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Call routing is the function that sorts calls based on caller input, placing them in different call queues with the intent of connecting them to the right agent for their particular concerns. You’re witnessing call routing in action wherever you hear, for instance, “press one for customer service.” 

In a nutshell, call routing is the process of parsing incoming calls, sorting them based on intent, need, and circumstance, and then placing them in the appropriate queue to hold for an available agent.

Read more: What is a Call Queue?

What is VoIP call routing?

VoIP (Voice over Internet Protocol) call routing is a process that directs incoming phone calls through a virtual phone system, allowing businesses to manage and distribute calls more efficiently. Instead of simply sending all calls to a single phone or department, VoIP call routing sorts calls based on predefined criteria, such as the caller’s input, time of day, or the caller’s geographic location. For example, when a customer calls and hears options like “press 1 for sales” or “press 2 for support,” that is call routing in action. It ensures the call reaches the correct agent or department, reducing wait times and enhancing the caller’s experience.

This process is highly customizable, enabling businesses to configure routing rules based on their specific needs. Advanced VoIP systems can integrate with Interactive Voice Response (IVR) tools, allowing even more dynamic interactions, such as gathering verbal inputs from callers or handling simple tasks like order placement or identity verification. This level of automation not only streamlines operations but also improves customer satisfaction by minimizing misdirected calls and providing a more responsive support system.

How does VoIP call routing work?

Ok, the way this question is phrased is a bit ambiguous, which means we can supply a few different answers depending on what you meant.

How are calls sorted?

You’ll define the sorting parameters yourself as part of the setup process. That said, there are some pretty universal buckets that are used for call queues:

• The department the caller needs to speak to (finance, sales, technical support, etc.).
• Time zones/time of day/location (calls are often distributed based on which open call center is closest).
• Language (if you happen to serve more than one linguistic demographic).
• Market segmentation (separate queues for different business relationships, like patients/doctors, insured/insurer, buying from/selling to, etc.).
• Skill/authority (some calls need more in-depth support).

Sorting calls based on these kinds of characteristics is known as attribute-based routing. Which segmentation rules you end up using will be up to you, and there will likely be some common ones you don’t need (or uncommon ones that are a must for you). 

Read more: DialPad vs. RingCentral: Which is best?

How is this achieved?

By software wizardry, mostly. These days, a large contingent of businesses use VoIP (voice over internet protocol) for their telephone services, meaning calls are routed through a computer system. This allows for some impressive application-based gymnastics if you have it set up properly. 

As for how the system administers the parsing of calls, that’s a factor in whether your system relies on an auto attendant or an IVR (interactive voice response) for prompting and collecting input from callers. The former is more rigid and less capable. Auto attendants usually can only accept numerical inputs from keypad presses the caller makes in response to questions. It then uses these inputs to sort callers into the predetermined buckets.

IVR, on the other hand, can do quite a bit more; callers can state their issue verbally (with varying degrees of effectiveness), and the IVR can handle a number of simple tasks like taking payments, verifying identity, accepting orders, etc. With these more dynamic systems, more information can be gathered from the caller before the call is answered, making it easier to route it to the appropriate queue. 

Read more: VoIP vs. Landline: The Pros & Cons for Business

What does this look like for customers calling in?

From the customer’s perspective, this process is as follows:

1. Call connects and enters the VoIP system, and is greeted by the auto attendant/IVR.
2. Initial information is shared with the caller, and initial inputs are requested.
3. Caller self-identifies as a top-level category, usually tied to particular departments or business relationships. 
4. Additional subordinate sorting is applied if necessary, or automated self-help features are offered to potentially sidestep the need to route to a live agent.
5. Caller lands in the destination queue, perhaps after hearing a prompt to opt for the callback option.
6. The call is answered by a live agent, and things progress from there. 

Read more: Vonage vs RingCentral

Benefits and challenges of VoIP call routing

The biggest benefits of using VoIP to route calls to different queues are pretty self-evident. No business wants finance staff spending half their day answering calls that should be picked up by the support staff, and proper call routing minimizes that. 

