Types of POS Systems: The Ultimate Guide for Businesses

If you run a retail business, restaurant, or golf course, you’ll need to equip it with a point-of-sale system. If you get just one piece of technology for your small business, this better be it. A POS system is critical to your daily operations and can help ensure everything from payment processing to managing inventory runs smoothly.

However, with so many types of POS systems on the market, it can be difficult to figure out which one is best for your business. We’ve created this guide to help you shop around and understand:

• What is a point of sale system
• The different types of POS systems 
• How to compare POS systems

What is a point of sale system?

A point of sale system (a.k.a. “POS system”) is a software and hardware combination that serves as the central hub for all transactions at a small business, such as a retail boutique, restaurant, or golf course. 

You can think of POS systems as technologically advanced cash registers. Beyond just calculating purchases totals, however, modern point-of-sale systems for retail process transactions, hold information about your inventory, process payments, collect business data, and a lot more. 

Types of POS systems

There are four main types of POS systems that small businesses use today: legacy, tablet, mobile, and cloud-based POS systems. 

We’re explaining what each one is, its key features, how much you can expect to pay for them, and several examples of each. Note that these systems have a lot of overlap in what they offer.

Legacy POS system

What is it?

A legacy POS system is also known as an on-premises POS or traditional POS. The biggest difference between a legacy system and other types of POS systems is that this system saves data locally. That means that all of your transactions and other information are saved to one device (or other devices on your closed network), and you can only access that data from those devices.

This system runs on hardware that’s typically proprietary and can only be purchased through the POS provider. Legacy point of sale systems for retail require a lot more training than other types of systems, making onboarding a slow and long process. You’ll also need someone to come and install the system, and be present on-site to provide maintenance, when needed.

Key features and benefits

• Scan product barcodes or look up products in the system
• Ring up customers
• Calculate purchase totals, including taxes and discounts
• Process payments
• Provide reporting on key aspects of the business
• Doesn’t require an internet connection 
• Offers strong data security 

Pricing

According to Fit Small Business, a legacy POS system typically costs between $10,000 and $15,000 for one-time hardware costs, between $1,000 and $5,000 for installation services, and between $100 to $250 per month for support services.

Examples

Aloha, Oracle MICROS, and Squirrel Systems are among the best legacy POS systems for retail.

Tablet-based POS system

What is it?

Unlike a legacy POS system, a tablet-based POS system is considered a “modern POS system” (like the remaining types of POS systems on this list). A tablet-based system is also known as a touchscreen or iPad POS system and gets its name from the hardware on which it runs. 

Because this system runs on hardware that many people are familiar with, training and onboarding tend to be easier than with a legacy POS. These systems are convenient due to the sleek size of their hardware. 

Most tablet-based retail POS systems run on a cloud-based network system, which means you can make changes to the business from anywhere. For example, you could add new inventory from your couch, after hours. 

A tablet-based system usually comes with self set up and self maintenance, which means you can get up and running on your own schedule.

Key features and benefits

• Familiar tablet hardware that’s intuitive to use and easy to train on
• Several options for processing transactions, including scanning a barcode and looking up products
• Calculate purchase totals, including taxes and discounts
• Payment processing for all kinds of payment types
• Collect data about your customers and add shopper notes to each transaction
• Inventory management features like low-stock alerts and built-in inventory counting
• Multiple fulfillment options, like click and collect and ship to customer
• Sophisticated reporting about your sales, staff, customers, and inventory
• Integrations with hundreds of other tech tools
• Social media integrations for seamless marketing

Pricing

With a tablet-based point-of-sale system, you’ll need to pay for the tablet hardware, an ongoing POS software license, and if it’s not included in your license costs, a fee for customer support. 

iPads, for example, start at $329. Depending on your provider, POS software can range from $69 to $199 per month.  

Examples

The best tablet-based small business POS systems include Lightspeed POS, Square, and Shopify POS. 

Mobile POS system

What is it?

A mobile POS system is a portable, modern POS system. The point-of-sale software runs on mobile hardware, like a tablet or smartphone. 

A mobile POS system is great for serving customers while they shop. Sales associates can look up products and customer profiles from a handheld POS to check inventory and make personalized recommendations. 

With this type of POS system, customers don’t have to stop the shopping experience to complete a purchase. Instead, every employee with a mobile system can checkout customers from anywhere in the store. Mobile POS systems are great for line busting and pop-up selling experiences, like markets.

Like tablet-based POS systems, a mobile system usually also includes self set up and fast onboarding. 

Key features and benefits

• Sleek, portable hardware
• Line-busting capabilities
• Every employee can serve as a checkout point
• Comes with a built-in card reader, in many cases
• Calculate purchase totals, including taxes and discounts
• Payment processing for all kinds of payments
• Familiar, easy-to-use hardware
• Can come with a built-in barcode scanner, which makes counting inventory a breeze
• Inventory management features
• Various shopping fulfillment options, like ship to home or click and collect
• Integrations with tools already in your tech stack
• Reporting and analytics capabilities that help inform business decisions

Pricing

Mobile point-of-sale systems have similar POS software costs as tablet-based systems (between $69 and $199 per month). The main difference is hardware costs, which will depend on what kind of device you choose. For example, an iPhone-based mobile POS system starts at $429, while iPads start at $329. Hardware costs are typically lower for Android-based devices.

Examples

Lightspeed POS, Clover, and Square are some of the best mobile small business POS systems.

Cloud-based POS system

What is it?

A cloud-based POS system is one in which data is stored in the cloud, rather than on a local device or network. That means that you can access business data, and make changes, from anywhere.

