How to Pick Your Small-Business Payment (POS) System

Very few retail businesses — even small ones — still use an old-school mechanical cash register. There are simply too many easy-to-use digital solutions that will integrate accepting credit cards with some level of record-keeping.

The challenge for the small business owner, however, is that payment or point-of-sale (POS) systems vary greatly in function and price. There are very inexpensive solutions that take payments and ring up items based on the codes associated with their price tags. A small business owner could also choose a POS that tracks inventory across multiple locations and the internet.

Before picking a POS, you must decide what your needs are now and what they might be going forward. You may know exactly what you need, or you might choose a system that can grow with you.

Your POS will dictate how your accept payment from customers. Image source: Getty Images.

Ask these questions

Before even looking at POS options, you should analyze your business. Ask yourself the following questions:

  • What do I want my sales system to do?
  • How many registers/checkout locations will I need? Do I need mobile checkout capabilities?
  • Is real-time inventory tracking important?
  • Will I need tracking across multiple locations?
  • Do I want to be integrated with a website?
  • How am I going to pay for my POS?

Your type of business will help you make many of these choices. For example, a single-practitioner physical therapist may only need a single terminal to take payment. A multi-location clothing retailer may want robust inventory-tracking features and the ability to add checkout capacity during busier shopping times.

Answer the questions above honestly and with an eye to the future. It’s not a problem if you buy an expandable system and never opt to add all the features that can be unlocked. It’s a disaster if you spend big on a POS that you quickly outgrow.

A couple of options

If you are just starting out, it probably makes sense to go inexpensive. A basic system from Square (NYSE: SQ) will allow you to accept credit cards, and you can add payment stations, credit card readers, and cash-register-like devices as needed. These systems are flexible and will work for many businesses as they grow, without the need to outlay significant cash to get started.

For more-robust or mature businesses, Intuit (NASDAQ: INTU) offers QuickBooks Point of Sale. This product is a more traditional POS that can do everything from inventory tracking to tying in with your record-keeping and customer rewards program.

There are countless other options, but these two are perhaps the best known. Either one can meet basic or complex needs, though Square has a lower-priced starter system, and the entry-level Intuit product offers more robust functionality. In both cases, financing can be arranged.

Know your needs

Buying a system that can track inventory requires that you input items that you already have and new ones as they arrive. If you know you’re not going to do that, then you may not want to spend the money required to add that type of feature.

In addition, while the idea of having roving salespeople check customers out from their smartphones may appeal to you, consider whether it makes sense for your business. Allowing that type of transaction may enable more theft (since it becomes difficult to know who has paid). It also makes less sense in a business where customers often pay with cash.

Buying a POS is a major decision. Take your time and test as many as you think you need to before deciding what’s right for you.

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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Intuit and Square. The Motley Fool has a disclosure policy.

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