When many people think of a cash register suitable for a small business, they don’t picture a touch screen system. Instead, they picture the old-fashioned cash register, complete with a cash drawer and manual buttons, that has been a longstanding machine used for facilitating sales.
However, the best cash register for small businesses is often a point-of-sale (POS) system instead.
We’re going to focus on why a basic cash register is insufficient for small businesses and why a POS system is a much better choice to help your business succeed. We’ll look at the pros and cons of each, so you can make a fully-informed decision for your small business.
What’s the Difference Between a Cash Register and a POS System?
Cash registers have been around since the late 19th century. After discovering the technology used to count the revolutions of a ship’s propeller, a saloon owner in Ohio named James Ritty created a machine that could keep track of his sales. He patented the machine in 1879 and called it Ritty’s Incorruptible Cashier. This first cash register didn’t include a cash drawer — it only tallied totals from each sales transaction.
After Ritty sold the rights to his invention, John H. Patterson founded the National Cash Register Company in 1884 and popularized this machine with business owners all over the nation. The cash register has long been a staple piece of technology for business, both big and small. Today, many small businesses still rely on traditional cash registers to facilitate transactions.
Modern cash registers are electronic, but they still fulfill the basic functions of earlier cash registers. Electronic cash registers consist of a cash drawer, a small display screen and buttons the cashier can press to add up dollar amounts, assign sales to particular departments and calculate change. Some registers will also print a basic receipt.Cash registers are essentially calculators designed for sales transactions attached to a drawer to keep cash secure.
So, how does the traditional cash register compare to a POS system? A POS system takes advantage of modern technology to expand greatly on the basic capabilities of a cash register. Like a basic register, a POS system includes a cash drawer. POS systems vary, but with an all-in-one POS system, you can also expect additional integrated hardware, such as:
Credit card processors
These components are typically all separate for businesses that use cash registers. At a glance, one of the most significant things that sets a POS system apart is that it features a touch screen, which no longer limits cashiers to a set of manual buttons. Now, cashiers can access multiple menus and options to fulfill a range of functions. Because of this advanced hardware, a POS system is sometimes called a touch screen cash register, but POS software is capable of doing far more than just facilitating sales transactions. It may also be able to:
Record sales analytics
Log employee shifts
Facilitate sales promotions
It’s easy to see how a POS system offers far more capabilities than even the best cash registers. If you want to upgrade from a standard cash register, a POS system is the modern solution that your small business needs.
What Are the Pros and Cons of Each?
Now that you know the difference between a cash register and a POS, you may be wondering which of these options is the best choice for your small business. As with almost any comparison, there are pros and cons to each option. Let’s start with the advantages of cash registers and then look at the disadvantages of this more basic option.
Pros and Cons of Cash Registers
Digital cash registers do have some advantages compared to POS system, including:
Affordability: Cash registers tend to cost less than POS systems, which is helpful for small businesses with a limited budget. Since there is no software involved, you won’t have to pay a monthly or annual fee to maintain software, so the upfront cost you’ll pay for your cash register — which could be up to $800 — is the full cost, with the exception of potential maintenance costs to fix a malfunctioning register.
Familiarity: If your employees are already used to using basic cash registers, then they may find it easier to stick to the method they’re familiar with. However, since cash registers come in different models, it’s likely that employees who have used a cash register before will still need some training to learn how to operate your business’s specific model. In contrast, POS systems are designed to be cutting-edge and therefore will be updated continuously with new software improvements and features that will help you run your business better.
Cash registers also come with their share of cons compared to POS systems. Here are some of the main disadvantages to consider:
No Integration: Cash registers are independent machines that are not integrated with other components you need to facilitate the checkout process, such as a barcode scanner and card reader. If you have multiple registers, they won’t be integrated with each other, either. This lack of integration means there is no communication among your equipment to streamline the process.
No Inventory Tracking: Cash registers simply aren’t designed to help you manage your inventory, so you can’t count on a cash register to tell you when to order more product or when you may be overstocking a certain product. This means you have to rely on manual methods for tracking inventory.
No Sales Analytics: Some cash registers may truly be like a calculator that wipes the slate clean after each transaction. Other cash registers are made to keep track of the day’s sales so cashiers can balance the cash register drawer. In either case, a cash register will not keep track of sales data long-term, so you have to do this manually, which is time-consuming and is likely to be inaccurate.