With separate queues and separate staff answering each one, hold times tend to be a lot shorter. Callers get their answers faster. And workflow strain is dramatically reduced. 

That’s not to say the system is foolproof, though.

From the business’s perspective, impatient or inattentive callers may still end up in the wrong queues, slowing things down. Callers may attempt to intentionally sidestep the routing process by hitting the button that requests an operator. Callback options may go largely ignored by callers. And there’s always room for human error when it comes to caller inputs.

On the caller’s side, the call routing may feel needlessly complex or confusing. IVR systems may not make it clear what kind of input the caller should be providing. Lengthy messages or recursive menus intended to divert callers away from live agents may be frustrating and unhelpful roadblocks, especially for callers who know they need to speak to a human being to have their problem addressed. And callback options may inspire painfully little confidence that the callback will actually ever come. 

Best practices for VoIP call routing

While every system is different—and every business is different—we can recommend a few guidelines that should help maximize the benefits you reap from VoIP call routing.

Curate criteria for qualifying and distribution

You will have a better idea of what sorting system will be the most effective or helpful for your organization, so don’t just model your system after one used at a different company. Pick the buckets you use yourself, and don’t be afraid to make adjustments over time. 

Leverage data and analytics

If you’re already using a VoIP system, you’re likely already collecting a large amount of call data, and that can inform your decisions regarding routing attributes. If a large segment of calls are coming in about the same topic, need, or concern, that’s something you can account for. Add an explanation to the recorded greeting. Provide instructions, or dedicate a whole bucket to that one thing. You might even be able to add it as a function the IVR can handle, depending on what it is. Don’t let that data go to waste.

Read more: Nextiva vs RingCentral

Aim for simplicity

As mentioned above, customers want a less frustrating experience, rather than a more frustrating one, when they call into your business. However, a poorly implemented routing framework can feel very much like a step backward in customer experience. Put simply, the hold time isn’t the only metric worth tracking here. Callers may be expecting to wait in line for an open agent. 

What they don’t have a lot of patience for is when they feel like the “phone robots” are unnecessarily slowing them down. And heaven help you if they have to call in multiple times, only to wade through the tarpit that is a hedge-maze of an IVR routing tree. 

Revisit as needed

Again, you’re running this through a VoIP service, which means it’s all going through apps run on computers. That means you’re collecting data, and making changes is a lot easier than in decades past. So take a look at the trends you spot in the analytics, and make adjustments on a regular basis. It’s a nominal time investment for you, but will likely result in dramatic improvements for both your team’s effectiveness and the customers’ experience. 

Choosing a VoIP provider

When you’re scouting out a VoIP provider, especially with call routing in mind, you’ll want to be aware of at least three things. 

Your available tech expertise

This is true for just about every business software vertical, but there’s a sliding scale of capability and accessibility (in regards to low technical skill). A team with plenty of programming and/or IT skills to throw around will probably benefit from a tool that has a less rigid and templatized platform. It gives them the flexibility to build the plugins, integrations, custom functions, etc. they might need.

On the flip side, if you don’t have a lot of technical know-how to spare, you may be better served by the aforementioned drag-and-drop style interfaces. These tools may offer less freedom if you want to get under the hood. But if that’s outside your skill set, that might not be as big a priority as being able to assemble things yourself. 

Your customization requirements

Even with expertise set aside, some teams will have some very non-standard constraints, and not every provider is equipped to meet those needs. Some solutions will be aimed at a generalized market, while others will specialize in a narrower industry niche. And, in a few cases, you may get more mileage from retrofitting a general tool than with any of the ones ostensibly built with your use case in mind. 

Your existing tech stack

As ever, you’ll have to contend with the question as old as the internet: “Does it play well with my other toys?”

Integration, interoperability, and compatibility are all major concerns whenever your workflow depends on consistent and accurate exchange of information. Case in point: a lot of VoIP platforms and CRM platforms are designed to link up so that you can directly tie customer calls to customer accounts/profiles. Just don’t assume that the VoIP you’re looking at is capable of interfacing with your existing CRM by default. It’s a costly mistake, and double-checking costs you nothing. 

