Selecting a Point-of-Sale System for Your Farm

What is a point-of-sale (POS) system?

The term “point-of-sale system” can be used to refer to many different kinds of systems. Its most general use simply refers to any equipment — hardware and/or software — that allows retailers to ring up customers’ sales. This includes old-fashioned cash registers, electronic cash registers with basic sales tracking features, so-called “legacy” software installed locally on a computer system, and more modern cloud-based systems.

In common usage, however, the term “POS system” refers mainly to those systems (whether locally-installed or cloud-based) that allow retailers to process credit and debit cards, at minimum, and that offer some level of product management and sales tracking (ranging from rudimentary to advanced). In general, this is how we will be using the term “POS system” in this tipsheet.

Most modern POS systems consist of a register screen and a credit card reading device, as well as a range of other possible hardware — a cash drawer, a receipt printer, a scale, and/or a barcode scanner. Their software features vary widely, and can include many (or very few!) different options for tracking sales, managing products and inventory, managing customer and employee information, and more. POS systems also vary in what payments they can handle — besides credit and debit cards, some systems accept EBT cards, Google or Apple Pay, and other payment types.

Where to start — how to choose!

There are hundreds of point-of-sale systems out there, so how do you know where to start in searching for the one that will best meet your needs? One of the first things many people do is look online — and that’s not a bad place to start. There’s a wealth of information online — so much, indeed, that it can be difficult to figure out how to wade through it all. We offer some tips at the bottom of this page to help you check online ratings and reviews of point-of-sale systems, but still, the sheer volume of information online can be overwhelming.

Another place people often turn is to sales representatives for particular point-of-sale companies. This can be a great resource for getting in-depth information on a particular system, but it is certainly not unbiased and can also be a very time-consuming way to compare different systems. Many of the farmers we’ve spoken with chose their current point-of-sale systems based on initial conversations they had with local sales representatives, and sometimes later questioned whether this had led them to make the best choice to match their needs.

The other place people turn is to neighboring businesses, asking around to find out what systems similar businesses are using. This doesn’t necessarily provide an exhaustive list of the best options, either, but it can be an excellent way to home in on the options that are more likely to be suited to their particular business type. To jump-start our point-of-sale research (and save you time!) CISA did our own “asking around,” talking with dozens of Local Hero member farms and businesses to see what POS systems they were using. Here is a summary of what we found.

POS systems being used by local farms

In Spring 2018, CISA staff talked with managers of 43 local farms and food businesses about their POS systems. Those we got feedback from included 34 mid-sized farm stands, five small grocery stores, and four restaurants (all of which included some retail component). Several of the farms we interviewed sold at farmers’ markets, where mobile POS options were required, in addition to selling through their farm stand.

Of the 43 farms and food businesses surveyed, 28 were using more modern POS systems, ten were using cash register-based systems, and five were using only cash boxes and a scale. Of the 28 businesses using modern POS systems, only five farms were using locally installed systems (either Intuit’s QuickBooks POS or Heartland pcAmerica’s Cash Register Express). The remaining 23 businesses were using cloud-based POS systems. Square Point-of-Sale was by far the most common cloud-based POS system used, with 15 farms using this POS system (though some farms were using it mainly for credit card processing without fully using the app’s product management features). Other cloud-based POS systems that were being used included Bindo, Clover, Posera’s Maitre ‘D, NCR Silver, PayAnywhere, and Shopkeep.

As far as how business owners were using their POS system, over half of POS system users reported accessing the system on their phones. One quarter of businesses reported using their system to manage inventory in some capacity, and one fifth of business owners used their POS system to track EBT sales in some way. Only 15% of businesses reported that their POS system was integrated with QuickBooks, and very few businesses discussed using more advanced POS system features like employee or customer management. Interestingly, while it is common for larger retailers to use scales that are directly integrated with their POS system, none of the businesses we surveyed reported using an integrated scale, although a couple businesses said that they were hoping to transition to one.

Factors to consider when choosing a POS system

As begin your search for POS system options that might be a good fit for your farm, what are the key factors to keep in mind? Here are a number of considerations that we have found to be important through our research and conversations with local businesses.

