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Types of POS Systems: How to Choose and Implement the Right Solution for Your Business
Oct 15, 2024
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The average US cardholder makes 251 credit card transactions per year, or at least one transaction every 1¾ days. And in the UK card payments make up 61% of the global transactions amount. That's why the first thing you should think about is what are the best solutions in developing point of sale systems for restaurants and retail (POS).
To choose the right solution for your business, you need to understand:
- What is the POS system?
- What on-demand trends and features should you implement in your POS system in 2024?
- What is the difference between customised POS and POS integration?
- What type of POS to choose?
In this article, we'll tell you where to start when choosing a POS system, how to use its features to improve your business, and how to keep up with the latest trends in the food tech industry.
What is POS systems
The POS, or point of sale, is a system that enables the sale of products and services. It is a device or software configuration that allows for the acceptance and processing of various payment methods, including credit cards, debit cards, and digital payments. Additionally, the POS calculates and collects the appropriate sales taxes for transactions.
The basic functionality of a modern POS system software for restaurant includes the following options:
- Acceptance of payments by bank cards and e-wallets, as well as cash in the presence of the appropriate terminal on the device;
- Full cycle of cash operations – from the creation and issuing of a cheque to the processing of returns and order cancellations;
- Purchasing and stock management in warehouses;
- Accounting and search of products and goods by individual barcodes;
- Calculate the cost of goods when selling by weight;
- Manage discounts and promotions on certain types of goods or launch marketing campaigns for holidays and special offers;
- Manage staff with the ability to schedule shifts and track hours worked;
- Warehouse purchasing and stock management.
Every business, including modern restaurants and retail outlets, begins with the connection of a POS system. Without it, you will not be able to accept payments from customers. Especially with regard to cashless transactions, which are now becoming the main payment method.
Imagine the complexity of operating without POS system for online retail:
Trends in POS system development
Now let's take a closer look at the global financial market in order to understand what trends you should follow in order to launch a successful POS system for your restaurant. Total transaction value is expected to show an annual growth rate (CAGR 2024-2028) of 9.52% resulting in a projected total amount of US$16.59tn by 2028.
Such predictions are based on global trends which are focusing on cashless payments. Here are the some of them:
- Global growth of contactless payments – according to Precedence research, the global market size in this field is expected to reach around US$213.39bn by 2034, expanding at a CAGR of 16% from 2024 to 2034;
- Demand for POS terminals from a variety of industries – high customer traffic is motivating retailers and restaurant owners to find ways to accept more payments at the same time, without slowing down or making mistakes;
- Government support for digital payments – Sweden became the world's first cashless society on 24 March 2023, meanwhile Finland, Norway and the UK are also leading the way in rejecting cash payments in the coming years;
- Emergence and development of new payment technologies – according to the research, 50% of UK adults will have used BNPL (Buy Now, Pay LaterBuy Now, Pay Later) digital payment methods, and the volume of P2P mobile apps, like Cash App, Venmo, PayPal, Zelle and Google Pay reaches 147.6 billion in the US. Near Field Communication (NFC) technology, which enables payment via smartphones and wearable devices, seems to be a necessary option in restaurant POS systems.
The diversity of transaction formats and channels creates new challenges. Firstly, we're still left with the lack of a robust and reliable infrastructure that prevents the spread of technology across countries and industries. Workarounds in development can cost you constant equipment failures, payment and billing errors and, as a result, negative customer feedback.
Another important issue is payment security. Most of the connected third-party services that provide packaged POS solutions store data and details of financial transactions on external servers, which are often exposed to attacks and threats. This vulnerability led to the creation of blockchain technology, which is now revolutionising the global financial landscape.
Three ways to improve POS systems
According to the HospitalityTech survey, 71% of respondents have plans to purchase new features or functionality for their POS system. The solution has evolved far beyond the traditional cash register, incorporating advanced technologies that improve the customer experience, streamline operations and drive business growth. Here's a look at the most in-demand features, supported by real-world examples of the innovation they bring
Contactless Payments and NFC
Contactless payments, powered by near-field communication (NFC) technology, have become increasingly popular since the 2019-2021 pandemic. This trend shows no signs of slowing down, as consumers demand faster, more convenient, and more secure payment methods. They are turning to tap-to-pay solutions and digital wallets for these reasons.
