How to Choose the Best POS Machine for Your Business

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Making payments an effortless and reliable process is a must to enable smooth business operations, especially for merchants such as retailers. The earlier system of cash registers has been replaced extensively with point of sale devices, since consumers are increasingly using plastic money even in developing economies like India. In fact, as India embraces FinTech, cashless is going to be the primary way forward. This requires merchants to invest in the requisite systems and processes, including the right point of sale machines, to make the payments process efficient and effective.

What is Point of Sale

Payments at Point of Sale (POS) terminals are increasingly becoming the mainstream payment mechanism for business and consumer transactions. The Point of Sale machine is a computerised device that can process credit and debit cards. A customer swipes their card in the machine and enters the PIN number to verify and complete the transaction. This FinTech tool has thus made financial transactions hassle-free and fast, both for the merchant and for the customer.

To enable point of sale transactions, a merchant must not only invest in purchasing the device and installing it, but must also pay the issuer bank a merchant discount rate (MDR). This is an additional expense for the merchant, and they must choose wisely to avoid taking a merchant cash advance to meet his or her POS needs.

How to select the best POS

With the popularity of point of sale devices, the FinTech market is flooded with different models for different industries or business features. It is important to approach this deluge of information in a systematic manner, with a specific goal in mind.

Here is a five-step guide to help narrow down on the best point of sale system for your business.

  1. Identify your business needs: Delve deep into why you need the point of sale system. Drill down to the basics, such as payment processing, back-office data management capabilities, employee management and taxation integration. Look for industry-specific requirements. For example, a supply chain company will necessarily need an inventory scanning bar code, while a restaurant will need a table management and reservations application. A third aspect is to understand the core of your business (marketing, finance, stores etc.) and shop for business-friendly features. For example, if the business is all about digital marketing, it is imperative that you integrate with email marketing and social media management tools.
  2. Evaluate the technology: Cloud-based points of sale systems are the next big thing, and they have their own advantages compared to on-premise points of sale. If you are a large corporation with multiple locations, the cloud can ease data access and data management, and thereby provide you with the speed and agility you require. Assess the point of sale system for its user interface – a high visibility dashboard and user-friendly engagement features go a long way in enhancing adoption by your team.
  3. Decide on a budget: It is important to scout for point of sale devices within your budget. This includes the cost of the point of sale device (hardware), the cost for systems (software and software integrations) and the cost for transactions (processing). Many points of sale providers charge a per-transaction cost called the merchant discount rate (MDR) that is a percentage of the transaction value. In India, the RBI has put a cap on the debit transaction charges carried out through the point of sale. These stand at 0.75% for transaction values up to Rs 2000 and at 1% for transaction values above Rs 2000. A number of another tablet-based point of sale providers charge per registration, a common range being $50-$150/month/register. These price points include basic features depending on the industry verticals. ShopKeep (inventory), Shopify (e-commerce), restaurant management (LightSpeed, Revel) are some of the players in this range. Then there is the high-end segment which provides advanced functionalities for $100/month/register. Another important consideration is the servicing cost and support.
  4. Narrow down and review the top few: Pick the best possible 7-8 point of sale offerings in the market that match the above two criteria. A good starting point to make this selection is to read online reviews and watch demos of the software. It is a good idea to ask for a live demo from the service provider itself, to give a hands-on in-depth view of each of the options. Assess the following in detail:
    1. What works well for your business?
    2. What does not work very well for your business?
    3. What differentiates each?
    4. How does it add value to your business? Try to evaluate this in performance metrics, both quantitative and qualitative.
    5. What is the extent of support and services?

These are just some of the pointers you must assess at this stage.

  1. Experience it live: Narrow down to 3-4 of the most attractive point of sale solutions and invest in a live demonstration and pilot implementation. Test it live in your business environment. This will give you an idea of the performance, business relevance and ease of use. Test and re-test the basic and advanced features – review “purchased” items, add and delete inventory, email promotions and carry out scheduling activities. Conduct a robust test-run for one-off but very real situations such as sudden orders and operational issues. Create situations and reach out for support at odd hours to test the provider’s support capabilities.

With the plethora of features available in today’s FinTech market, choosing the correct point of sale partner for your business is a tough job. Make sure you take the decision not only by considering the current state of your business, but also by factoring in the growth prospects of your business. Scalability and flexibility are two must-haves in a point of sale application, to help sustain your business in the long run.

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