Product management features

The ability to manage individual product sales — i.e. to be able to key in and track sales by item — is the core feature of modern point-of-sale systems. This allows you to calculate pricing and tax, keep track of how much you sell of different products, and manage inventory. A product management interface must be user-friendly for a POS system to be a worthwhile investment for your farm. It must save you time in ringing up customers and tracking sales — if the interface is cumbersome and adds time to each transaction, you’ll be hard pressed to convince yourself to use it to track product sales at all. The best way to determine the user-friendliness (and, especially, the speed) of a product management interface is to talk with other users and, if at all possible, to try the software out yourself before you invest.

Key features that are important to consider on the product management front include:

• How well the POS system handles products that have varying prices (due to different package sizes, sales, or other variations).
• How well the POS system will handle any discounts or add-on charges that are part of your pricing structure.
• Whether it is possible to tag or categorize products as to whether they qualify for EBT, HIP, or other payment types.
• How easy it is to calculate regular sales tax and meals tax (if needed) in the POS system.
• Whether the system has the capacity to integrate affordably with a scale.
• Whether the system has the capacity to easily calculate pricing by weight (including weights with decimals, which not all systems can handle).

Inventory management features

Relatively few of the businesses we spoke to reported using their POS system to manage inventory, although inventory management is one of the key benefits offered by POS systems. This is not that surprising, since our conversations revealed several barriers to managing inventory accurately for farm products via POS systems.

If you would like to use your POS system to manage inventory, here are some of the key factors that determine whether that is practical in any given system:

• Whether the system can handle inventory for products sold in variable weights (including weights with decimals, which not all systems can handle).
• Whether the system can separately manage inventory for multiple locations, if you need this feature.
• If you operate an online store and want to take online sales into account in your inventory management, you would benefit from a system can easily integrate information from e-commerce.
• Whether the system is well-built to accommodate inventory management for products that you grow or produce, as opposed to products that you buy in from other vendors.
• Whether the system makes it easy to adjust inventory for sales through other channels. For example, if you have a CSA pickup in addition to regular farm stand sales, you may want an easy way to adjust inventory to reflect the amount of product sold through the CSA.

Customer management features

Not all POS systems have customer management features, but these can be beneficial. POS systems may be able to help you track individual customers’ sales, record contact information and other information about your customers, and even email your customers directly through the system. You can use customer information to learn more about individual customers’ loyalty (i.e. how frequently they shop at your business), to generate targeted email marketing campaigns, as well as to assess the success of marketing efforts. For example, if you send an email advertising a sale to customers, you can see how many of the customers receiving the email actually came to the store and took advantage of this sale. Likewise, if you initiate a new loyalty program, you can check to see if it had the desired effect of motivating customers to return more frequently to your store.

Employee management features

Some POS systems have the capacity to be used as a time clock to track hours of retail employees, as well as to track sales by employee and to set up different user accounts for each employee (with varying levels of permission to access different parts of the system). Such features have the potential to streamline time-tracking unless you already have another good system for doing so, and you may also find it helpful in assessing employee performance.

Accounting integration

If you use QuickBooks online, it is important to have a user-friendly method for syncing information between your point-of-sale and QuickBooks systems for things like end-of-day sales, till counts, cost of goods sold, payroll information, inventory, and/or purchase orders. Some point-of-sale systems have the capacity to integrate with QuickBooks, either directly or through one or more third-party apps. A number of other systems offer relatively easy options for manually transferring POS information into your accounting system.

Note that QuickBooks integrations have varying reviews, and while automatically transferring information may save labor up front, it may also result in errors if the information is transferred without being reviewed for accuracy. Systems that offer a streamlined way for manually transferring POS information to QuickBooks (via Excel, etc.) may well meet your needs just as well or better than a system that offers direct integration.

Scale integration

The ability to integrate a scale directly with a POS system can significantly speed up the process of checking out customers, reduce room for employee error, and improve inventory mangaement. None of the local farms and other businesses we spoke to were using an integrated scale, likely because many systems don’t offer scale integration, and those that do have scales that cost significantly more money than the average non-integrated scale. Investing in a point-of-sale system with an integrated scale (which often run around $400-$500 each) may well be worth it over the long-term, however, if you can afford the upfront investment. Some POS systems that offer the option of an integrated scale include Square, NCR Silver, Revel, Bindo, and Clover.