Inefficient Checkout: Even if you’re only interested in facilitating sales transactions, a cash register does not provide the most efficient checkout experience. Having to punch in totals and manually subtract savings from promotions results in a slower process, which can feel cumbersome to cashiers and frustrating to shoppers who are in a hurry.
No Screen: Even though digital cash registers have a small display screen, similar to the screen on a calculator, all this screen will display are the totals as the cashier rings up items. If you want a larger display screen that includes more detailed information for the customer, then you’ll need a POS system. A POS system also includes a touch-screen for the cashier.
Pros and Cons of POS Systems
Now that we’ve covered the pros and cons of cash registers, let’s focus on POS systems. POS systems offer many benefits, but we’ll hit the highlights with six significant advantages that a POS offers compared to a cash register:
User-Friendliness: One of the advantages of POS systems is that they’re user-friendly. The touchscreen features clear, colorful buttons that make navigating through features easy. The interface will feel familiar to employees who are used to using a smartphone or touchscreen tablet, which means they may not need a great deal of training.
Integration: Especially if you purchase an all-in-one POS system, you also benefit from the fact that all the components needed for checkout are seamlessly integrated together. If you need multiple checkout lanes or even if you have multiple store locations, POS systems with cloud-based software will all send information to an app so you can access all your data in one place.
Inventory Management: Managing your inventory is a critical aspect of any small business. A POS system makes inventory tracking easy by maintaining an accurate account of what you have in stock, letting you know when to order new stock and providing data to help you accurately determine which products are helping your business grow and which may be a financial drain.
Sales Analytics: A POS system also helps you make data-driven decisions to help grow your business. They track sales, so you can quickly answer questions like what your peak times are, which cashiers have facilitated the most transactions, whether a promotion helped boost your sales and more.
Efficient Checkout: If you’re more concerned with the checkout experience itself rather than the additional features a POS offers, it’s important to note that a POS also provides a more efficient checkout process, which will please employees and customers alike. A POS automates multiple aspects of checkout so you can maintain accuracy and get customers checked out quickly.
Dual Screens: All POS systems feature a touchscreen which makes the checkout process far more visually engaging for employees. Some POS systems also feature a display screen for customers. This customer-facing screen can help you improve sales since it provides transparency and can even display ads to inform the customer of upcoming promotions.
Despite all of these advantages, purchasing a POS system does have some potential disadvantages, including:
Higher Cost: The main disadvantage that concerns some small businesses, especially start-ups, is that POS systems cost more than cash registers. While POS systems are more expensive than cash registers, they include many more features that will help your business become more profitable. Consider the many other components and software programs you would need to buy if you opted for a cash register instead of a POS, and the real price gap quickly disappears.
Software Updates: POS systems are intended to keep up with current technology so they remain the best piece of sales technology you can have. This means that POS software will need to be updated from time to time. If your software is stored in-house, this can be an inconvenience. However, if you go with a cloud-based system, you’ll enjoy automatic updates whenever the developers improve the software.
Potentially Intimidating: A final possible downside to consider is that a POS system is a departure from the old, familiar cash register. This may be intimidating to some employees who are not used to using modern touch-screen technology. That said, 42% of Americans aged 65 and up own smartphones, so it’s likely that all or nearly all of your employees will embrace the technology with some familiarity.
Why Do Small Businesses Need More Than a Basic Cash Register?
As we’ve seen, cash registers are extremely limited in their capabilities compared to POS systems, which do far more than just help you ring up customers. In light of the advantages POS systems offer, it should be clear that they are preferable for any small business that can afford them. Even if you’re worried about the cost, you should still consider investing in a POS system for a few reasons.
There are many reasons to invest in a POS system, but we’ll focus on three main reasons why you need a modern POS system instead of a basic cash register:
1. To Offer a Modern Checkout Experience
Customers today are often in a hurry and expect the checkout process to be efficient. That’s why retailers are always on the lookout for ways to speed up checkout time. Using a POS is an excellent way to do this since it integrates hardware and uses cutting-edge software to offer a seamless checkout experience. No more punching in discounts or getting frustrated over errors. A POS makes it quick and easy to facilitate sales in a way that shows customers you’re committed to the best technology has to offer.
2. To Manage Your Business Effectively
A POS system also gives you valuable tools to help you manage your business, from employees and inventory to promotions and more. These are all major aspects of management, so if you don’t have a POS to help you, you’ll find yourself relying on outmoded methods or software options that may work well on their own but aren’t integrated. A POS allows you to view data and make changes all in one place, so you can manage effectively, either on-site or on the go.
