Retail store technology has significantly evolved over the last decade, and point of sale (POS) systems are at the center.
As customer preferences and the technology they use change, so have POS systems. But small retail business owners are also part of this evolution, demanding more features and accessibility to crucial data.
The retail store owner of the 2020s expects to be able to run their business themselves, with access to vital data and functionality that helps them streamline operations and make the right decisions.
This makes it a perfect time to discuss cloud-based POS vs. traditional POS systems.
This post will define what cloud and traditional POS systems are. We’ll also highlight the key differences in a direct comparison using POS industry data.
Let’s Dig Into the Cloud-Based vs. Traditional POS Debate
As a small business, you might not be sure which type of POS system you need. But one thing you can depend on is this: if you want to grow your business and make your life easier, you need to modernize your POS system.
With that in mind, let’s start our cloud-based POS vs. traditional POS comparison by looking at the defining characteristic of each solution.
Traditional POS Defined
Also known as an on-premises POS or legacy POS, traditional POS has been around for longer and offers data capabilities to business owners. Because traditional POS systems connect to a local, on-premise server, data is stored on a computer in your back office.
Typically, unless your local database solution has cloud capabilities, you have to be on-site and logged into your store computer(s) to access data (similar to storing files on your desktop that you can only view in one place).
If you have a hybrid solution with cloud capabilities, data is still stored on your main system, but you can access your software’s back office from anywhere at any time.
Cloud-Based POS Defined
Also known as a web POS, all the data you need is stored directly on the web. It’s backed up to servers in the cloud and hosted at a secure data center.
You can access data from anywhere and on any device with an internet connection (similar to checking bank account info or emails on your smartphone or tablet).
You can manage your store from home and see the information you care about, like sales, inventory reports, and customer trends, all in one place and in real-time.
Direct Comparison of Cloud-Based POS vs. Traditional POS
Traditional POS: Hardware and software are typically paid for up front, but some providers offer a month-to-month option for software. In most cases, you choose the hardware, software, and payment processing service to create a custom solution. Software and hardware updates are an additional investment.
Cloud POS: Hardware is typically paid for up front, and software is paid for monthly as a subscription. You can access the software from most mobile devices. Updates are usually included in your monthly subscription fee.
Related read: How Much Does a POS System Cost?
In traditional POS systems, software updates can be more time-consuming and often require the help of your vendor to complete.
The upside is that, unlike cloud POS, traditional POS doesn’t rely on an internet connection, meaning you can access all of your data offline. If your internet goes down, you can keep making sales on a local database point of sale solution.
An additional upside is that traditional POS software is typically a one-time cost.
Cloud POS requires an ongoing internet connection to work, but the software is updated efficiently. Your provider installs updates automatically and remotely, often overnight, to avoid business interruption.
Most cloud POS software comes with a monthly subscription fee, different from the one-time cost of most traditional POS software.
Traditional POS systems require a back office computer and terminals set up around your store (or just one if you have a small store). You’ll need an on-site server and a purpose-built touchscreen monitor for the till.
You’ll likely need a pinpad, cash register, receipt printer, and barcode scanner, depending on your business, all of which are easy to find and purchase.
With a cloud POS, you’ll still need the hardware mentioned above, but you can also access your business from a mobile device.
There’s a debate in the retail world. Many people think data is less secure in the cloud than in one location, while others put their full trust in the cloud for both personal and business use.
Traditional POS stores data on local servers and runs a closed internal network, making it a pretty good defense against potential hackers. Plus, IT vendors use high-caliber, industry-standard security protocols to keep business data safe.
However, if a virus attacks your system or there’s a system failure, you may lose your data forever if it’s not backed up.
Cloud POS systems store data on remote servers. If anything happens on your physical system, you have backups and your data is typically unaffected. It’s also a lot easier to update data automatically and in real-time. You are open to cyber attacks, but security is usually robust to counter attacks.
Related read: 5 Reasons Why Your Small Business Needs Cloud Backup
Traditional POS maintenance can involve technicians coming to your location and performing upgrades, or helping you via remote support. You might experience business interruptions, and if there are any problems, there’s no guarantee that they can be solved there and then.
Cloud POS maintenance is done online with automatic upgrades to the software. Real-time updates ensure your system is compliant and secure. The downside is if you experience an internet blackout, you might miss or interrupt updates and need to speak to your provider to rectify any issues.
You’ve seen the Comparison of Cloud-Based POS vs. Traditional POS. Now What?
Another POS type to consider is a hybrid POS that offers the best parts of on-site POS and cloud POS. With a hybrid solution, you have a local server, but data is also uploaded to the cloud.
Schedule a custom demo of our hybrid POS solution to find out if a hybrid solution is right for you. Then, use the build and price tool to build your dream POS system and get a quote.