Frequently asked questions (FAQ)

The post What is Call Routing? appeared first on TechnologyAdvice.

An operational CRM bears significant relevance as it assists organizations with efficiently managing customer interactions, improving customer satisfaction, and increasing overall productivity. This is all made possible through the integration of all customer-related information into a unified platform. 

The integration of customer data into a singular hub that can be easily accessed leads to better customer insights, personalized experiences, and more effective communication. This combination of factors assists with driving business growth and strengthening an organization’s routine business practices. 

Defining operational CRM

An operational CRM system is designed to support and automate the front-end business processes that involve direct interactions with customers. Its core concept is to streamline these customer-facing activities by integrating all customer data, which allows for seamless and efficient management of customer relationships throughout the entirety of a customer lifecycle. This integration enhances a team’s ability to personalize customer experiences, improve service quality, and drive business efficiency. 

Outside of an operational CRM platform exist analytical CRM and collaborative CRM solutions. While the three share similar qualities, they are different in some key areas. An operational CRM deals in automating and streamlining customer-facing processes, while analytical CRMs focus on analyzing customer data to provide valuable insights and support data-driven decision-making.

A collaborative CRM differs from the others as it works to facilitate communication and information-sharing among different departments and with customers to ensure a unified approach to client interactions.

Key features of operational CRM

Sales force automation

Sales force automation (SFA) in an operational CRM refers to the use of software to automate various sales tasks such as tracking customer interactions, managing sales pipelines, and forecasting sales. This automation streamlines the sales process, reduces administrative tasks for sales teams, and enhances accuracy and efficiency in managing customer relationships and sales opportunities.

Lead management

Lead management involves the process of capturing, tracking, and nurturing potential customers from initial contact through to conversion. It helps organizations efficiently manage their sales pipeline by automating lead generation, scoring, assignment, and follow-up. This ensures that no opportunity is overlooked and that prospective customers are effectively moved through each stage of the sales funnel.

Sales tracking

Sales tracking refers to the monitoring and analysis of sales activities, opportunities, and performance metrics throughout the entirety of a sales cycle. It enables businesses to gain insights into sales progress, identify trends, and make data-driven decisions to improve sales strategies and achieve target goals. 

Marketing automation

Marketing automation in an operational CRM refers to the use of software to streamline, automate, and measure marketing tasks and workflows, which enables more efficient and personalized marketing efforts.

Campaign management

Campaign management usually involves planning, executing, tracking, and analyzing marketing campaigns across multiple channels. It helps organizations efficiently target their audience, optimize campaign performance, and measure return on investment (ROI) by providing tools for segmentation, scheduling, and performance reporting.

Email marketing

Email marketing leverages the CRM system to create, send, and track targeted email campaigns to customers and prospects. This integration allows for personalized communication, automated follow-ups, and detailed analytics to measure engagement and overall effectiveness.

Service automation

Service automation refers to the use of technology to streamline and automate customer service processes, such as ticket management, case routing, and resolution tracking in order to enhance efficiency and increase customer satisfaction.

Customer support management

Customer support management involves using a CRM system to efficiently handle customer inquiries, issues, and service requests through various channels. It provides tools for tracking, prioritizing, and resolving customer support tickets, which then ensures timely and effective responses to enhance customer satisfaction and promote brand loyalty.

Case management

Case management refers to the process of tracking, managing, and resolving customer service issues or cases from initiation to resolution in order to ensure efficient and effective problem-solving.

Operational CRM benefits

An operational CRM largely boosts business efficiency by automating routine tasks, which reduces manual work and errors. It also strengthens customer relationships through centralized data for personalized interactions and better support. The CRM also enhances sales and marketing by streamlining processes, offering valuable insights, and enabling targeted strategies. Here are a few examples of the known benefits of using an operational CRM. 

• Improved efficiency: Automates routine tasks and processes, reducing manual work and freeing up time for employees.
• Enhanced customer relationships: Centralizes customer data, enabling personalized interactions and better service.
• Increased sales: Streamlines sales processes and provides insights into customer behavior and sales performance.
• Effective marketing: Automates and targets marketing campaigns for more precise and impactful outreach.
• Better data management: Consolidates customer information in one place, improving data accuracy and accessibility.
• Streamlined support: Facilitates quick and efficient handling of customer service requests and issues.

