How To Choose a POS System for Your Retail Store (2023)

By now, you already know what a POS system is—but with so many options available, figuring out how to choose a POS system can feel overwhelming. 

At its core, a POS system will help you securely process sales and take care of administrative tasks like managing inventory and staff. But when you’re in the process of choosing a POS system for your retail store, it’s important to understand what tools and features you need to run your business now and in the future. What are your current needs? What will your needs be in five years? 

The answer to that question is largely dependent on your retail business type. What’s important for a furniture store might not be necessary for a clothing store, for example. 

For any retail business, initial and ongoing costs, usability, and scalability should be top factors when shopping for the right POS system. This article will help you understand what to look for when comparing retail POS systems so you can make the best decision for today and the future. 

What is a POS system?

A point-of-sale (POS) system is the hardware and software that lets you check out customers, accept payments, and manage your physical retail stores. 

Choose a POS system that helps you capture more sales in-store, unify your online and in-person customer experience, and reduce time spent on administrative tasks like inventory management.

A POS system is made up of three parts: 

1. Software
2. Hardware
3. Payments 

1. Software

POS software is the operating system used to ring up sales and manage your store, products, customers, and staff. 

Most point-of-sale software providers offer different subscription plans at different price points. While the cheaper plans come with everything you need to sell in-person, the more expensive plans typically include more advanced features. 

More modern POS software—like Shopify POS—is built for selling online and in-person, providing unified multi-channel sales reports, customer purchase history, inventory management, order fulfillment, and more.

2. Hardware

To accept payments, you need POS hardware. Make sure to choose a POS system that can accept all types of payment, including cash, credit and debit cards, mobile payments like Apple Pay or Google Pay, and gift cards.

Depending on which payment types you want your POS system to accept, you’ll need a cash register, tap and chip card reader, cash drawer, and bar code scanner. 

3. Payments

POS systems also take care of routing funds to your bank account after each sale. But if the POS system has integrated payment processing, you can avoid paying third-party payment processing fees, know when to expect payouts, and track both in-store and online sales and payments from the same back office. 

How to choose a POS system

Whether you’re considering switching from your old point-of-sale or opening your first store, here are a few steps to help you choose a POS system for your business’s needs, now and in the future. 

1. List your business activities 

Before you start shopping for POS systems, list your most important business activities and the things you need your POS system to do. If you’re using another POS system and are thinking about switching, list your challenges and what POS features could solve them. 

Also, think about where you want your business to be in the next five to 10 years. What tools do you need to support that growth? Thinking about this now will ensure you choose a POS system that grows with your business as its needs evolve. 

Questions to ask 

• How do you manage inventory? 
• How do you keep track of sales and inform the decisions you make? 
• Do you want to manage your online store and retail stores from the same place? 
• What payment options do you want customers to have? 
• Do you want to customize your checkout? 
• Do you want integrated payment processing?
• How do you collect customer information for online and in-store purchases? 
• Do you need a loyalty program that works both online and in-store? 
• Do you want your POS system to sit on a counter or be mobile? 
• Do you want to offer fulfillment options like curbside pickup? 
• How do you want to track employee schedules and performance?

2. Consider the data you need

Data helps you make educated decisions, take advantage of opportunities, and avoid costly mistakes. Similar to your business activities and aspirations, we suggest listing the data you need to run your business. 

What data do you need to know at the end of each day, at the end of the month, or at the end of the year? What data do you wish you had? Pinpoint which retail metrics are important and ensure that your POS system’s reports provide you with that information.

Think beyond what you need to run day-to-day operations and consider the data you need to grow your business—like customers’ online and in-store purchase history, or which items account for the largest (and smallest) percentage of revenue. 