In the restaurant industry, companies like McDonald's and Starbucks have embraced contactless payment methods. At Starbucks, customers can use their smartphone to pay for orders using digital wallets like Apple Pay and Google Pay, which reduces wait times and minimises physical contact during transactions. In retail, Walmart has its Walmart Pay system that integrates contactless payment into its app. This allows customers to check out quickly without touching a card reader, enhancing convenience and improving transaction security. The use of NFC-based payments reduces the risks associated with handling cash and swiping cards, making it a safer option for both customers and businesses.
Biometrics
Biometric technologies, such as facial recognition and fingerprint readers, have become an integral part of modern POS systems for retail stores, providing added layers of security and efficiency. These technologies allow customers and employees to quickly and securely authenticate transactions without the need for traditional passwords or personal identification numbers (PINs).
In the retail industry, Amazon is leading the way in using biometrics through its Amazon One system. With Amazon One, customers can pay for items simply by scanning their palms, creating a seamless checkout experience. This technology has now been integrated into Amazon's cashier-less stores, known as Amazon Go. These stores use biometric authentication combined with AI-powered cameras to allow customers to enter, grab items, and leave the store without waiting in line. Payment occurs automatically as customers exit the store. In restaurants, KFC in China uses facial recognition technology at its self-service kiosks. Customers can order and pay using a simple face scan, providing speed and convenience while enhancing security.
Artificial Intelligence (AI)
Artificial Intelligence (AI) is transforming POS systems by enhancing their predictive capabilities, automating processes, and personalising customer experiences. AI enables retailers and restaurants to make data-driven decisions in real-time, improving inventory management, customer service, and overall business operations.
In the retail industry, Sephora utilises AI-driven POS systems to analyse purchase patterns and recommend personalised products for individual customers. Their AI-powered systems help store employees provide tailored recommendations based on customer purchase history, leading to increased sales and improved customer satisfaction. Restaurants like Domino's Pizza leverage AI within their POS systems to forecast customer demand based on factors such as weather, events, and historical data. This allows them to ensure they have the right amount of ingredients and staff on hand to meet fluctuating demands. Additionally, AI powers their automated ordering system, allowing customers to place orders through voice-activated assistants like Amazon Alexa.
What types of POS system to choose
The first thing to decide is whether you need custom POS development or integration with existing solutions. Choosing the best POS system for retail or restaurant in the UK depends on the factors that most affect your business processes. A full comparison can be found below:
Custom POS vs Integration with POS
On the other hand, custom POS is fully aligned with the core business. And Nando's restaurant chain has successfully implemented one to scale its growth. Customised POS systems are ideal for high-end restaurants and online retailers with unique and ever-changing menus, complex reservation systems, and multi-tiered catalogues. It can be tailored to meet the specific operational requirements of these businesses, streamlining processes and enhancing the overall customer experience.
Here the three examples, in what business will better built retail point of sale (POS) software from scratch:
- Launching aggregators and marketplaces – it will be easier to connect new restaurants and online shops to the whole system than to find a way to integrate with each of their POSs. And it's also a good way to strengthen the collaboration offering, especially for young businesses that will get POS integration on top;
- Streamlining core operations – if you manage to reduce or increase targets (e.g. reduce delivery costs or speed it up to 15 minutes) or add a new process, these changes should be reflected throughout the POS architecture. In the case of packaged solutions, this will be either very expensive or impossible;
- Fast scaling – it’s much easier to connect new services and devices in custom POS with original code than find a way to integrate separate systems and add new ones. Keep this in mind if you plan to use robotic delivery services.
On the other hand, existing systems such as Square, iZettle and Lightspeed are widely used in retail and restaurants. And in most cases, they are sufficient. These POS systems are designed to handle large volumes of standardised transactions, making it ideal for high-volume businesses. The system processes orders quickly and efficiently, thanks to its intuitive interfaces. This allows cashiers to serve customers quickly during peak hours and keep their loyalty.