An operational CRM offers significant advantages by automating key business processes, which enhances overall efficiency and reduces administrative burdens. It builds stronger customer relationships through centralized and personalized interactions, which leads to improved satisfaction and customer loyalty. By streamlining sales and marketing efforts, an operational CRM enables data-driven decision-making and boosts organizational performance.

Applications of operational CRM in business

Operational CRM systems play a critical role in enhancing business efficiency by automating and optimizing customer-facing processes. In the realm of sales, these systems streamline the entire sales cycle, from lead generation to deal closure. They manage and track customer interactions, automate routine tasks, and provide sales teams with timely reminders and insights. This not only helps in maintaining consistent follow-ups but also improves sales forecasting and performance analysis.

By having a centralized database of customer information, sales representatives can better understand customer needs, personalize their approach, and close deals more effectively.

By integrating data from various customer touchpoints, operational CRMs provide a comprehensive view of customer interactions, which aids in better decision-making and strategy formulation across an organization.

Implementing operational CRM

Successful implementation of an operational CRM requires a series of well-coordinated steps:

1. Clearly define your business goals and objectives to ensure that the CRM aligns with your organizational needs. 
2. Select the right CRM platform that suits these needs and integrates well with your existing systems.
3. Engage stakeholders from various departments to gather input.
4. Conduct thorough training for users to ensure they are comfortable and proficient with the new system.
5. Ensure accurate and complete transfer of existing customer data into the CRM. 
6. Establish clear processes and workflows within the CRM to streamline operations.

Implementing an operational CRM can be challenging due to user resistance, data migration issues, and integration difficulties. To overcome user resistance, you must provide comprehensive training and highlight the CRM’s benefits. Remember to always address data migration issues by thoroughly auditing and cleaning data before transfer and always choose a CRM with strong integration capabilities. Lastly, be sure to ensure continuous support and gather feedback to quickly resolve issues and keep the CRM aligned with your business needs.

Is an operational CRM right for your business?

An operational CRM is crucial for driving business success by streamlining customer interactions and automating key processes. It enhances sales efficiency through lead management and follow-ups, improves marketing effectiveness with targeted campaigns, and boosts customer satisfaction via responsive service. 

An operational CRM is the right choice for organizations with the need to integrate data from various touchpoints, as the CRM consistently provides a comprehensive view of customer behavior, which aids in making more informed decisions. This unified approach increases productivity, fosters team collaboration, and ensures a consistent customer experience, leading to higher retention rates, improved sales performance, and sustained business growth.

Frequently asked questions (FAQ)

The post Operational CRM Guide: Overview, Features & Benefits appeared first on TechnologyAdvice.

In this video, we provide you with a step-by-step guide to mastering the art of merging cells effortlessly. Whether you are a beginner or just need a quick refresher, our easy-to-follow instructions will help you combine cells without any hassle.

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What is global compensation?

Global compensation refers to the strategic compensation given to an international workforce—employees who work in their home country and those located abroad, either on permanent or temporary international assignments. In this context, compensation includes direct payments made to employees (like salaries and bonuses) and indirect compensation, such as health insurance and paid time off.

Your global compensation strategy serves as your foundation for deciding how to pay and reward employees. With it, you can adopt equitable compensation rules for all employees that meet or exceed industry and country standards. For example, a market-based strategy allows you to pay employees at the median or midpoint of local salary data for specific job roles within the same industry.    

Elements of a global compensation strategy

There are five main elements to consider when it comes to strategizing compensation for international employees: 

• Base pay.
• Variable and incentive compensation.
• Premiums and allowances.
• Benefits.
• Training. 

