Your point of sale solution, often referred to as a POS system, is the collection of hardware and software that allows you to securely take customers’ credit and debit card payments.
It also assists with many other business-related functions, including customer relationships, employee and inventory management, integration with third-party software, and detailed report generation.
Since there are many options on the market today, it is important to understand how your choices differ from each other. In this post, we will focus specifically on the distinctions between cloud-based and server-based options.
Cloud-based POS systems defined.
A cloud-based POS is a point-of-sale system hosted on remote servers, offering secure, flexible, and cost-effective management without the need for in-house IT staff. Accessible from anywhere with internet connectivity, it integrates seamlessly with other systems, provides automatic updates, and is typically priced through a subscription model.
These solutions are hosted on remote servers, meaning that they are not located at your company’s physical site. Because they are managed by a third-party company and do not require your organization to have a team of in-house IT staff to manage them, they can be more cost-effective, affordable, and flexible.
Setting up your system is usually quite user-friendly, only requiring that you configure software and connect to the internet. Because the system is hosted and maintained remotely, you have constant access to it from anywhere.
Even so, your data remains secure, protected by encryption with robust security systems that are regularly backed up by the third-party vendor.
The cloud-based POS integrates with other systems that you may already be using through APIs and third-party apps. Updates are seamlessly conducted by the vendor, and integrations with other software packages are generally easy to implement.
When it comes to pricing, cloud-based POS solutions are typically paid for with a monthly subscription. The price you pay will depend on the size of your business and the scope of the services that you need.
Server-based POS systems defined.
A server-based POS is an on-premise system that requires physical hardware and in-house IT expertise for setup and maintenance, offering high flexibility and data privacy but limited remote access. While it provides customizability and control, it involves significant upfront costs, ongoing updates, and dedicated support for operations.
Setting up one of these systems can be a complex process involving the installation of physical hardware such as terminals, servers, and peripherals. In many cases, this installation and configuration requires a good deal of in-house technical expertise and time to accomplish.
Since your server-based system is self-hosted, your team will be responsible for all maintenance tasks and software updates. The upside to this extra workload is that you gain a great deal of flexibility and customizability in your system.
Another advantage of on-premise systems is that you can have a high degree of privacy and control over the data that you store and transmit. This is the case because you are running a closed system that can only be accessed from inside your own self-hosted networks.
On the downside, because you are in control of every aspect of your own security and data management, you are on the hook should an information breach occur in your server-based POS or payment processing equipment.
If you are using complex inventory management or accounting software, your server-based POS’s interface and functionality can be modified by your team of experts to match your company’s unique needs.
As a result, you can construct your own tailor-made system and make modifications to its capabilities as conditions warrant. On the other hand, this requires ongoing in-house support from a highly skilled IT team.
Although the system can be tweaked and refined and can be quite flexible in that respect, it is only accessible to users who are on the physical premises. This restriction makes remote management difficult if not impossible in most cases.
Operating a server-based system comes with significant upfront costs. These include paying for the hardware and software as well as the setup, periodic maintenance, updates, and reinstallation if problems arise.
Ultimately, the company will need to purchase an entirely new system when the current one becomes outdated. Until that time, qualified support staff must keep the system going by conducting manual updates after business hours.
This is the case because staff cannot use the smart payment terminal or other POS systems when the procedure is occurring.
Which to choose: the bottom line.
On one hand, a cloud-based POS system is flexible, affordable, and easy to update. At the same time, they rely on stable internet functioning and come with recurring costs. The degree of security that they offer is dependent on the third-party company providing the service.
Server-based POS solutions give you total control over data, hardware, and software. The system is not dependent on the internet, and data can be kept locked down and highly secure. Even so, setup costs are much higher, putting these solutions out of reach for some smaller companies.
Maintenance remains in the hands of internal staff and can be resource-intensive, leading to higher ongoing costs. In these closed, on-premise systems, remote management and oversight can be challenging and even impossible, limiting scope and scalability.
In general, the flexibility, affordability, and lower costs of cloud-based systems make them a good fit for new companies or those with several locations. Alternatively, their greater control and improved offline functionality mean that server-based solutions are generally well-suited to companies that want in-house management and network independence.
That being said, only you can determine the right type of POS for your growing business, so choose wisely.
