POS has been around for a while, and it is providing solutions to making payments, especially in retail stores. It reduces the physical handling of cash, hence minimizes all risks associated with it. It also makes payments faster and record-keeping easier. A POS machine does not only receive payments but also print receipts and keeps records of financial transactions.
If you have been using this system, you sure understand how it works. Even if you are just about introducing it to your business, the basic working principle is pretty easy to understand, even though it is a very complex system. A complete POS system consists of both hardware and software. A typical one you will see in popular retail stores consists of a screen for monitoring transaction progress, a barcode reader for determining the price, a card reader for processing payments, a receipt reader, and a cash drawer. However, the software stores data in two basic ways, either on a local server or in the cloud. The difference is so significant that every retail store owner needs to understand it and decide which one will work best for him before integrating POS into his business.
This article will discuss the two types of POS software, their primary features, and the differences between them. But first, let us discuss the data that are needed to be stored by the software.
What does a POS do?
Everybody knows a POS is used to process payments, transfer money to a bank account, and keep a sales record. A POS, therefore, consists of software that will scan the barcode on the product and extract the product name and price, read the card data, process financial transactions, store the transaction, and print the transaction receipt. Even when we make payments in cash, the cash drawer will facilitate the drawer’s opening and closing and record the sale.
Therefore, with POS, all the sales and inventories can be adequately recorded and classified. But their storage is the significant difference between the local POS and the Cloud-based POS.
As stated earlier, the record of all these activities can be stored in two ways, either on a local server based in the store or the cloud system. So, we will discuss the features of each of the software.
The working principle of a local POS
At the end of each business day, it is normal for the manager to go through the day’s sales record. That means he must have access to the data captured by the POS. For a traditional POS, also called on-premises POS, this data is stored on a server of a computer system that is based in the store.
The business owner only needs to purchase a license to the software from the solution provider and install it on its local computer. That also means he can only access these pieces of information when he has access to the computer on which the software is installed.
The cloud-based POS
As opposed to the local POS, the cloud-based POS stores information in the cloud. Therefore, the information can be accessed on any computer system that is connected to the internet. Hence, you do not have to be physically present in the store before you can check the POS data.
But there are more differences between the cloud-based POS and the on-premises POS than just the way they are configured. Let us look at these differences.
Differences between Local POS and Cloud-Based POS
Below are the significant differences between local POS and cloud-based POS:
- Data Storage and Accessibility
As earlier explained, the storage is the primary difference between the on-premises POS and the cloud-based POS. While the on-premises POS stores data in a database that is physically present in the store and can only be accessed on the computer on which the software is installed, cloud-based POS stores data in the cloud, hence its data can be accessed on any computer that has internet service. All you have to do is to log in to your cloud account.
- Data Security
Data is stored on an in-store computer in a local POS solution; therefore, they are at the risk of computer safety. If the computer is attacked by a virus, crashes, or experiences physical damage like a fire accident, then all your data may be destroyed.
In an environment that is not safe, even theft can possess a risk to any computer, and that might mean the loss of all the data on the computer. But cloud-based POS solution does not have to worry about an attack on a computer since the data is stored in the cloud. Therefore, your data is always safe and secure, irrespective of what happens to any particular computer.
- Management and Maintenance
Once you purchase a license from a software provider in local POS and install it on your computer, the rest is in your hand. It is your responsibility to manage your data and your solution system. All maintenance work is in your hand. But if you are using the cloud-based POS system, such as Revel POS, you can employ the service of the solution provider for some system management as well as for full maintenance of the system.
From time to time, every system needs to be updated; and POS systems are not exceptions. However, to update your on-premises POS system, you must hire a professional to do it for you. The technician also has his working hours which will likely be similar to your operational business hours.
This will indeed affect your business as you will not be able to use the POS during the time the business upgrade is taking place. You will also be responsible for the labor cost and any other associated cost. But if your POS system uses cloud-based software, then the system update will come with the software and will take place at a regular interval automatically. The update will be programmed to take place during the off-peak time, hence will not cause any interruption to your business activities.
It will also not incur any extra cost. While you must watch out for updates and decide when to update your system while using the traditional Point of Sale software, you can rest assured in cloud-based POS that your system will be updated anytime updates are available.
- Computer System
You must install your local POS software on the computer system you want to use to access it. The more system you install the software on, the more you pay for the licenses. Hence, you will have to work with limited hardware.
However, you can work on as much hardware as you like with cloud-based POS software as the only requirement is for the system to be connected to the internet. It is not even compulsory that your hardware must be a desktop computer or laptop. It could be any device that can access the internet, including mobile phones, iPads, and tablets.
To every business owner, the cost is an essential factor. It would help if you critically considered the cost of both before making a decision. There are two categories of the cost involved. The first is the set-up cost, and the second is the maintenance cost.
The set-up cost includes the hardware cost, the license cost, and the installation cost in the local POS. At the same time, the maintenance cost involves the cost of updating or reinstallation. Cloud-based POS software does not require any maintenance cost or license cost. Their set-up cost is usually low compared with the local POS.
However, they need a monthly subscription. Therefore, essential factors to consider will be the duration you intend to use the service, the number of employees that will be using POS, and the scale of your business.
Differences at a glance
The differences between the traditional POS system and the cloud-based POS system can be summarized as shown in the table:
All POS function in similar ways, except that some store data in a database that is located physically on the premise of the store, while some store data in the cloud. This means that while the traditional POS system can only be accessed while in the store, the cloud-based POS solution can be accessed on any device that is connected to the internet and at any location (source).
This makes the data saved on the traditional POS vulnerable to attack and destruction, but the cloud-based system is relatively safer.
However, while there is little need for further expenses once the traditional POS software has been installed, the cloud-based POS requires a monthly subscription.
Author Name: Aniko A, Marketing Manager