Questions to ask

• Do you need daily sales reports to keep tabs on day-to-day performance?
• Do you need weekly, monthly, quarterly, or annual sales reports to see the big picture? 
• Do you often run out of stock of bestsellers? Would a low-stock report help? 
• How do you measure staff performance? Do you need staff sales reports? 
• Do you wish you had cash flow reports to understand payouts better and know when you’ll receive money for the sales you make? 
• Can you see online and physical store data in the same place? 
• How do you know which items are your bestsellers? 
• Do you need product reports that show which account for the largest (and smallest) percentage of revenue? Perhaps an ABC analysis report would be beneficial. 
• Can you easily see inventory data across all your store locations, warehouse, and online store? 
• Can you track the performance of your discounts and promotions? 
• Do you have reports to review your finances? 
• Do your customer profiles centralize online and in-store purchase history? 
• Do you wish you knew each customer’s average order value, average items per order, and lifetime value?
• Do you know which sales channels your customers prefer to shop on? 

3. Know which payment types you want to accept

Consider what payment types you need your POS system to support. How do you want customers to be able to pay? 

Aside from the most common payment types (cash, debit and credit cards), mobile wallet usage has surged in North America. In fact, its market size surpassed $23 billion in 2019 and is anticipated to expand at a compound annual growth rate (CAGR) of 16% through 2026. 

When assessing which POS system to choose, ensure it lets you accept the payment types that are most important, and that its payment processing fees fit into your budget. 

Questions to ask

• What payment types does your business currently accept?
• What payment types do you wish your business accepted?
• Would you like to add financing and buy now, pay later (BNPL) payment options? 
• Are there certain credit cards that are more common payment methods than others? 
• What are your payment processing fees for those credit cards? 
• Are there any payment types you’re OK with not supporting? 
• How will you fulfill cash payments? 
• Do you want to accept tap to pay and chip payments? 

4. Figure out what POS hardware you need

Once you know what payment types you’ll accept, you can start thinking about the POS hardware you need. While most POS providers will be happy to guide you through your hardware options, we recommend having a general idea of what you need beforehand. 

Questions to ask

• What POS hardware do you already use and enjoy?
• What POS hardware do you wish you had? 
• What types of payment hardware do you need? 
• Do you want to buy hardware or would you prefer renting? 
• Do you want a stationary checkout counter or do you prefer a mobile checkout using tablets or smartphones?

5. Compare different POS systems

Now that you have a clear idea of what you need to support your business today and in the future, you’re ready to start shopping for a POS provider. 

Research review sites, talk to other merchants, and see which POS systems businesses you admire use. Also, explore each POS provider’s website and learn more about what they have to offer. 

Once you’ve narrowed down your list of options and want to see how their POS system works, start a free trial to get a hands-on sense of whether it meets your needs. Free trials let you explore its features and how easy it is to use before making any financial commitments. 

Questions to ask

• What features do each POS provider have? 
• Does the POS system’s pricing fit into your budget? 
• Can the POS system support my business today and in the future?
• WIll the POS system help grow my business? 
• What are the benefits of using one POS over another? 
• What are the POS system’s weaknesses?
• Does the POS system have any missing features or functionalities?
• Does the POS system feel intuitive and easy to use? 

Factors to consider when choosing a POS system

Whether you’re opening your first store or are thinking of switching from your current point-of-sale system, here are some key factors to consider when choosing a POS system for your business: 

• POS software fees
• Hardware costs
• Payment processing fees
• Mobility
• Order fulfillment options 
• Ecommerce platform integration
• POS software features 
• Apps and add-ons
• Customer support

POS software fees

First things first: your POS system needs to fit your budget. But there are several factors that can impact how much a POS system costs. The first is POS software fees. 

Most POS software has either a monthly fee or an annual fee, as well as different plan tiers at different price points. Higher tier plans typically have more advanced features. 

For example, any ecommerce merchant on Shopify’s Basic plan gets Shopify POS software for free, giving them everything they need for occasional in-person selling through pop-up shops and events.

Merchants with permanent store locations looking for more robust features—like advanced reporting and analytics or more control over staff accounts and user permissions—can sign up for Shopify POS for $89 per month, per store location (or $79 per month, if you pay yearly). 

Hardware costs

The second thing you should factor are hardware costs and functionality. Hardware costs will vary depending on your needs, what payment types you want to accept, and the number of stores and staff you have. 

You can buy, lease, or rent your POS hardware depending on your situation. If you’re opening a pop-up shop, for example, it makes more sense to rent your POS hardware than to buy it outright.