3. To Increase Sales
Finally, when customers are pleased with the checkout experience they have at your business, and you leverage data to make smart decisions about what products you carry, when you run a sale and more, you can expect your sales to climb. If your POS system comes with loyalty software, this can encourage more repeat business. A POS system is a financial investment, but for many small businesses, it could help you become more profitable.
Choose the NRS POS System to Replace Your Small Business Cash Register
Cash registers may have been a cutting-edge piece of technology back in the 19th century, but today, they pale in comparison to the capabilities offered by a POS system. The best small business cash register isn’t just a cash register. It’s a modern all-in-one POS system, complete with all the components you need to facilitate sales and help your business succeed. The POS+ from National Retail Solutions is designed with small businesses like yours in mind, so it’s an excellent option to consider. Request a free quote today, and see how you could see your business grow by bringing your point of sale into the modern age.
If you’re used to disappointed looks on customers’ faces when they see a “cash only” sign, it’s time to add credit card processing as a payment option at your small business. National Retail Solutions has all the tools and services you need to make this possible. Though credit card processing can be a bit complicated, it doesn’t have to be a source of stress. We’re going to explain why you should accept credit cards, what equipment you need to do it, how it works and what options we offer.
Why Should a Small Business Accept Credit Cards?
If your small business doesn’t currently accept credit cards, you may wonder whether adding credit card processing is worth the investment. After all, credit card processing involves adding equipment and allowing a little bit of every credit card sale to go toward fees. Let’s talk about why every small business can benefit from accepting credit cards.
In brief, small businesses should accept credit cards because consumers want and expect them to. If you aren’t sensitive to the preferences of your customers, you could lose business. In a 2017 survey, just 12% of consumers said they preferred to pay in cash. Most people find debit and credit cards to be more convenient and preferable to cash. Here are a few reasons many consumers prefer to use credit cards over cash.
1. Credit Cards Are More Secure
One reason your customers may prefer using credit cards is that they offer more security than cash. To pay with cash, you have to carry money around with you, which can make some people feel vulnerable. Whether you fall victim to a pickpocket or accidentally leave your purse or wallet in a public place, you could lose your cash in the blink of an eye.
In either of these scenarios, if you only had credit and debit cards in your purse or wallet, you could call your bank to freeze or cancel them. If someone has already made purchases using your cards, you can report these charges as fraudulent, and not have to pay them. If someone spends your cash, there’s nothing you can do, unless you somehow manage to track the person down.
2. Credit Cards Are More Convenient
Credit cards are also more convenient for most people. Rather than having to keep track of how much money you have on you, with a credit card or debit card, you always know you have access to your funds. You also don’t have to take the time to count out bills or change, which tends to speed up the checkout process. If you don’t have exact change, you’ll get change back, which can be a nuisance to some people.
Coins jingle around in pockets or get lost in the bottom of a purse and weigh it down. Even folded bills take up more space than a credit card. Some people prefer to forego a wallet or purse altogether and carry their phone with an attached sleeve for holding a few ID and credit cards. While you may be able to cram a couple of bills into your phone sleeve, it’s much easier to stick to cards in this instance.
3. Credit Cards Let You Track Your Spending
Another advantage of paying with credit cards is that it allows a person to keep better track of their spending. Every time a person swipes, inserts or taps their card, whether it’s to buy a sandwich or a sofa, it creates an electronic log of those charges. With cash, you would have to keep track of your spending manually by making entries in a notebook or in your phone, or keep paper receipts for every transaction to compile a payment history.
Credit or debit card users can check their payment history online anytime and can use these records to help them budget and keep track of their finances. Digital spending records can also be helpful when it comes time to file your taxes, especially if you lose track of receipts.
4. Credit Cards Build Your Credit History
Paying with a credit card also helps a person build their credit history. Even if you’re exceptionally responsible, if you pay for things in cash, you won’t establish a credit history lenders and others can use as proof of your responsibility. If you faithfully make your credit card payments on time, you’ll steadily build a positive credit history that results in a high credit score.
Achieving a high credit score is essential for several reasons. In today’s world, your credit history comes into play whenever you need to take out a loan, whether it’s to finance a new vehicle or take out a mortgage on a home. Your credit history can even influence your insurance premiums.
5. Credit Cards Come With Rewards
Finally, some consumers prefer to use credit cards because, unlike cash, credit card transactions can reward customers with perks like cash back. The cash-back model typically rewards consumers by giving a certain percentage of the cost of each purchase they make back to them. For some cards, this percentage will differ based on what they’ve bought — such as fuel, groceries, restaurants and so on.
