solutions in detail, which also applies to POS software solutions. Cloud-based POS software on the other hand runs form the cloud and is not restricted to any specific system. Let’s have a look at the key differences between cloud-based and on-premises POS solutions.

Characteristics of On-premises POS Software

The software is installed locally on the system

Businesses may have to buy a license for each system

Businesses are responsible for maintaining and updating the software themselves

On-premises solutions require dedicated IT professionals, especially large companies

Investment also required for purchasing hardware, which is often expensive and depreciates quickly

Characteristics of Cloud-based POS Systems

The software is in the cloud and can be accessed from anywhere

The licensing model is different, mostly based on the number of users or POS points

Automatic software updates, the software is maintained and updated by the provider

Dedicated IT professionals are not required to maintain the software

Low upfront cost

Choosing between on-premises and cloud-based software depends on a variety of factors, including integration support, required flexibility and budget. Many businesses prefer cloud-based software because of the low upfront costs, accessibility from anywhere and better scalability. On the other hand, businesses that want complete control over their data prefer on-premises systems (usually large businesses).

Hardware Components

Hardware components are the physical components needed to run a POS system. In addition to the usual components such as the CPU and input peripherals like keyboard and mouse, other components required to run a POS include:

Barcode scanner: Used for automation of the checkout process by scanning barcodes. The system automatically pulls the product information and adds the item to checkout list/total. POS systems connect barcode scanners with the inventory management module and update the stock levels automatically.

Credit card reader: An EMV-compliant CC reader is a must for businesses who want to ensure compliance and save themselves from losses associated with fraud liability.

Display unit/tablet: Many businesses prefer monitors to perform tasks that include viewing sales reports and clocking-in. However, many of them do not want to spend a lot of money and use bulk tablets instead of display.

Receipt printer: Physical receipts still remain the preferred proof of purchase despite all the advancements in technology so a receipt printer is a part of the POS system.

Cash drawer: Although cash drawers are becoming a thing of the past, they still remain relevant as most customers prefer paying by cash. Businesses need a secure place to put cash and can choose between different kinds of cash drawers, including manual, printer-driven, USB-based and Serial cash drawer.

Things to Consider and Key Features to Look for in a POS Software

Making a list of all the features you need and asking for an opinion from other retail business owners is a good starting point during the search. The POS software should be easy-to-use, agile, easy to maintain, scalable and flexible. POS solutions are available in abundance with varying features and prices. But there are a few features and things businesses should consider before deciding on any solution including:

Inventory Management

The most important component of the system that automatically updates the inventory and makes it easier to manage stock quantity. The IM tools allow users to digitally scan and count items, manage stock by creating different variations such as color and size and identify products with a unique number.

Multi-location businesses need a software that supports inventory tracking across different locations and allows consolidating purchases and orders. Many POS systems come with more than just inventory management tools, including automatic re-stock reminders, purchase order creation and stock transfers between different retail locations.

Customer management

Allows sales and marketing teams to keep in touch with the customers and build a strong relationship. The POS software should be able to integrate with a CRM, allowing it to automatically pull customer data. The customer management tools keep track of the purchase history and attach transactions to customers.

The customer management module should be able to record important customer information and connect with email marketing to stay in touch with the customers. Many POS systems come with a customer management system that have a loyalty program built-in.

Sales Reporting

Records all sales data and provides users with the tools they need to analyze trends and make informed business and sales decisions. The sales reporting tools allow users to generate sales reports based on different criteria, including by product, by amount, by profit margin and so on and provide snapshots of sales performance in an easy-to-understand form.

Employee management

Keeps log of work hours and sales and makes it easier to identify and reward top performers and employees who need some extra coaching. Makes it easier to manage performance and ensure that sales targets are being met. The employee management tools allow adding employees, creating and adding employee schedules according to the forecasted activity and tracking work hours/overtime.

