Cloud-based point-of-sale systems are becoming more popular in businesses that wish to control all or most aspects of their business online. A cloud-based system is a modern and streamlined alternative to the more traditional approach of accepting payments with a POS card reader or another device that saves transaction data locally.
Although cloud-based payment systems are already the standard for online businesses, cloud-based POS systems aren’t only for new or digital-only businesses. More and more traditional businesses are adopting cloud-based POS systems for their flexibility and ease of use.
What Are Cloud-Based Point of Sale (POS) Systems?
Cloud-based point-of-sale systems are payment management systems in which information is stored on external servers (which are connected via the internet) rather than on the merchant’s hard drive. In contrast, traditional POS systems require standalone software and process payment transactions through landline phone cabling rather than via the internet.
Storing customer and sales data on a cloud POS system means that it can be accessed from anywhere with internet connectivity, as opposed to traditional software-based systems, in which sales history, customer data, inventory management and all other data are stored on a desktop computer or external hard drive.
Who Is a Cloud-Based POS Recommended for?
Any type of business can use cloud-based payment processing, but this model is particularly appealing to mobile businesses that move around—for example, tradesmen or food trucks. It can also be used by brick-and-mortar business owners who wish to streamline their payment system and protect their transaction data from onsite risks such as fire and theft.
How Is a Cloud-Based System Different from a Legacy POS System?
There are two key differences between cloud POS systems and traditional POS systems:
Because your data is stored online in a cloud-based POS system, it’s possible to store much larger amounts of data than you could locally. Data that may need to be stored includes your customers’ details and card information, transaction records, data related to inventory management and the software needed to power your global payment gateway.
Storing your data and POS software locally means relying on your computer’s internal storage or USBs, memory cards or even compact discs. Though this may work for some businesses, this is a slow and unreliable way of storing important information related to your business and customers and leaves data vulnerable to fire, theft, physical damage and onsite hackers (especially if it’s not adequately protected with passwords).
In a traditional POS system, you can only access your inventory and sales data by physically going to the store, booting up the computer, inserting the drive or storage device on which the data is stored and entering the password.
In contrast, cloud-based POS systems allow anyone with login details to access transaction data from anywhere in the world as long as there is a reliable internet connection. Logins can also be customised by role to ensure that only management-level staff have access to sensitive information and advanced settings.
How Exactly Does Cloud-Based Payment Work?
With a cloud-based POS system, customers can pay for their purchases using traditional payment methods (such as cash, cards and cheques) as well as modern payment methods like digital wallets, pay-by-text and QR code payments. In addition to paying in person through a virtual terminal, customers can also pay through your virtual terminal with a mail order or telephone order (MOTO), or online through your website with a digital wallet or card.
No matter which method of payment is used or where each customer makes their purchase (in-store or online), all of the transactions made through the same cloud-based online merchant account are recorded online and the amounts are aggregated in real-time in your transaction history. If your account comes with merchant services, you should also be able to generate sales reports that break down your revenue by location, payment method, modality (in-store or online) and more.
What Are the Advantages of Cloud-Based POS Systems?
According to Eurostat, only 41% of EU enterprises used cloud computing in 2021, but this is predicted to rise to 75% by 2030. While this indicates that cloud-based POS systems will also gain popularity over the next few years, it also suggests that many businesses possibly don’t know about the benefits a cloud-based solution can bring.
There are many reasons why businesses may choose a cloud-based POS over traditional POS systems:
Integration with Other Systems
Businesses often rely on separate payment processing systems for their brick-and-mortar and online stores. With cloud-based payment processing, these systems can be combined. Additionally, businesses that use a cloud-based POS system in addition to industry-specific software can integrate all of their systems seamlessly for real-time transaction aggregation and easier inventory management.
From an organisational and logistical standpoint, having every aspect of your business up-to-date, centralised and easily accessible makes coordination and planning so much easier.
