The Secret To Running Your Business Effectively? Knowing Whether You Need a POS System or Cash Register (& The Difference Between Them)

So you’re getting ready for business launch and you’re officially ready for business — almost. You still have a few big things left to decide. One big question lingers — Do you need a point of sale (POS) or can you settle with a cash register? The answer depends on how you answer other questions like:

• How important is mobility?
• How much inventory do you have?
• Do you need customer engagement tools?
• What about accounting and inventory?

When it comes to choosing the right tools for your business, it certainly pays to dig a little deeper and sift through your options carefully. All of the questions above beg for answers, and no one can answer these questions better than you can. However, if you need a bit of guidance navigating these unfamiliar waters, you’re in the right place.

This post focuses on the notable differences are between traditional cash register systems and a POS cash register. Let’s take a closer look at the two options so you can determine which is the best choice for your business — now and in the long term.

What Is A Cash Register?

A cash register is an electronic, non-computerized device that has one primary function — recording a sale and collecting cash. A cash register can also include a receipt printer, barcode scanner and of course, a cash drawer to hold money. Some of the specific features, like product library capacity or issuing unique ID codes for your operators, may vary.

Can You Accept Credit Cards With A Cash Register?

Yes, you can accept credit cards with a standalone credit card terminal, but think of this as a non-integrated option. Your cash register still operates as a separate piece of equipment. You and your team can record the non-cash sale appropriately so you can reconcile the books — and your cash till — at the end of the day. Some merchants place the merchant copy of the credit card receipt directly in the cash drawer for a manual tally at the end of the day.

Pros & Cons Of Using A Cash Register

Let’s start with the cash register system pros. A cash register is a relatively inexpensive piece of hardware that gets the job done when it comes to tallying a sale. Most of them are easy to program and comfortable for your sales team to learn the ropes. The equipment itself is reliable and does what it promises — create basic sales reporting by the dollar.

However, when it comes to getting detailed reports about how, when, and where your products sell, inventory tracking and management, or customer engagement, you’re out of luck. You’ll need to piecemeal other software and products together to form the complete solution you need. Another significant drawback to a cash register is that you can’t sync registers or locations. All of this means more room for human error and less capacity for personalized customer service.

It’s safe to say that a traditional cash register is a relatively simple piece of equipment, and while a workhorse when it comes to tallying a sale, that’s all you can expect. If both simplicity and low cost are what you are after, the cash register is a great option. You can purchase one for a few hundred dollars and start ringing up your sales.

If you are looking for more integration and control, however, keep reading. Below we will discuss the POS register which offers much more beyond the sales tally.

What Is A POS System?

A point of sale system, otherwise known as a POS, is a computerized system utilizing a combination of software and hardware to perform a variety of functions beyond just ringing up a sale. A POS register system comes with a variety of software features, but some you may have to opt-in for an additional fee. POS business tools may consist of:

• Inventory tracking
• Employee tracking and reports
• Advanced sales reports
• Loyalty program
• Marketing tools
• Managing multiple locations

You may be wondering about payment processing, and if so, you have options there, too! As with a cash register, you can choose a non-integrated option with a standalone terminal. However, if you want an integrated approach — where your terminal and POS work together to record sales, you have a few options. We will explore some of these choices later on in the post.

When it comes to hardware, you have to first think about what — and how much — you need. If you are a smaller shop, you may get by paying nothing for a reader, as companies like Shopify POS (read our review) and Square (read our review) offer free card readers with their accounts. Both of these companies sell POS systems that are just all-in-one dashboards for your reporting, tracking, and customer data. You access their dashboard on your computer, tablet, or mobile device. It’s all very portable and low profile.

If you need a more robust countertop solution, you have many choices. Most modern POS systems use a touchscreen, often an iPad or another type of Android tablet. (Note: These can also double as mobile processing tablets in some cases.) These updated POS systems don’t rely on clunky equipment or require an expensive software license. That’s because, over the last few years, most POS systems have moved to the cloud-based SaaS (software as a service) model. The great thing about the SaaS model is that you also don’t have to worry about keeping up with the latest updates — your monthly subscription usually also covers you with the latest security or feature updates. This flexible option frees up your countertop space, too.

Of course, you may also need all the hardware bells and whistles such as:

• Customer-facing display
• NFC mobile wallet reader
• Barcode scanner
• Tablet Stand
• Kitchen receipt printer
• Cash drawer
• Scales
• Additional tablets for mobile or wait staff

The point of sale system has come a long way from the clunky days of yesterday, and what’s super for small business owners is that the price has come down significantly, too. Gone are the days where you’d spend thousands of dollars in hardware and setup costs!

That said, your budget is still a deciding factor. Below we take a look at the costs you can expect with a POS register and later, what you need to know about credit card processing.

How Much Does A POS System Cost?

Nowadays, nearly any type and size of business can find a POS suited to their needs and budget. How much a POS system costs can vary significantly. Prices go up with the hardware and software tools you need, but in many cases that also means you have room to scale up — or down as needed.

If you are looking for more of a sturdy countertop presence, you could get a complete point of sale setup starting around $700. Many POS companies offer hardware product bundles to help ease costs and sweeten the deal so you’ll sign up with them. You may also catch a promotion or land free hardware out of the deal. Some providers charge a single monthly subscription fee while others charge per device. Consider how many devices you’ll need per location and crunch the numbers to find the best value.