Most modern POS systems are cloud-based. While data can be accessed from anywhere, this also means this system is more vulnerable to security breaches than a legacy POS system. And because it relies on an internet connection to post data, the system could be down when the internet is down.

Like other modern POS systems, this system usually operates on sleek, portable hardware. It also comes with self-onboarding and training documentation.

Key features and benefits

• Business data is saved on the cloud, which means you can access it from anywhere
• Can make changes to your business from anywhere
• Sleek, familiar hardware
• Calculate purchase totals, including taxes and discounts
• Payment processing for all kinds of payments
• Inventory management features
• Various shopping fulfillment options
• Integrations with tools already in your tech stack
• Sophisticated reporting and analytics features

Pricing

Cloud-based POS systems have costs similar to other modern POS systems. That means you have to pay for hardware, point-of-sale software, and sometimes customer support. 

When it comes to hardware costs, you could pay anywhere from $329 and upwards for an iPad. Software costs start at $69 per month. You’ll also have to think about payment processing fees, which point-of-sale system providers pass on to their customers, usually at a rate of 2.6% plus 10 cents per transaction.

Examples

Lightspeed POS, Square, and Clover are examples of the best cloud-based POS systems for retail. 

How to compare POS systems

There are lots of different types of POS systems on the market. So, how do you compare them?

First, you need to know your business’ needs. Before you shop around for a POS system, ask yourself these questions:

• What’s your budget for a POS system?
• What do you need the system to do?
• Do you want a stationary checkout point, or do you want to checkout customers from anywhere on premises?
• How many locations does your business have?
• Do you have a wifi connection or do you rely on ethernet?
• What kind of data do you want to collect about your business?
• What other tools does your business use? 
• Does the POS system you’re considering integrate with my existing technology?

Once you’ve answered those questions and thought about your needs, go through your options (as discussed above) to determine the right type of POS you need and the specific vendor you should work with.

Consider the following scenarios. 

Scenario #1: Comparing POS systems when you’re a growing retail business

Let’s say you’re a multi-store retailer with a large catalog, and you need a POS that has all the bells and whistles: inventory management, loyalty program, promotions—the works. And because you run multiple stores, you also need a solution that gives you visibility into how all your locations are doing. 

In this instance, the best solution is a cloud-based POS system that can run on an iPad, laptop or desktop computer. This type of POS will enable you to manage more complex operations from a central system so you can run and grow your business with ease. 

Wendel Wray, Global Retail Manager at Lighthouse Immersive (the company behind notable exhibits like the Van Gogh exhibit), agrees that having a robust cloud-based POS is pivotal to retail operations and growth. 

Switching to Lightspeed enabled Lighthouse Immersive to handle up to 300 transactions per hour, per location to significantly streamline customer service and operations.

“We roll up to the venue, plug everything in, and we’re good to go. I can get three registers set up in 25 minutes,” says Wendel. “Our transactions, start to finish, [take] less than seven seconds, which is incredible. We’re saving time left, right and center, which I love. I am all about the efficiencies.”

“Lightspeed helped us grow our revenue, primarily through the reporting, as well as our processing times at the register, because it allows us to have a seamless customer experience and guest journey.”

Scenario #2: Comparing POS systems with the customer experience in mind

Here’s another example. Suppose you’re a retailer that provides a high-touch customer experience. Your team members are constantly on the sales floor interacting with shoppers and showing your catalog. 

In this instance, having a mobile or tablet-based POS makes the most sense because it lets you engage with customers directly without being tied to the counter.

The photography store and gallery Leica is a great example of a business that leverages an iPad POS in their day to day. 

According to Leica General Manager Chris Durkin, “Lightspeed for iPad benefits us hugely. Being able to sit with customers and display our products on the iPad makes the sale more personable.”

Wrapping up: Types of POS systems

There are four main types of POS systems: legacy, tablet-based, mobile, and cloud-based POS systems. The last three of these types of systems are considered “modern” POS systems and are usually more efficient and affordable than legacy systems. 

Learn how a mobile, cloud-based POS system like Lightspeed can help your business grow. Book a demo today.

FAQs

What are different types of POS?

There are four main types of POS (Point of Sale) systems:

• Legacy POS systems: Also known as traditional or on-premises POS systems. They store data locally and often require proprietary hardware.
• Tablet-based POS systems: These are modern POS systems that run on tablet devices like iPads, offering portability and ease of use.
• Mobile POS systems: Portable POS systems that run on mobile devices, such as smartphones or small tablets. They are ideal for on-the-go transactions and in-store customer service.
• Cloud-based POS systems: These POS systems store data in the cloud and can be accessed from various devices, offering flexibility and real-time data access.

What are the two 2 most common operating systems for POS devices?

The two most common operating systems for POS devices are:

• Microsoft Windows: Widely used in various POS systems due to its compatibility with a range of hardware and software options.
• iOS: Particularly popular in tablet-based and mobile POS systems, known for its user-friendly interface and robust security features.

What is the difference between a POS system and a POS terminal?

 POS systems are the complete set of hardware and software that manages sales transactions. It includes not just the physical hardware (like a computer, scanner, printer, etc.) but also the software for processing transactions, managing inventory, customer data, and other business functions. The POS terminal is one component of a POS system. It’s the physical device used to conduct the sale transaction, and can come in the form of a cash register, computer, or tablet. 

What is an example of a POS system in retail?

Lightspeed is an excellent example of a POS system for retailers. It offers a range of features like inventory management, customer relationship management, promotions, reporting, and more. Used by over 160,000 customer locations across the globe, Lightspeed serves as the unified point of sale and payments platform for growing and large businesses.