Base pay

There are four main approaches to calculating base pay:

• Home country approach: Employees are paid a wage equivalent to what they would be making in their home country. This is often used for temporary expatriates to ensure employees do not suffer financially if they are assigned to work in a country with a much lower cost of living.
• Host country approach: Compensation is based on local or national rates and the cost of living. This approach is often used for permanent relocations and hiring local employees who already reside in the country.
• Headquarters approach: Employees are paid as if they are working in the country where the business is headquartered, regardless of their actual location. Note that many countries mandate a minimum wage, so you need to make sure to abide by all local laws when using this method.
• Balance sheet approach: This method starts with a home country approach and adds allowances, deductions, and reimbursements to ensure employees receive equitable compensation as well as all necessary international benefits.

Variable and incentive compensation

Variable pay, sometimes called incentive pay, refers to compensation that is linked to performance and/or employee tenure. This type of compensation covers bonuses, stock options, and restricted share grants.

Premiums and allowances

Premiums and allowances are added to the base salary. These additional payments allow employees to maintain their standard of living wherever they’re located and cover costs associated with international moves. Examples of common premiums and allowances include hardship and hazard pay, cost of living adjustments, educational assistance, housing assistance, and home leave.

Benefits

Employee benefits consist of any perks or compensation besides base salary and other monetary payments. Some of the most common international benefits include paid time off, health insurance, retirement savings plans, and visa assistance for temporary expatriates.

Each country has different laws that dictate what benefits must be provided to employees residing within national borders, and some make specific exceptions for foreign nationals. For example, in Singapore, foreign nationals are not entitled to the country’s free public healthcare system. Health insurance is only provided to those with a valid work permit for migrant employees or an S Pass for skilled workers.

Training

While not as popular as the other elements listed here, some companies compensate international employees with cross-cultural training and language lessons to ease the transition to a new country. They may also offer assistance with repatriation or reassignment after the international posting ends.

Related: Cultivating Cultural Competence in the Workplace

How to create a global compensation strategy

Whether your business is embarking on an international expansion or the time has come to revise an established strategy, following the steps below will set you up for success.

Step 1: Establish goals

When creating or revising a global compensation strategy, you need to identify your primary goals, as these can guide your decisions throughout the process. Your company’s culture and values also play an important role, as well as your overall business objectives.

For example, your global compensation strategy could include a wide range of employee bonuses to reward performance and motivate employees. Or, your compensation strategy could focus on competitive salary packages with wellness benefits that promote work-life balance.

Step 2: Identify your competitive edge

Assess whether you have something unique to offer and highlight those advantages in your compensation strategy. These can be above-standard benefits, incentives, salaries, and perks that differentiate your company from others.

For example, say one country’s labor laws require that employees receive 13 months of pay in one calendar year, but your company offers 15 months. You can use that as a competitive edge to attract new hires, reduce high turnover or attrition, and retain potential job hoppers.

Another example is highlighting your office space, especially if it has well-stocked pantry areas and rooms where employees can rest or play games during break times. Unique perks like gym memberships, travel-related rewards, and stock options can also set you apart from competitors.                                        

Step 3: Research legal and cultural considerations

The next step is familiarizing yourself with local labor laws and customs that will influence your compensation package decisions. Besides the required minimum wage and benefits, you’ll also need to reconcile how your compensation packages for employees in one country remain fair and equitable with those in another.

For example, the UK mandates universal healthcare and paid leave for employees, while the U.S. does not. Your global compensation strategy should consider this and find options to ensure your U.S. employees receive equitable pay and benefit options that reflect those for your employees in the UK.

You should also consider cultural sensitivities and the needs of your international workers. This is where your diversity, equity, and inclusion (DEI) policies come into play. For instance, employees in Japan may appreciate commuter benefits since many depend on public transport to get to work — while employees in Belgium would rather receive meal vouchers to lower food costs.

Step 4: Conduct competitor analysis

Whether you are putting together an international or domestic compensation package, you’ll want to research the direct compensation that your competitors in that country are offering. You can partner with salary survey providers, such as Mercer and Willis Towers Watson, to get the market and competitor data you need. Don’t forget to check if your benefits (like paid time off, health insurance coverage, or retirement plan) are on par or better than your competitors in all the countries where you are hiring.

