POS systems for small businesses

A POS system is a combination of hardware and software that work in tandem to process payments and record sales, either in person or online. 

There are several types of POS system:

• POS Terminal: A basic system designed primarily to process credit and debit card payments in a compliant and secure way.

• Retail POS system: A more fully featured system that can record details of sales as well as process payments and is designed for use in physical locations like stores or pop-up shops.

• Restaurant POS system: This may include additional features like table management, kitchen display systems and online ordering.

• Mobile POS system: This is a software-based POS designed to work with a regular mobile device, such as smartphone or tablet. 

• Cloud POS: this is hosted in the cloud and is increasingly popular due to the fact it’s relatively easy to set up and deploy, with easy access to your data.

Point-of-sale systems provide you with the means of taking, processing, and recording payments. Most follow the same process:

• A customer puts products into their shopping basket (virtual or physical) before taking them to the checkout to purchase.

• The POS system adds up the total value of the shopping basket, adds any relevant add-ons (such as VAT or postage), applies any discount vouchers or codes, and then presents the customer with the final amount to pay.

• The customer pays using the POS’s payment processing system – this might be with a debit or credit card (swipe, contactless or chip and PIN), a mobile payments system, or with cash.

• The transaction is logged (including its date and time) and completed: the customer receives any change if paying with cash, along with a receipt, which may be printed out or emailed to them.

POS systems can also do much more behind the scenes depending on what features they provide, such as updating your store’s inventory after each purchase, applying loyalty points to the customer’s account, or providing reports and analysis into recent sales.

Point-of-sale systems are a vital tool for any business who wants to boost trade through supporting the full range of payment methods. Whether you’re a sole trader selling handmade goods at craft fairs, a newly established business on the high street, or a busy restaurant or bar looking for ways to simplify payment for your patrons, there’s a POS system to suit you.

How consumer behaviour is changing 

UK consumers continue to gravitate away from paying in cash, and in 2022 a milestone was reached when half of all payments were made using debit cards compared to just 14% with cash, according to UK Finance. 

POS systems are constantly evolving to match changing habits too, making them a vital investment for any business wishing to take advantage of the 87% of adults who made at least one contactless payment per month in 2022, or the 30% who have signed up to at least one mobile wallet service such as Google Pay or Apple Pay.

The price can vary widely between POS providers and systems depending on what you need. Costs can be divided between three segments:

• Hardware: Expect to pay £20-50 for a simple card reader, £300-£1,000 for a full POS terminal, and £75+ for add-ons like barcode scanner or secure cash drawer.

• Software: Some solutions can be bought outright for as little as £30 for an entry level package, but most providers include the cost of their proprietary software in their fees. Some offer multiple tiers depending on the features you need.

• Payment processing: The cost of processing each payment, whether online or in-store.

Common payment terms

Monthly fee: A charge made by some POS providers to cover the costs of using their software and – if included – hardware. Expect to pay around £25-£70 per month for a package aimed at small businesses that includes software but not usually hardware.

Transaction fee: This is a charge levied on every transaction – typically around 1.5-2.5% of the total cost, but sometimes also accompanied with an additional flat charge for certain types of transaction (such as online purchases). Transaction fees can simply cover the payment processing fees or cover other costs too, eliminating the monthly charge.