Consider the hardware and functionalities you’ll need to operate your store, and compare each POS provider’s options to find the best bang for your buck.

Payment processing fees

Along with how much your POS system’s payment hardware costs, also consider payment processing fees. 

Each time you process a sale, your payment card processor charges a fee. This fee is charged per transaction, in hidden and monthly fees. In many cases, the amount you pay per transaction varies depending on the credit card the customer uses.

Before you choose a payment processor, see if your point-of-sale provider offers integrated payment processing. Shopify Payments, for instance, is included in all Shopify POS plans and comes with no sign-up or setup fees. Pay the same pre-negotiated rate for all credit cards—2.7% + $0 for the Basic plan and 2.4% + $0 for the Advanced and Plus plans, receive payouts faster, and control your cash flow better.

Accepted payment methods

When paired with the right hardware, your POS system should be able to accept all major retail payment options, including: 

• Cash
• Magstripe credit cards 
• Contactless payments
• Chip cards
• Gift cards
• Card not present transactions 
• Split payments

Mobility

While legacy POS systems were tethered to a checkout counter, modern POS systems like Shopify POS are mobile and let you sell wherever your customers are. 

Mobile checkout is becoming table stakes in retail because it shortens wait times to pay and can improve circulation in your store, especially at the checkout counter.

Order fulfillment options

Modern customers want the flexibility to shop however they wish. Whether a customer shops online, in-store, or using a mix of channels, retailers need to make the experience feel convenient. 

When your POS system integrates with your ecommerce platform, it opens up more flexible order fulfillment options like buy online, pickup in-store (BOPIS) and home delivery, and helps offer a smooth shopping experience for your customers. 

Ecommerce platform integration

Choose a POS system that works in perfect harmony with your ecommerce platform and helps you manage your entire business from the same place. 

As independent bicycle company Tokyobike learned, when your POS system and ecommerce platform are from different providers, it will be more challenging than it has to be to offer a unified customer experience. 

“We’ve always had different point-of-sale systems and platforms for our online store,” says Juliana Di Simone, Tokyobike’s partner and director. “There were things we wanted to do that we couldn’t, mostly around order fulfillment and the way we wanted our online experience to be. We thought somewhere in there we were probably losing customers.”

There were things we wanted to do that we couldn’t, mostly around order fulfillment and the way we wanted our online experience to be. We thought somewhere in there we were probably losing customers.

Using separate systems to manage its online and retail stores created a messy customer experience, ranging from minor frustrations, like not being able to redeem digital gift cards in-store, to bigger issues, like the inability to see inventory across locations. By unifying your POS system and ecommerce platform with the same provider, you avoid those pitfalls. 

“It’s impossible to think of physical retail as separate from ecommerce,” says Juliana. “The interaction between physical and digital should feel like a natural part of your customer experience. To do that, you need systems that connect the two. This idea of unified commerce is the future.”

POS software features

Asides from core functionalities like accepting payments, choose a POS system that also provides the following:

• Integrated payment processing
• Centralized reporting and analytics 
• Multichannel inventory management
• Staff management
• Flexible order fulfillment 
• Multi-store management
• Customer relationship management

Shopify, for instance, comes with all the features you need to sell in person and offer a smooth shopping experience—including omnichannel selling, quick checkout, smart inventory management, and easy-to-understand reports on your sales, customers, products, and staff. 

Apps and add-ons

Your business is unique. It’s important to choose a POS system that can adapt to those needs with apps and add-ons that extend their capabilities. 

With Shopify, for instance, you can choose from thousands of apps built by our trusted partners in the Shopify App Store. Find an app to help you do anything—from counting foot traffic to visual merchandising and more. 

Customer support

Choose a POS system that has customer support available via email, chat, or phone. Check to make sure that support is free and will be available whenever you need it—even 20 minutes before you launch your Black Friday Cyber Monday promotion. 

With Shopify, our support team is with you whenever you need us. Whether you’re just getting started, switching from another POS system, or looking for help training staff, managing inventory and more, we’re ready to help. 

Features to look for when choosing a POS system 

Other than helping you take payments and make sales, it’s important to choose a POS system that includes features to help speed up your checkout, avoid costly mistakes, improve store operations, and make more informed decisions. 