Step 5: Create a budget

Next, it’s time to set your total compensation budget. Be sure to account for base pay, mandatory and voluntary benefits, and bonuses, plus currency exchange rates and administration costs. Use this budget to determine what benefits you can offer to employees, including the tools you need to support international hiring efforts. These expenses might include extra payroll software fees and staffing costs for additional in-house HR employees. Some global payroll providers, like Oyster, even offer free online calculators for computing employee costs.

Step 6: Categorize employees by job roles

Employees may receive different compensation packages depending on their work experience, tenure, and position. Conducting job complexity analysis and market salary research for similar positions can help determine fair compensation plans that are based on each job role and not solely on the worker’s contributions. You can even create a compensation structure with salary bands or pay grades, which you can use to identify pay increases for employees and salary offers for new hires. 

Step 7: Consider partnering with on-site experts

Paying employees in other countries can be challenging, especially in staying on top of local labor laws and tax regulations. In some cases, it may be more practical to partner with an employer of record (EOR) to take care of managing essential HR tasks. 

EORs provide HR support to companies with global workforce expansion plans. Oftentimes, they serve as local business entities in the countries where you want to hire people. They’ll take care of payroll, benefits administration, and compliance, while you handle all of the other workforce management needs. EORs can also advise you of changes in country labor regulations that will impact benefits and salaries, allowing you to look at your compensation package and come up with strategies to address potential gaps.

Step 8: Execute and review the strategy

After designing and implementing your global compensation strategy, review it regularly and revise it as you prepare your annual budget. You should also update your compensation strategy if there are major changes in the company, such as a business expansion or reorganization.

Use EOR services and payroll software to support your global compensation strategy

Establishing a global compensation strategy and paying international employees can be an ambitious task without well-defined processes in place. Thankfully, the right software tools and EOR services can make things easier for your HR and finance teams.

For example, providers like Remote and Papaya Global grant you access to a wide range of country guides with insightful information about pay, benefits, and other local labor regulations. These resources can help you create a competitive compensation strategy or improve your current total rewards package.

Remote offers more than 190 country guides for hiring workers around the world. Source: Remote

Papaya Global’s online library has over 100 country guides you can access for free. Source: Papaya Global

For more options, check out our lists of top global payroll software and best EOR services to find the right one for your business.

Global compensation strategy FAQs

The post How to Create a Global Compensation Strategy appeared first on TechnologyAdvice.

Square and Toast are two of the most popular restaurant point-of-sale (POS) systems in the market. They are considered among the best restaurant POS systems because of their ease of use, comprehensive restaurant-specific features, and excellent hardware options.

When comparing Square vs Toast, it’s important to compare their pricing and features and look at their key differences to know which would be best for your restaurant business. 

Toast vs Square: Key differences

Visit Square

Visit Toast

Contract length

Month-to-month

2 years

Plan structure

Simple plan structure

More complex plan structure (Pay-as-you-Go and Standard)

POS software starting cost

$0+

$0+

Features

Basic included, need to upgrade to a paid plan for many necessary tools

Robust base plan

Industries

Any small business

Specifically for restaurants

Customer support

• Mon to Fri phone support
• 24/7 automated chat support

• 24/7 phone, email, and in-app support

Toast: Best for mid- to large-sized restaurants

Visit Website

Pros

• Robust restaurant-specific features
• Industry-grade hardware
• Extensive integrations
• 24/7 customer support

Cons

• 2-year contract for all plans
• Add-on fees for most features
• Higher processing fees

Why I chose Toast

Toast is the top choice for mid- to large-sized food businesses due to its powerful, restaurant-specific features and durable hardware. Tailored exclusively for the food service industry, Toast excels in supporting various dining establishments—from bustling cafes to multi-location fine dining restaurants—with advanced tools for order management, payroll, and scheduling. 

The robust hardware, including the versatile Toast Flex and portable Toast Go, is designed to withstand the demands of high-volume environments, offering features like spill-resistant designs and self-service options such as the Toast Kiosk to enhance operational efficiency.