Some cards reward customers through programs where they can accrue points by making purchases. Once the cardholder gets to a certain number of points, they can earn a reward like a gift card. Another popular reward system is for travelers who can earn airline miles or other travel discounts by using their credit card.
What Equipment Do I Need to Accept Credit Cards?
Hopefully, everything you’ve read so far has convinced you of the need to include credit card processing as a payment option at your business. If you want to maximize your business and please customers, you should give your customers the option to pay with a credit card. So, how can you get set up to accept credit cards at your business?
There are ways to manually enter credit card numbers on a computer, like consumers have become accustomed to doing on e-commerce sites. However, manually entering information is an inconvenient and inefficient way to process credit cards. The best way to process credit cards is with a suite of equipment that works in concert to make the checkout process as quick and convenient as possible.
Before we discuss the other pieces of equipment that can assist in the process, let’s focus on the essential piece of equipment you’ll need: a credit card reader.
Credit Card Reader
A card reader is called such because it reads the information embedded in a credit or debit card, either through a microchip, magnetic strip or both. This device is what customers interact with. They insert or swipe their card when prompted and confirm the amount of the payment. This card reader initiates the process of authentication, which we’ll discuss more in the next section.
Merchants should make sure they have a card reader that is capable of reading EMV chip cards, since these cards are becoming increasingly popular over the traditional magnetic stripe cards you swipe. According to credit card giant Visa, three-quarters of U.S. storefronts now have the necessary equipment to process EMV cards.
The trouble with magnetic stripe cards is that the information they contain never changes, so getting the details once is enough for someone to copy it and use it for fraudulent charges. EMV cards prevent fraud by generating a new code each time a person uses it to buy something. That way, information from one transaction won’t be useful to someone wanting to commit fraud by using it repeatedly.
EMV chip transactions take a bit longer than purchases with other credit cards, but they’re still fast, at about 15 seconds for a typical transaction. No matter what type of card a customer is using, a card reader makes it easy for them to share their payment information so their bank can deposit payment into your business’ bank account.
Other Components Used to Facilitate Credit Card Sales
Small business owners who want to embrace a fully modernized checkout experience that makes it easy to process credit card payments should use a card reader as part of an all-in-one POS system. You can think of a POS as the brain that connects all the necessary components to facilitate a checkout process. An all-in-one POS system comes with all the components you need for checkout, already integrated to work together seamlessly. These elements include your card reader, along with these other essential pieces of equipment.
Barcode scanner: Barcode scanners make it easy to ring up items. Rather than manually plugging in information or prices, checkout personnel scan each item with their handheld barcode reader. One of the major advantages of scanning barcodes is that you can track inventory in real time this way. As you scan an item, your inventory records change to reflect having one less of that SKU in stock.
POS terminal: The POS terminal is the screen you and your employees will use behind the counter. Employees can enter information as needed and can even use this touchscreen terminal screen to accomplish tasks separate from the checkout process. These could include programming in discounts, managing inventory, checking sales analytics and more.
Customer-facing screen: The best POS systems will also come with a customer-facing screen directed toward the front of the counter. Unlike the POS terminal, this is not a touchscreen. It’s there so the customer can see the name and price of each item displayed as the cashier rings them up. They can also see the money they save from discounts. A customer-facing screen provides the transparency customers appreciate.
Cash drawer: Cash drawers are essential pieces of hardware for any merchant. Modern cash drawers come equipped to prevent theft and keep cash secure. Of course, cash drawers come into play when a customer wants to pay in cash, but they may also be valuable for customers who pay with debit cards and request cash back.
Receipt printer: A modern thermal receipt printer uses thermal technology rather than ink to print on special paper that will turn different colors under varying degrees of heat. These thermal printers make it easy to produce accurate receipts for customers, and they make it easier for the merchant, since they integrate with your POS system, so everything is completely automated.
How Does Low Rate Credit Card Processing Work?
Now you know why credit card processing is essential and what equipment you need to facilitate these transactions, let’s talk about how credit card processing works. To the consumer, credit card processing looks like nothing more than inserting their card, seeing the sum on their credit card bill and paying it. A lot goes on behind the scenes, however, to make that transaction possible. We’re going to draw back the curtain and explain this process step-by-step.
There are three fundamental steps in this process: authorization, authentication and clearing and settlement.
The customer initiates this process by either swiping or inserting their card. The processor then reads the information on the card and sends it to the credit card network, such as Visa or Mastercard. This network acts as the go-between for the customer and their issuing bank.
