Point-of-sale (POS) systems are among the fundamental systems that retail businesses rely on. However, it is precisely because POS systems are extremely common in the retail sector, and retail companies use them every day, that it can be easy to take them for granted and forget to update them.
If you haven’t updated or upgraded your POS system recently, you might be surprised by how sophisticated contemporary POS systems are. Rather than simple payment systems, today’s POS systems offer a range of automated tools that can streamline your business processes and improve customer experience. That’s one of the (many) reasons you should choose a complete POS system for your retail business, like the one offered by VendHQ.
If you don’t feel the need to upgrade your POS system, you should. Working with a system that has not been updated means that you might not be able to perform certain types of transactions, and can even expose your business to security threats, like cyber attacks.
In this article, we’ll look at what a POS system should be able to provide, why it’s important to keep yours updated and how you should approach the cost of upgrading it.
What Should a POS System Be Able to Do?
If you are working with a dated POS system, the features that newer systems come with might be surprising. LinkedIn contributor Shmuly Preizler, an expert on POS systems, recently outlined a list of the tasks that a robust POS system should have the ability to perform, including the following:
- Calculate accurate payments for every transaction
- Record payment methods
- Track money in the cash register
- Create regular sales reports
- Determine proper labor and payroll numbers
- Maintain inventory data
- Provide information on repeat customers
Beyond these “basic” functions, a quality POS system also integrates with your wider IT infrastructure, including your online payments system. This means that it should be able to handle recurring payment processing and include support for new technologies such as integrated payments and cloud infrastructure.
At their best, modern POS systems can even help you streamline more strategic goals. If you are looking to build a strong e-commerce community around your brand, ensuring that your POS systems offer great functionality can be an effective way to encourage brand loyalty and great customer reviews.
The Importance of Updates
If you haven’t updated your POS system in a few years, you are probably missing out on many of the features I’ve listed above. You are also in the minority among retail companies: a 2015 Capterra survey found that 88% of companies have updated their POS software in the past five years, indicating that most retail companies take the need to update seriously.
There are also a number of more practical reasons why you should update your POS system. It has now been five years since the 2015 deadline for major U.S. credit card issuers to implement EMV POS systems, but many companies are still working with POS systems that cannot handle chip-and-pin payments. Not being able to take this kind of payment can undermine the trust that your customers have placed in your company, and can also have legal ramifications: companies that do not use an EMV-capable POS system and incur a fraudulent transaction are held liable for customers’ losses.
In addition, POS systems that have not been updated for a few years are increasingly targeted by cybercriminals due to the security vulnerabilities they contain. Falling victim to a hack can not only have significant financial consequences, but also affect your online reputation. For that reason, it's important to implement a POS system through which you can avoid credit card processing pitfalls and that comes with dedicated IT support.
Finally, upgrading your POS systems might save you money. Advances in POS hardware over the past five years mean that contemporary POS systems are typically much cheaper than their ancestors, and also come with lower monthly maintenance costs.
Financing Continual Upgrades
All that said, upgrading your POS system is certainly a major business decision. The same Capterra survey mentioned above found that the major obstacle retail companies face when it comes to upgrading their systems is a lack of working capital. Though POS systems are now much more affordable than they were even a few years ago, the cost of implementing a new system can still be prohibitive for small retail companies with thin profit margins.
This issue can be approached in two ways. It’s certainly possible to justify a one-off business loan to upgrade your POS system, especially given the extra functionality (and increased profit) that a new POS system provides. However, you should also recognize that upgrading your POS system (and other systems, for that matter) is, in reality, a recurring cost.
As such, raising the money to update and upgrade your POS system should be an integral part of your business planning. Most high-quality POS systems on the market today have the ability to expand as your business does, and therefore setting these funds aside need not dramatically affect your profit margin. It is critical, however, that you meet the cost of POS upgrades every five years or so: otherwise, you will be overtaken by competitors with more agile, more functional, cheaper systems.
The Bottom Line
Ultimately, the purpose of your POS system extends far beyond the ability to take payments from customers. Complete POS systems are now an integral part of the modern business environment and you can integrate them with many of the other systems you use.
The benefits of updating your existing POS system are multiple: increased functionality, increased security, and potentially decreased costs. Upgrading your existing system is a more dramatic step but can bring equally dramatic advantages to your business. Above all, you should recognize that the vast majority of retail businesses are using POS systems that are less than five years old. As a consequence, if you are still using a legacy system you risk being left behind by your more advanced competitors.
Tell us about your current POS system set up below. Do you find gaps in its efficiency? We’d love to hear from you!