Introduction
The point of sale (POS) system is arguably one of the most important investments for any retail business. An effective POS streamlines checkout processes, unlocks customer insights, and provides robust inventory and staff management capabilities. While traditional, on-premises POS systems have reigned in the past, cloud-based POS solutions have emerged as powerful alternatives promising greater flexibility and mobility. This guide provides an in-depth comparison of traditional vs. cloud-based POS systems to help retailers choose the right platform.
Overview of Traditional POS Systems
Traditional POS systems are typically on-premise solutions relying on desktop terminals or cash registers connected locally to the store’s internal network. The POS software and database are housed on a local server or PC in the back office. Traditional POS systems have been around since the first cash registers were introduced and have continued to evolve with technology.
Key attributes of legacy, on-site POS platforms include:
- On-premise server, software and database
- Fixed POS terminals/registers in store
- Limited mobility and access
- Manual software updates
- Higher upfront costs
- Dedicated tech personnel for management
For decades, traditional POS reigned supreme for retail businesses. However, the recent emergence of cloud-based systems has challenged legacy platforms.
Overview of Cloud-based POS Systems
Instead of relying on local servers, cloud-based POS systems leverage remote servers accessed online. The software, database and terminals connect to the cloud. This enables merchants to manage operations not just in-store but also remotely via any web-enabled device.
Key attributes of cloud-based POS platforms:
- Software, database and terminals access data in the cloud
- Mobility - Manage POS via any device from anywhere
- Automatic software updates
- Lower upfront costs and monthly fees
- Easier to set up and use
- Integrations with back-office platforms
For retailers wanting greater mobility, flexibility and functionality, cloud-based POS offers compelling advantages over legacy on-premise systems.
Comparing Features and Capabilities
While both options help ring up sales, they differ sharply regarding features and capabilities:
- Mobility - Cloud systems enable managing the POS from anywhere, while traditional POS requires being on-site.
- Omnichannel - Cloud POS seamlessly unifies in-store and online sales channels. Traditional POS operates as a silo.
- New Features - Cloud platforms roll out upgrades and new features quickly. Updating traditional POS requires manual software installation.
- Customization - Cloud POS enables effortlessly tailoring settings and preferences. Changing traditional POS requires complex programming.
- Integrations - Cloud systems easily integrate with ecommerce, accounting, inventory and other vital platforms. Traditional POS integration is difficult.
- Data Access - Cloud POS allows real-time data access from anywhere. Traditional POS requires physically being at the terminal.
- Scalability - Cloud platforms easily scale to accommodate business growth. Scaling traditional POS capacity is challenging.
- Security - Both systems use point-to-point encryption for processing payments. Cloud systems leverage robust cloud security while traditional systems require local security measures.
For advanced features and frictionless management, cloud-based POS reigns supreme.
Security Considerations
With sensitive customer payment data involved, security is paramount for any POS system. Cloud-based systems implement robust security including:
- End-to-end encryption for payment processing
- Cloud data encryption
- Rigorous compliance with PCI DSS standards
- Role-based access control and permissions
Meanwhile, traditional POS systems typically rely on:
- Local data encryption
- Network and endpoint security
- Physical security limiting system access
Following best practices for password management and data access controls is vital for any system.
Cost Comparisons
A major factor in choosing a POS system is comparing costs:
- Upfront - Cloud systems have little to no upfront costs. Traditional systems require purchasing or leasing POS equipment and servers, easily costing thousands.
- Monthly fees - Cloud POS involves an affordable monthly subscription typically under $200. Traditional systems have higher ongoing licensing, maintenance and IT support fees.
- Scalability - Cloud systems allow easily adding registers and locations for minimal fees. Scaling traditional POS capacity is costly.
- Software - Cloud platforms give automatic software updates. Traditional POS requires manual upgrades and IT personnel at a significant expense.
Though pricier initially, a cloud POS system can provide a better return on investment long-term. Lower monthly costs, automatic upgrades and easy scaling ultimately outweigh higher upfront expenses for legacy systems.
Ease of Use
For non-technical business owners and staff, intuitively operating the POS system is critical. Cloud-based systems provide a distinct edge in usability:
- Setup - Cloud POS can be deployed in under an hour without complex installation. Traditional systems require extensive IT configuration.
- Training - The familiar web-style interface of cloud systems requires minimal staff training. Often, no specialized IT skills are necessary.
- Use - Cloud POS allows managing the system via any web-enabled device. Traditional POS requires hands-on use of terminals.
- Customization - Merchants can easily customize cloud POS settings themselves as their business evolves.
For business owners lacking robust IT resources, cloud POS solutions provide a much easier path to get up and running quickly.
Which is Right for Your Business?
Choosing between traditional and cloud POS requires weighing your specific business needs:
- Budget - Cloud systems offer more bang for your buck long-term. But legacy POS works if you have minimal budget constraints initially.
- Existing infrastructure - If you have already invested heavily in on-site servers and hardware, sticking with traditional POS may make sense.
- Mobility needs - For a distributed retail business, the flexibility of cloud POS is invaluable. Single stationary stores can suffice with legacy systems.
- Staff capabilities - Tech-savvy businesses with dedicated IT teams can handle a traditional system. Less technical retailers benefit from cloud POS requiring minimal expertise.
- Omnichannel plans - For unified commerce across physical and digital, cloud POS is preferred. Traditional POS works for brick-and-mortar only models.
Carefully assess your budget, existing infrastructure, business model and internal capabilities. This will dictate whether legacy or cloud POS makes the most financial and operational sense for your organization.
Conclusion
Transitioning to a feature-rich yet easy-to-use cloud-based POS system can position retailers for flexibility and frictionless operations now and as their business evolves. While traditional POS systems sufficed in the past, cloud POS presents a compelling new alternative - especially for retailers lacking complex technical infrastructure and capabilities. Considering the differences in cost, mobility, security, integrations and scalability will ensure you choose the right POS platform to achieve your business goals.