It offers flexible pricing plans, including $0 upfront hardware options in exchange for higher processing fees. Overall, Toast’s all-in-one approach, combined with its continuous enhancements, makes it the ideal choice for mid- to large-sized food businesses aiming to streamline and scale their operations.

Restaurant-Specific Features

Toast is specifically designed for food businesses, offering an extensive range of restaurant-specific features that cater to the unique needs of dining establishments. Overall, Toast provides a comprehensive suite of tools to enhance operations.

Below is a list of some of the key features that make Toast a powerful solution for restaurants.

• Table management
• Menu management
• Order and course management
• Kitchen display system (KDS)
• Integrated online ordering
• Delivery management
• Loyalty programs
• Gift cards
• Employee management
• Inventory management
• Reporting and analytics
• Customer relationship management
• Self-service kiosks
• Mobile POS (Toast Go)
• Dark mode
• Guest feedback
• Extensive integrations

Pricing

	Starter Kit	Pay-as-you-Go Core	Pay-as-you-Go Growth	Point-of-sale (Standard)	Build Your Own
Monthly Fee	$0	$0	$0	$69	Custom-quote
Payment Processing Fee	3.09% + 15 cents	3.39% + 15 cents	3.69% + 15 cents	2.49% + 15 cents	Custom-quote
Hardware (Handheld Kit)	Included	Included	Included	$799.20	Custom-quote
Hardware (Countertop Kit)	Included	Included	Included	$1,024.20	Custom-quote

Gallery

Toast’s Handheld Starter Kit includes a Toast Go handheld device, wireless access point, data security router, POS software, and free setup and installation. (Source: Toast)

Toast’s Countertop Starter Kit includes a Toast Flex terminal, Toast Tap device, data security router, POS software, and free setup and installation. (Souce: Toast)

Toast’s kitchen display system comes with restaurant-grade hardware which are highly durable and rated for higher temperature. (Source: Toast)

Toast offers self-ordering kiosks for customers to easily customize and place their orders without queuing up. (Source: Toast)

Read our full review

Square: Best for small food businesses

Visit Website

Pros

• Always free POS software with good features
• Free online ordering
• Quick and easy sign-up and set-up
• No contracts, cancel anytime

Cons

• Users reported occasional outages
• Fewer integration options
• Limited customer support hours

Why I chose Square for Restaurants

Square is the best choice for small food businesses due to its affordability, ease of use, and versatility. It offers a range of hardware options, from the compact Square Terminal to the iPad-compatible Square Stand, making it easy for cafes, food trucks, and small restaurants to find the right setup for their needs. 

Each Square account includes a free POS plan and a mobile card reader, allowing small businesses to start processing payments with minimal upfront investment. Its all-in-one system covers everything from order management to inventory tracking, ensuring that even the smallest businesses can operate efficiently.

Square’s transparent pricing, no-contract approach, and free plan options add to its appeal for small food businesses looking to manage costs while still benefiting from a robust and reliable POS system. While Toast may offer more specialized features, Square’s flexibility, comprehensive functionality, and ease of use make it the ideal choice for small food businesses looking to get up and running immediately.

Restaurant-Specific Features

Square offers a variety of restaurant-specific features that cater to the needs of small food businesses, helping them streamline operations and manage their day-to-day tasks efficiently. However, note that the free POS subscription does not support some basic functions you might expect a restaurant POS to include, like reopening closed checks, custom user permissions, custom floorplans, and end of shift reports.

Here’s a list of key features available depending on plan:

• Menu management
• Table management
• Order management
• Kitchen display systems
• Online ordering through Square Online
• Delivery management
• Loyalty programs
• Gift cards
• Employee management
• Inventory management
• Reporting and analytics
• Self-serve ordering
• Mobile POS
• Fewer integrations

Pricing

• Monthly fee (per location):
  • Free
  • Plus: $69
  • Premium: $165
• Processing fee:
  • In-person: 2.6% + 10 cents
  • Online: 2.9% + 30 cents
• Hardware:
  • Magstripe reader: Free
  • Contactless and chip reader: $59
  • Terminal: $299 or $27 for 12 months
  • Register: $799 or $39 for 24 months
  • Stand: $149 