We used integration to transform the ordering process at Ronin restaurant, for which we built a delivery website. Previously, all orders were emailed and managers had to process them manually – from sending them to the kitchen and notifying couriers to accepting payment. After integration with the POS system, all the necessary data is automatically reflected in it.
Service for online ordering dishes from a premium Japanese restaurant
A website for online sushi ordering with integration with R-keeper.
POS integrations are also suitable for situations where you need to export data from the system to be used for other business tasks. This is what we did when we built a loyalty programme app for Beerpoint, a large retail chain. In order to quickly update the user's data and provide only relevant information, the system needed to selectively reflect a subset of orders that were included in the loyalty programme. It also needed to automatically apply discounts, take into account partial payments with bonus points and update information on product availability in stores every 15 minutes.
Development costs and terms (it'is not an offer)
- $2-$3,000 and up to 3 days for integration with your point of sale (POS) system. These costs are usually included in app and website development, so please check out our food technology portfolio;
- $50 000+ and 3 months or more for the development of a custom POS system.
The final budget and term depend on project complexity and the variety of functionality. When integrating with POS, we write code to combine various elements of the business infrastructure into a single database. When creating a custom solution, we approach development from a business analysis perspective. The team is immersed in the overall logic of the process, helping to work out the functionality and user flow. As a result, the client receives software that is flexible in its settings and functionality, and that automatically reflects changes across all connected devices.
Still have doubts about your choice? Let's clear them up with a consultation!
Olga V.
Business Manager
5 types of POS system
When people think of POS system for retail shop, they often imagine handheld terminals or cash registers where items and their amounts are entered. But as business owners, we know that more complex architectures and technologies help to cover more processes and tasks, increasing their efficiency. Here are the main types of POS systems you can connect to your restaurant or retail business. Each is suitable for businesses with specific sizes and objectives.
✍ Suitable for: medium and large enterprises that are in a stage of rapid growth, entering new markets and trying to take the place of competitors.
Multichannel POS
The most common types of POS systems that combine online and offline sales. All channels use the same software. This allows customers to place orders in the way that is most convenient for them: if they place an order on the website, it is automatically recorded in the system, and if they place an order in a restaurant or shop, the staff must enter the information on the tablet POS. In both cases, all orders are stored in a database, making it easy to extract data and generate reports.
✍ Suitable for: small and medium-sized retail or restaurant businesses
Online POS
Сost-effective POS solution or option, as it allows you to use existing hardware such as tablets, laptops, or desktop computers to handle your transactions, including large-value transactions. Additionally you can access it from anywhere with internet or Wi-Fi connectivity. This could be the perfect choice for any business that doesn't engage in high-volume, frequent sales.
✍ Suitable for: small retailer or food delivery service.
Omnichannel POS
One of the on-demand variations of this solution covers the entire sales process from start to finish. Thanks to the integration of an omnichannel POS system, businesses can spread their sales funnel wherever their target audience is present: from their official website and physical stores to social media platforms, email lists, and banner ads. This approach covers not only the payment for products or services, but also various marketing activities.
✍ Suitable for: medium and large enterprises that are in a stage of rapid growth, entering new markets and trying to take the place of competitors.
Self Service Kiosk
POS systems are becoming more common for quick service dining and retail stores. Essentially, a self-service kiosk is a tablet that allows customers to input order information at their table or front counter. It reduces employee costs and improves efficiency. Retail is also implementing self-service kiosks with attached barcode scanners so customers can quickly scan a couple of items and pay. Again, this cuts costs for necessary employees and baggers.
✍ Suitable for: restaurants and retail with a high flow of customers and a need for fast service.
Open-Source POS
These types of POS systems are well-suited for companies that require custom operations or unique features they want to develop from scratch. Unlike multichannel solutions, they tend to run on a desktop or tablet, so it is worth adding the hardware purchase to the development cost.