Payment processor

Some POS systems (like Square) work with only one payment processor, whereas others like NCR Silver can integrate with almost any processor you choose. Who processes your payments will determine what types of payments you can accept beyond credit and debit cards – such as EBT cards, mobile “Near Field Communication” payments like Apple Pay, Google Pay, and Android pay, or even Bitcoin in the case of some e-commerce POS systems. Your processor will also have a big effect on the overall reliability and cost of your POS system.

A key consideration when choosing a payment processor is whether it is a “merchant account” or a “payment service provider (PSP).” Merchant accounts involve a specific agreement between a merchant (you) and a payment processor, whereas PSPs aggregate payments from many different merchants to manage their risk and have few obligations to any one of these merchants. Hence, the approval process for creating new merchant accounts often takes several days, since the payment processor must assess the risk of that individual merchant, whereas you can get set up with a PSP almost immediately. Many of the most popular processors are PSPs — like Square and Paypal, for example. The difference between merchant accounts and PSPs is important for two main reasons:

1. A PSP like Square can legally terminate your agreement at any time with very little cause if it suspects your account to be posing an undue risk to its portfolio. So a PSP is inherently less reliable than a merchant account.
2. A PSP is often cheaper for businesses with a low sales volume, since it has high per transaction costs but generally no monthly fees. However, a merchant account is generally cheaper for businesses with a medium to high sales volume, since it will often have a monthly fee combined with significantly lower transaction costs.

It is also worth noting that while PSPs typically are non-negotiable and have no “early termination fee,” merchant accounts are frequently negotiable (so it’s wise to read a company’s reviews to get advice before signing a contract) and sometimes have penalties for ending a contract early (which are also often negotiable).

Overall reliability and ease of use

Some of the most frequent complaints about POS systems relate to their overall reliability. If POS software has glitches or is unable to continue operating when the internet is down, this will likely cause you to lose sales. Most, but not all, cloud-based systems have an “offline mode,” which can enable them to keep operating for a period of time even if the internet goes down – it is important to confirm that a POS system has this ability, and ask how easy the system is to operate and how long it can run when offline.

By and large, modern POS systems are more intuitive than the cash registers that preceded them. However, POS systems still vary widely in how intuitive they are. This may not matter much if you will have a small number of people using the system over a long period of time. However, if you have many employees who will be using the POS system or will have frequent turnover in these staff, it is essential that the POS system be designed in such a way that you can easily train new employees to operate it. In addition, some POS systems become unwieldy when canceling transactions or managing product returns, so this is another factor that can affect the ease of use (and the speed) of a POS system.

Understanding POS system costs

All farms are looking to get the best bang for the buck out of their POS system, and cost was the top criterion in choosing a POS system for many of the farms we spoke to. It can be difficult to accurately compare the costs of different POS systems, however, because the pricing structures of different systems vary widely. Furthermore, a single point-of-sale system will often involve working with multiple companies — for example, one company may own the software while other companies may produce some of the hardware components, and still other different companies may be involved in sales and customer support roles, and/or in payment processing. Key POS system costs can generally be broken down into software costs, transaction fees, and hardware costs.

Software costs

Software costs can be paid upfront and/or monthly. Locally installed POS systems usually require a software license to be purchased upfront, whereas cloud-based POS systems commonly charge a monthly fee for use of the software. Companies often also charge for tech support to troubleshoot software issues. Cloud-based POS companies frequently charge extra for phone support plans. Note that customer support for locally-installed POS systems is often more expensive, because a technician may need to visit you in person to troubleshoot issues, as opposed to accessing the system online.