24/7 Access from Anywhere with an Internet Connection
For businesses with chains in multiple locations or business people who move around a lot, being able to take payments and access your business’s data from anywhere is a huge plus. For business owners who want to keep on top of things even while they’re away, cloud POS systems mean that you can view your business’s transaction history in real time from anywhere in the world.
One of the key features of an internet-based POS system is its ease of use. The apps that are used to manage cloud-based POS systems are extremely intuitive, meaning that new staff shouldn’t need much additional training in order to use them.
Pricing will vary depending on the provider you choose, but the price of subscriptions tends to vary according to how many different services your business requires. This means that for small or new businesses without the need for very advanced systems, a more basic system should be very accessible in terms of price. Businesses that require more features will typically have a larger monthly subscription price that includes premium and even custom-made features.
No Pricey Updates
Software often requires regular updating which is another added expense for your business when using a legacy POS system. Updating cloud-based systems only involves updating the app to synchronise the latest bug fixes and improvements. Regularly updating your system means you have access to the most up-to-date and secure version of your web-based software at all times.
Backups Are Optional
Cloud-based systems store everything on the internet, meaning there is no need to back up your business data (although you might still choose to download things like data reports in case of an extended internet outage). There is also very little risk of losing your data once it’s stored in the cloud.
Save on Hardware Costs
Because SaaS (software-as-a-service) products only require an internet connection to function, businesses don’t need to invest in traditional hardware. Any internet-connected smart device can double as a POS card reader, reducing the start-up costs for new businesses.
Are There Any Disadvantages to Cloud-Based POS Systems?
Though there are many benefits to integrating an internet-based payment system, there are a few things that are important to be aware of:
Cloud-Based POS Systems Typically Come With a Monthly Cost
Cloud-based systems come with a lower upfront cost than legacy systems because you don’t need to purchase software or hardware outright. However, the monthly fees that are often associated with cloud-based systems may end up costing you more over time.
To work out which option would be more cost-effective for your business, compare the costs of purchasing hardware and software for all of your locations (including updates, maintenance, servicing and replacing) over time with the cost of a cloud-based POS subscription. You can then work out the break-even point and choose the option that makes the most sense for your business.
Though unlikely, businesses using cloud-based systems are open to attack from hackers around the world. For this reason, it’s essential to use industry-leading security practices for your online system and review your transaction history regularly to catch any suspicious activity before it gets out of hand.
Whether you choose cloud-based or software-based POS systems, the security backup provided by your credit card processing company will also be critical for keeping your data safe. Choose a reputable company that is PCI-compliant to minimise your security risks.
Dependency on the Internet
Some cloud-based POS platforms don’t offer offline solutions, meaning they only work online or on mobile devices. For businesses in areas with a weak or spotty connection, this can lead to a loss of sales.
If you are considering a cloud-based system, it’s important to know which options you have if the internet goes down. Some systems offer 3G capabilities or give you the option to process payments through the phone line. Others offer an offline mode that processes payments as soon as your device reconnects to the internet.
How to Get Started With a Cloud-Based POS System
Cloud-based POS systems are easy to install. Once your business has set up a merchant account, you can integrate your payment gateway and virtual terminal and install any apps provided to you by your merchant services provider.
If you opt for a mobile system like mPOS, you can then either purchase mPOS card readers or use your NFC-enabled phone to accept contactless payments from contactless cards and digital wallets. Otherwise, you can simply use your provider’s virtual terminal to process payments on any internet-connected device.
Cloud-Based POS Systems Offer a Modern Solution for Modern Businesses
Though legacy POS systems provide excellent service in a great number of businesses, cloud-based systems offer flexibility for modern businesses with multiple channels or locations or that want to reduce their start-up costs. Many business owners that travel or have businesses in different locations may also prefer an internet-based POS system that allows them to oversee their business’s affairs from a distance.
If you’re interested in adopting a cloud-based POS system in your business, keep in mind that a merchant services account is also a must. With the right merchant services partner, you can then optimise your payment processing systems for greater efficiency, greater flexibility in terms of payment methods and centralised data collection to help you analyse sales trends, make strong business decisions and boost your revenue into the future.