The network sends the customer’s payment information on to their bank. The bank then checks to make sure the purchase is legitimate rather than fraudulent, and determines whether the transaction should proceed. For example, if the customer has already reached their credit limit, the sale won’t go through. The card reader should tell the customer at this point whether the system has accepted or declined their payment.
3. Clearing and Settlement
The process appears to be over at this point from the customer’s perspective, but the merchant still doesn’t have their payment yet. A process similar to the one above takes place, which can take up to several days, to make sure all is in order before the cardholder’s bank sends funds. The processor comes into play once again as it transmits the necessary information to the credit card association to settle the payment.
The funds that get transferred to the merchant will have fees deducted to pay the banks and processors involved for their part in facilitating the transaction. From a retailer’s perspective, they see a small amount of each credit card transaction withheld, typically around 2 to 3% for a retail store. This fee gets divided three ways, with the most significant chunk going toward paying the required interchange fee to the issuing bank.
Interchange: Credit card networks like Visa and Mastercard set and publish interchange fees. These networks update the current fees biannually. An interchange fee consists of a flat rate, such as $0.10, with a percentage of the sale, such as 2%. Together, these amounts will satisfy the credit card network’s requirement for each sale.
Assessment: Interchange fees aren’t the only fees credit card networks require. They also charge assessment fees. Whereas the interchange fees go to the issuing bank, assessments go directly to the card association. Assessment fees are much smaller than interchange fees, at just a fraction of a percentage per sale.
Discount rate: The amount credit card processing companies charge you beyond the fixed costs associated with interchange and assessment fees is the discount rate. The discount rate, sometimes also called the markup, is a flexible amount a processor can set so they also get paid for their part in facilitating credit card sales. You may be able to negotiate this rate with some processors.
Processors will use one of these models to determine their fees.
Interchange plus: Interchange plus models vary from month to month, and are complicated to understand and read on a statement. However, they can be the most cost-effective option for retailers who move a lot of product every month or who sell high-dollar items.
Flat rate: Flat rate models keep things simple and tend to be a good choice for merchants whose ticket items are low. Flat rate processing does not take factors like card type into account. For every transaction, you’ll pay one predetermined fee.
Tiered pricing: Tiered processing models consist of three different possible fees you’ll pay on a credit card transaction, depending on whether it falls into a qualified, mid-qualified or non-qualified tier. Factors like the type of card and how it’s entered determine the tier.
What Options Are Available From NRS?
Choosing a credit card processing company to facilitate your credit card sales, both with equipment and ongoing processing services, is a crucial decision. Choosing the wrong partner could result in paying unreasonable markup fees or finding hidden charges on your bill. National Retail Solutions keeps things transparent and offers two pricing options for credit card processingso you can choose the best fit for you.
Flat rate: The flat rate keeps things consistent, so you know what fee you’ll pay every time, whether someone swipes, taps or dips their card. This flat rate is 2.49% of the transaction cost plus $0.10, making it one of the cheapest credit card processing options for small business.
Custom rate: If your businesses process over $10,000 a month in credit card transactions, you can also work with NRS to set a custom rate designed to fit your business and save you money. You can get a free quote to find out what this rate would look like for you.
Regardless of which rate plan you select, you can usually expect to receive your funds within just 24 hours, which is a valuable perk for keeping your cash flow more current. We understand how critical it is to have access to your funds when you need them.
According to Business News Daily, if you own a small business, it’s essential to find a credit card processor that specializes in businesses of your size, since otherwise, you may face credit card processors who don’t understand your industry and expect you to generate at least $10,000 in revenue every month. While NRS has a custom rate option for businesses that create this much in credit card sales, we also cater to smaller businesses with our flat rate.
At NRS, we understand the unique needs of payment processing for small businesses, and believe size shouldn’t keep you from having the best technology to facilitate sales and help you manage your growth. That’s why we offer payment services, such as our card reader and processing services, that make it possible to accept not only all major credit cards, but also mobile wallet apps, EBT and eWIC.
Money isn’t the only element you should consider when choosing a partner for merchant services. In a past blog post, we discussed three critical factors to consider when selecting the best payment system for small businesses.
When you partner with NRS, you get these valuable qualities and more.
Contact NRS Today for Reliable Small Business Credit Card Processing
The world of credit card processing can seem complicated and confusing, but credit cards are here to stay. If you want to make it easy for customers to do business with you, you should know how to find the best credit card processor to supply you with the equipment to accept all forms of payment.