Transaction fees

Transaction fees are the amounts charged per card swipe or other type of transaction. They can be a percentage of the transaction amount, and/or a fixed amount. For example, a company may charge a cost of 1.75% + $0.15 per card swipe. These transaction fees charged to the merchant (you) represent a markup over what is know as the “interchange rates,” or the wholesale rates that companies must pay to Visa, Mastercard, or other credit card associations to process transactions. Generally, a merchant account will charge a lower average markup than PSPs, but merchant account rates may also be a bit more complicated. Instead of charging a fixed fee for all transactions like PSPs often do, merchant accounts frequently offer a variable “interchange plus” rate — which simply describes a standard markup that is charged on the interchange rate (which varies over time).

Hardware costs

The costs for different hardware components vary widely among systems, so it is important to price-compare hardware components before deciding on a POS system. It is worth noting here that the hardware components for locally-installed POS systems are generally significantly more than for cloud-based systems. Since locally-installed systems offer little or no advantage over cloud-based systems (except possibly for enhancing security in certain limited cases) this is often reason enough for farms to go with cloud-based systems.

Another important hardware consideration is that some POS systems, like Clover, require you to buy hardware that can only be used with that one system. If you want to keep your options open, you might instead want to invest in a system with more generic hardware like an iPad register that can later be re-purposed for a different POS system if needed.

Based on our research, common prices for different hardware components are in the following ranges:

• Register screens – Tablets can generally be purchased for around $300, and the cost of non-tablet registers goes up from there. Note that the most basic tablet stands start at $20 (or $50 for an aesthetically pleasing wooden one on Etsy), though more ergonomic ones with locks and other features can be $100-$200.
• Credit card readers – Credit card readers require a tablet or phone to operate, and are relatively cheap — usually around $50.
• Credit card terminals – Credit card terminals are free-standing and frequently range from $100-$150.
• Scales – Basic price-computing scales are typically available for around $150 (or $400-500 for integrated scales).
• Cash drawers – These often range from around $100-150 (though these can be more if integrated with a receipt printer).
• Receipt printers – These often range from $200-$300.
• Barcode scanners – You can expect barcode scanners to range from $100-$250 (though wireless scanners may be twice that amount).

Take-home message

Given the importance of cost and the complexity of POS system cost structures, we suggest you take your time in comparing system costs before you invest. Sometimes, a system that appears to have lower costs — such as when costs are subtracted from each transaction as opposed to being paid upfront — may actually cost your business more once you reach a certain threshold of sales.

Sources of POS system reviews

As mentioned earlier, online reviews can be very helpful when comparing point-of-sale systems to identify those that might be the best fit for your business. Below are several good web sources for professional and/or user reviews of different point-of-sale systems.

• Merchant Maverick – A small company in California focused exclusively on providing in-depth reviews about software and payment processing options. It has some of the most thorough reviews available for point-of-sale systems on its website, as well as for merchant accounts, payment gateways, and more. It also develops helpful primers like this one on payment processing to help demystify various topics. Merchant Maverick makes its money through referral commissions, but note that companies cannot pay extra to be featured on the website.
• Business News Daily – An online magazine that reviews software and hardware for small businesses, providing brief reviews and annual “top picks” lists for point-of-sale systems and other categories. It is owned by the multinational company Purch which also runs online marketplaces and price comparison apps.
• Capterra – A web service that compiles user reviews of point-of-sale systems and countless other categories of software. It may have the highest number of user reviews of any website for point-of-sale systems. However, product reviews are basic and not always up-to-date, and companies can pay to have their product featured. Capterra is owned by the large multinational corporation Gartner, which also owns Software Advice (and has bought out many other competitors).
• Software Advice – A web service that compiles software user reviews and offers very similar information to Capterra, which is owned by the same large multinational corporation, Gartner.

Other websites you might consider checking to verify a company’s reputation include Ripoff Report and Better Business Bureau, both of which provide forums for users to submit complaints about companies’ business practices.

One of the best ways to learn more about a particular point-of-sale system, of course, is to try out the system yourself, and/or to talk with a business similar to yours that uses the system you are considering. Through conversations with dozens of local farms and food retailers, CISA has compiled information on what systems many of our members are using and how they are using them. If you would like help finding a neighboring business in western Massachusetts that could talk with you about (or show you) a particular point-of-sale system (and/or point-of-sale feature) that you are considering for your business, please let us know and we would be happy to try to connect you!