Built-in payment processing

Payment processing agreements with third-party providers can be difficult to navigate. Fees are often unclear and can vary depending on the credit card type, contracts often lock you in for several years, and it can take a long time to receive payouts. All that ambiguity makes managing cash flow more challenging than it has to be. 

But POS systems with integrated payment processing are much more straightforward. 

Shopify POS, for example, comes with Shopify Payments. Merchants get PCI-compliant payment processing and pay one low, pre-negotiated rate for all credit card transactions, and receive payouts faster. 

With Shopify Payments and hardware, you can accept all popular payment methods and easily track online and in-store transactions and payouts from Shopify’s back office. 

Customizable checkout

Every store is different. Choose a POS system that’s flexible and customizable to better fit your needs and store workflows.

For instance, Shopify POS has a customizable smart grid, which lets you add shortcuts for the things you do the most and speed up checkout. Add shortcuts to find products, apply discounts, create customer profiles, fulfill orders, and more. 

Omnichannel selling

Most customers use more than one channel to shop. As a result, they expect brands to make shopping with a mix of in-store and online touchpoints feel seamless. But if you’re using the wrong POS system, that’s not always easy. 

Nearly 50% of brands say that unifying online and in-store operations and data is their biggest challenge. That’s partly because when integrating a POS system and ecommerce platform built by two different providers, you’re likely to need complicated workarounds and plug-ins. Even then, the results are often cumbersome and underwhelming. 

Choose a POS system that doesn’t just connect to your online store—it should work with it and have built-in omnichannel selling and order fulfillment features. 

With Shopify POS, for instance, store staff can follow up with indecisive in-store shoppers by sending them email carts that include products they were interested in. When the customer buys the product online, the sale is attributed to the store and staff who sent the email cart from Shopify POS. Think of it like an abandoned cart email, but for in-person selling.

Mobile POS hardware

Mobile POS systems are increasingly popular, because they give staff the freedom to move with customers and serve them wherever they are. Choose a POS system that has reliable, sleek mobile hardware.

The hardware you need depends on your store’s setup. That said, chances are you’ll need a card reader, cash register, receipt printer, and bar code scanner. You’ll also need a tablet or smartphone to run your POS software. 

Smart inventory management

Inventory control is critical. But when you sell online and in physical stores, it can be challenging to ensure stock quantities are accurate as items are received, sold, returned, or exchanged. 

Choose a POS system that integrates with your ecommerce platform to ensure stock quantities shoppers see online and stock staff see in the POS system reflect what you actually have in stock. 

Shopify POS, for instance, connects seamlessly with your Shopify online store’s database. Inventory levels are automatically updated as products are sold, returned, or exchanged in-store or online. By managing inventory from one platform, you can simplify inventory management and ensure accurate inventory reporting while spending less time manually counting and reconciling inventory.

Unified reporting and analytics

Data and analytics help you spot trends, capitalize on opportunities, and make decisions with confidence. Your retail POS system should come with built-in data and reports that help you track your inventory and revenue, which products are selling or languishing, your customers’ purchase history, and your staff performance. 

While POS data typically includes the data collected at the point of purchase, that can be problematic for a brand that sells both in-person and online. If you’re doing both, the last thing you want is data that’s siloed by sales channel. That will cause you to spend more time in spreadsheets to find the data points you want. 

Instead, choose a POS system like Shopify POS that unifies your in-store and online data to one place. This will help you understand the big picture—how each channel influences the other, how customers shop on both channels, and your store’s impact on online revenue in the surrounding area. 

Product and SKU management

Some POS systems limit the number of products and stock keeping units (SKUs) you can have under your plan. This is their way of forcing you to upgrade to a pricier plan once your product catalog grows above a certain size. 