Integration Support

Chances are good that you are already using an accounting software and other systems to manage business operations. A POS system should be able to integrate well with your existing software such as email marketing, which reduces the amount of data entry work required and ensures consistent and up-to-date information across all systems.

Integrations with other systems can save a lot of time and work hours required in inputting data in different systems. A POS system should not be judged only based on the cost and features it offers. Integration support is equally important and a POS system should support most (if not all) third-party solution you already have (or plan on using in the future).

Payment Methods

The POS system should be compatible with the payment methods you want to use, including chip-enabled debit/credit cards. An EMV-compliant terminal minimizes the risk of fraud liability and is a must-have for any modern retail business.


Cost is often the main reason small retailers don’t use POS systems. However, POS systems are available at different price points, including affordable monthly subscriptions and expensive made-to-order software. Gone is the time when small businesses could not afford POS systems. SaaS (Software as a Service) POS solutions have leveled the playing field and it’s not difficult to find reasonably priced options.

What make things a little complex is availability of so many POS systems, including a good amount of mediocre ones. Inconsistent pricing is one sign of a mediocre system, but you still have to test-drive a solution to see if it works as per business requirements. The pricing should be transparent and straight forward with no hidden fees. It’s better to go for no-contract option if available instead of opting for mandatory contracts.

Contract Terms and Length

Some providers require you to sign long-term contracts, while other allow you to cancel anytime. That’s why it’s recommended to test-drive a solution before committing to anything and read the SLA (Service Level Agreement) to understand what service level to expect and obligations of the provider. Another thing to consider is hidden fees and other costs such as training and installation. Ask the provider in advance if there are other costs involved such as implementation fees, training fees, support and maintenance fees.

Proprietary Hardware

Although proprietary hardware might save you some time and provide smoother functionality, it can make customization difficult and might not be compatible with the third-party software/hardware. It’s better to invest in hardware that’s compatible with other systems, allowing you to use it with the software of your choice.


Buying a POS software is like entering into a relationship with the vendor. The service providers must have the resources required to support the relationship in the long-term. Issues related to POS systems can cost retailers a lot of revenue and time, which is something they cannot afford every now and then.

Most of the employees using a POS system probably won’t be tech-savvy people. Quality support ensures timely resolution of issues when they arise and makes it easier to setup the system and answer questions users might have from time to time. Different providers offer support via different channels, including email, phone, ticketing system and live chat.

Make sure to confirm if the provider offers support within a reasonable time period via your preferred channel. Support should be unlimited and not come at an additional cost. It’s not that difficult to determine the level of support a vendor offers, thanks to review sites and forums.


Easy-to-use and simple solutions make it easier for IT teams to train employees and boost the adoption rate. It’s recommended to visit stores around you and investigate how usable is the solution they are using. Retail businesses cannot afford to use a software that makes the users feel overwhelmed. They need to take their time to test-drive different systems or ask other fellow retailers to during the research phase.


Training is directly related to usability and high employee turnover in the retail businesses. An easy-to-learn software usually comes with simple training procedures resources. It’s not practically possible for small and medium retail businesses to provide extensive training to employees when the turnover is high. That’s why they need a software with streamlined training processes and plenty of learning resources.

State of a Business

The current business situation plays a pivotal role in determining the kind of POS system you should buy. Businesses upgrading from an old cash-register might need something different than new ventures and businesses switching from an existing POS system (something might not have been working as expected in their current situation, so they are looking for a new system that resolves those specific issues).


The right POS system can play an important role in the success of a retail business. However, with hundreds of POS vendors and all claiming to be the best, it can become difficult to choose the right one. The good news is that there are plenty of resources to help you pick the right solution and now might be the right time for small and medium businesses to invest in a POS system.

Choosing the right POS system from the start ensures smooth operations and minimizes the chances of lost revenue and time. It makes businesses more competitive and establishes credibility with its customers. However, it’s important that the vendor also shares the vision of its clients and be willing to contribute in their success by providing customer-focused solutions and great customer services.