It also requires a team and regular technical support to configure and adapt it to the needs of the business, as its functionality goes beyond basic operations. Only large companies can afford such an investment, for whom the POS system is not just a sales tool, but also a way of streamlining processes and, as a result, reducing costs.
✍ Suitable for: enterprises and large retail and restaurant chains.
POS systems features for restaurants and retail
Here is a list of must-have POS system features that can streamline operations for restaurants and retail businesses:
Inventory Tracking
Prevent overstocking and out-of-stock situations by maintaining accurate real-time inventory data. The system automatically updates stock counts after each sale or delivery, eliminating the need for manual labour and reducing errors.
Customer Data Management
Allows businesses to track customer preferences and purchase history to provide personalised service. Provides valuable insights for targeted marketing campaigns and loyalty programs, leading to increased customer retention and engagement.
Multi-Location Capabilities
Synchronises inventory, pricing, and customer data between multiple stores or restaurant locations. Ensures consistent operations and efficient management of all locations from a single system.
Payment Card Industry (PCI) Compliance
Protects businesses from data breaches and fraud by maintaining strict security standards for card payment processing. Provides seamless, secure payment processing to reduce risk and build customer confidence.
Shipping Integration
Simplifies the process of fulfilling online or in-store orders that require shipping. Automates the coordination of shipping labels, tracking and deliveries, reducing manual entry and delays.
Automated Purchasing
The system prevents stock-outs and over-purchasing by automatically replenishing inventory based on real-time data. This reduces the time spent on manual labour and optimises stock levels, ensuring that products are always available when customers need them.
Reporting Tools
Provides insight into sales trends, employee performance, and customer behaviour to make data-driven decisions. Automated reporting helps managers quickly assess the health of the business and adjust strategies as needed.
Return & Refund Policy Features
Simplifies returns and refunds processing, ensuring consistent policy enforcement and minimising disputes. Automates the process of returns/refunds, improving customer satisfaction and reducing errors.
Employee Management
Tracks employee working hours, performance, and schedules, assisting with payroll and task management. Eliminates manual scheduling efforts and guarantees optimised staffing for peak hours.
Promotions Management
Facilitates the creation, management, and tracking of discounts, coupons, and promotions. Automatically applies promotions at checkout to ensure consistent offers and increase sales without manual intervention.
Essential Accounting & Email Marketing Integration
Integrates sales data with accounting and marketing platforms to provide seamless financial tracking and enable customer outreach. This reduces manual data entry, ensures accurate financial records, and enables automated email campaigns to boost repeat business.
This list can be modified to suit your business needs. Overloaded restaurant point of sale systems often lose performance and are unable to analyse data. Therefore, we recommend that you start with the minimum you need and scale your solution as your business grows.
FAQ
What POS system is used in restaurants?
The restaurant POS system comprises both software and hardware components that facilitate the process of taking customer orders, accepting payment and managing stock inventory. This system covers the entire operation, from the front of the house (FOH) to the back of the house (BOH).
How much does a POS system cost?
Average $2-$3,000 for integration, $50 000+ for custom POS system development.
What is the best POS system for fast food restaurants?
For fast food restaurants it would be better to integrate with existing POS system solutions. According to the Forbes 2024 ranking you can use Clover for quick service restaurants, Lavu for pizzerias, SkyTab for table service restaurants.
What are the four types of POS systems?
Most restaurants and retailers can choose between multi-channel POS, omni-channel POS, online POS and self-service kiosk POS. Large companies and enterprises are often looking for open source POS.
What POS system is best for retail?
According to the Forbes 2024 ranking, here are some of the best off-the-shelf POS solutions for retail: eHopper – for small business owners on a budget, Square POS – for small retailers, Clover – for larger retail businesses.
What is a POS system in retail?
Point-of-sale (POS) software is used to process in-person transactions. Retail POS systems offer a range of features to help retailers manage inventory, generate business reports and analysis, manage customers and staff, and integrate with other software systems to streamline operations.
What POS system has the lowest fees?
The cost of using a POS system depends on the complexity of the software, its functionality and the size of your business.