Choose a POS system that lets you add an unlimited amount of products or variants to your POS and helps you organize your product catalog. Shopify POS, for instance, comes with powerful tools to help you stay organized and spend less time managing your product catalog. With Shopify POS, you can: 

• Add an unlimited amount of products and variants to your POS 
• Categorize products by type, season, promotions, and more
• Use smart collections to automatically sort products based on vendor, price, and inventory quantities 
• Add multiple product variants like size, color, or materials 
• Assign each product its own price, SKU, and weight 
• Track inventory status as products are received or transferred between stores 
• Allocate inventory to various online sales channels, warehouses, retail stores, or wherever else you store stock 

Staff management

At minimum, your POS system should have scheduling and bookkeeping capabilities. It should also have reports that show you each store associate’s performance—their daily sales, average units per transaction, and average transaction value, for example. 

As your retail business grows, you’ll likely need to hire more staff. Some POS providers know this and will limit the number of staff accounts you can have under your plan, forcing you to upgrade to a pricier option. 

Choose a POS system that will help you manage your team as it grows, without forcing you to jump through hurdles or pay more. Your POS can also help you set boundaries on what store associates can and can’t do when logged in while giving store managers and owners access to the features and information they need to do their job—whether it’s managing payroll, changing a product’s price, creating staff schedules, or anything in between. 

Customer management

Whenever a customer buys something from your brand, there’s a paper trail. Your POS system records what they bought, where and when they bought it, the total value of that transaction, and more. But you also want your POS system to record who bought it. 

Choose a POS system that lets you create customer profiles that unify a customer’s contact information and purchase history for what they buy both online and in-store. This will help fuel your email marketing, as well as loyalty programs—both of which help increase retention, repeat purchases, and customer lifetime value. 

Choose the best POS system for retail

Some POS systems are better for small businesses, while others are focused on larger enterprise customers. But you want a retail POS system that can support your businesses growth, no matter how big you get. 

Take Allbirds, for instance. The brand started small with Shopify and has since grown into a category-leading public company valued at more than $4 billion. Regardless of your aspirations, Shopify POS equips you with the tools and support you need to adapt to commerce as it evolves and achieve your goals. 

While we may be biased, Shopify POS is the best POS system for modern retailers who want to unify online and in-person sales. 

Most POS systems allow you to integrate with your ecommerce platform by using an API or integration partner. Unfortunately, those integrations don’t fully unify your sales channels. After all, you’re still using two different tools built by two different companies. 

But with Shopify, you can start, market, manage, and grow your business everywhere your customers are, from the same powerful platform.

• Launch a beautifully branded website fast with easy-to-use themes and templates. 
• Convert more traffic into sales with the best-converting checkout on the web. 
• Sell internationally in just a few clicks. 
• Unify your sales channels: social media, your online store, online marketplaces, retail stores, and more.
• Offer fulfillment methods like in-store pickup at checkout. 
• Fuel your marketing with customer profiles that combine online and in-store purchase history. 
• Manage your store and warehouse inventory in the same place. 
• Make informed decisions using reports that unify data from your website and POS system. 

Merchants that use Shopify to unify their in-store and online sales grow revenue by 30% year over year.

How to set up Shopify POS

Whether you’re a new business or are already selling online with Shopify, setting up Shopify POS is straightforward. First, you need to choose your subscription plan. With Shopify POS, you have two options: Shopify POS Lite and Shopify POS Pro. 

Shopify POS Lite is free with any Shopify subscription plan and is ideal if you want just basic in-person selling features. This option is good for opening a pop-up shop or selling at an event, but lacks key features for operating a permanent store location—like advanced reporting and analytics, inventory management, or omnichannel selling features.

If you want to open a permanent retail location, we recommend choosing Shopify POS Pro. For $89 per month (or $79 per month if you choose yearly billing), per store location, you can create unlimited staff accounts, assign roles and permissions to staff, and have unlimited POS terminals. You also get advanced inventory management features, reporting and analytics, and omnichannel selling features like buy in-store, ship to customer. 

Choose a POS system to fuel your growth

Your retail store is unique. What’s best for one merchant may not be a fit for you. That’s why we recommend listing your current and future needs to the best of your abilities, testing different systems, and asking potential POS providers questions before making any commitments. 

After reading this post, hopefully you’re equipped with the information you need to choose a POS system for your retail business—one that helps you sell the way your customers shop, and run your business with confidence. 

Additional research and content from Alexis Damen.