When it comes to identifying the best option, compare both long term and short term costs, and be very cautious with long-term contract agreements. Read How Much Does A POS System Cost? for a look at some of these costs. Before you commit to an annual contract with a POS system (even if it saves you money) test it out on a monthly basis to ensure the software is really right for you. 

The goals of any POS system should be to save time, money, or improve customer experience. So if an accounting or inventory management integration saves admin time, or a loyalty program helps you re-engage customers, it’s worth every penny! Wondering how a point of sale system could cut costs? Check out Use Your POS to Reduce Labor Costs and find out. Here is a handy POS Software Comparison table to help you on your journey as well.

Keep in mind that a POS system and payment processing don’t always come together, which brings us to the next big talking point: How to set up credit card processing with your POS system.

How Does Credit Card Processing Work With A POS System?

A point of sale system records all types of payments, but credit cards are indeed the dominant option in shoppers’ wallets. That is why it’s time to discuss one of the most critical aspects of your whole POS cash register system — payment processing.

All-In-One POS & Payment Processing

Some POS Software companies combine credit card processing with their point of sale — and may or may not be compatible with anything else. Companies operating through this all-in-one approach include Toast POS for restaurants (read our review), ShopKeep for retail (read our review), and mobile processing apps like Square (read our review) and PayPal Here (read our review). Mobile credit card processing companies typically start with an app and then you can upgrade hardware as needed. This option can be easier for merchants to get started because everything is already integrated and ready to go.

The Integrated Approach

Other companies integrate a separate POS system with credit card processing. What this means is your POS app and credit card terminal are linked together, and the POS tracks the sale when a transaction is approved. If you were to sign up with a credit card processor first, they often supply you with a list of compatible POS systems. Conversely, if you choose a POS system first, you can get a list of compatible processors, so you’re not left in the dark.

Non-Integrated POS & Processing

Another option is the non-integrated POS approach. Similar to a traditional cash register and payment processing setup, you have two systems that operate separately with each sale. If you have ever been to a shop that has two receipts, they likely are using a non-integrated setup with either a traditional cash register or a POS system. This approach frees you up to go with virtually any processor you choose, but you do lose an element of convenience. 

Cost Of Credit Card Processing

When it comes to costs, credit card processing may include per transaction fees, markups for the type of transaction or card, monthly fees, or other one-time fees. The POS and payment processing combination is a pretty big deal. For an in-depth post that can help you answer the most important questions and help to know what to ask in the first place, check out Payment Processing Companies And Services For Small Businesses and The Complete Guide to Credit Card Processing Rates and Fees to learn more about how to navigate finding a payment processor. 

Pros & Cons Of Using A POS System

When it comes to the pros and cons of using a POS system, only you can decide what aspects are most important for your business. In general, the pros of using a POS system include:

• Multi-site businesses management
• Access to reports anywhere, often in real time
• Feature-rich and easy to use
• Login-control for staff and some activity tracking potential
• Categories and item lookup
• Inventory tracking and management
• Customer tracking and engagement

Another great thing about the subscription-based SaaS model of today’s POS systems is that you can usually scale services up and down, and integrate anything as you go. Merchants don’t need to worry about syncing customer or inventory data from one location to another because it’s all automatic.

As far as the drawbacks to a POS, it all depends on the size and nature of your business. If you have limited inventory and you have a well-established set up with one location, you probably don’t need the bells and whistles of a full-fledged POS or the monthly cost.

Here is an example to illustrate my point: Near my house is a locally famous donut shop. Despite a line meandering out the door and each person having to wait for the customer in front to write a check because they don’t accept credit, everyone still seems very happy. Customers are content to get their favorite pastry before the shop sells out; the donuts are that good. This shop will likely not open any more stores in the future, as they are currently the donut oasis right where they sit. With their current setup, a POS is probably overkill. They don’t need advanced inventory reporting because they literally start fresh each day and fill up their case — it will all sell. But that can’t be said for every business. Inventory reporting tools, customer engagement, and flexibility in processing are integral aspects to most businesses nowadays. 

Should You Choose A POS Or Cash Register?

The truth is, those of us who own businesses know how hard it can be to compete with the big-box stores and franchised businesses that seem to crop up everywhere. We can’t all enjoy the untouchable status of a locally famous donut shop that sells out by mid-morning. For the rest of us, the POS can solve some big challenges in business.

So let’s recap. If you only plan to accept primary cash payments, don’t have a lot of inventory, or have a small budget, you can certainly manage to get by with a cash register. However, keep in mind that you won’t get the advanced sales reporting, customer reporting, or other features that you get with a POS system. The data that you glean from tracking product sales can be invaluable when it comes time to plan and market, so keep in mind what you have to gain, too!

If you plan to accept cash and credit cards, it’s definitely worth having a POS system that can combine reporting for both cash and card sales — as well as all the other features you get with a POS. You will incur added costs with this solution, but remember that you have options here, too. For instance, mobile POS systems operate with a mobile device and oftentimes they throw the first card reader in for free. The mobile option may be simpler than a full-fledged POS, but they still offer you more reporting and business tools beyond just ringing up a sale. For more information on specific companies and POS options, check out our POS Software Comparison chart.