Gallery

Square offers a free magstripe reader, a contactless and chip reader, and a standalone POS terminal. (Source: Square)

The Square Stand Restaurant Station includes a cash drawer, receipt printer, kitchen printer, paper, and an optional iPad. (Source: Square)

Square’s kitchen display system is compatible with a list of Android devices. (Source: Square)

Square’s self-ordering kiosk allows easy ordering and speedy payments. (Source: Square)

Read our full review

Square vs Toast: A detailed comparison

Contract length

Month-to-month

2 years

Monthly fee

Starts at $0

Starts at $0

Payment processing fees

• In-person: 2.6% + 10 cents
• Online: 2.9% + 30 cents
• Keyed-in/Invoices: 3.5% + 10 cents

• Pay-as-you-Go: 3.09% + 15 cents
• Pay-as-you-Go Core: 3.39% + 15 cents
• Pay-as-you-Go Growth: 3.69% + 15 cents
• Standard: 2.49% + 15 cents

Hardware options

• Free magstripe reader
• Tap to Pay on iPhone and Android
• Standalone terminal starts at $299 (Square Terminal)

• Free hardware kit with Pay-as-you-Go plans
• No Tap to Pay on mobile device option
• Handheld kit with Standard plan: $799.20

Customer support

• 24/7 support for paid subscribers
• Monday – Friday phone support from 6am – 6pm PT for free subscribers.

• 24/7 phone, email, and in-app support

Visit Square

Visit Toast

Looking for other options? Both Square and Toast are included in our list of the best restaurant POS systems.

Pricing: Square is the most affordable option 

When it comes to pricing and affordability, Square wins over Toast. Square is known for its zero-initial-cost affordability, making it an attractive option for small food businesses or those on a tight budget. It offers a free POS plan with basic functionalities, a free magstripe reader, the ability to accept contactless payments with just a compatible iPhone or Android mobile device, and a low flat-rate card-present processing fee of 2.6% + 10 cents per transaction. 

While Square’s costs are generally lower than Toast’s, the basic functionality is still enough for quick service operations. Additional features like payroll, marketing, and advanced reporting can be added for a fee, but even with these add-ons, Square tends to be more cost-effective for smaller businesses. Unlike Toast, Square’s pricing is straightforward, with no long-term contracts, making it easier for small businesses to start with minimal financial commitment.

On the other hand, Toast’s pricing model is structured to cater specifically to established food businesses, especially with its standard 2-year contract. Although it offers a Pay-as-You-Go option with no monthly fees and a free hardware kit, it comes with processing fees much higher than Square’s standard processing fees. Also, while Toast’s basic plan includes essential POS features, many of Toast’s most sought-after features, like online ordering, gift cards, and loyalty programs, require additional fees.

If your main priority for a restaurant POS system is affordability, you’d get the lowest cost with Square’s basic setup. It gives you essential, basic functionalities for quick-service restaurants while only paying for processing fees per transaction. However, for mid- to large-sized food businesses, Toast’s higher upfront and ongoing costs may be justified by its extensive restaurant-specific features, making it a better fit for full-service that are willing to invest in a more specialized system.

Hardware: Toast is built for a kitchen environment

Both Square and Toast offer a range of devices designed to cater to the needs of restaurants, but they differ significantly in terms of customization, durability, and overall cost.

Toast’s hardware is specifically built for the restaurant environment, offering durability and functionality that aligns with the demands of busy kitchens, dining areas, and mobile food services. 

Key Toast hardware devices include:

Toast Flex

Toast Go

Toast Kiosk

Outright purchase: $1,024.20

Outright purchase: $799.20

Outright purchase: $1,339.20

On the other hand, Square offers a variety of hardware options that are more generalized but still very effective for small food businesses. 

Key Square hardware devices include:

Square Magstripe Reader

Square Contactless and Chip Reader

Square Stand

Square Terminal

Square Register

1st one: Free

Additional reader: $10

1st generation: $49

2nd generation: $59

$149 or $14 per month for 12 months

$299 or $37 per month for 12 months

$799 or $39 per month for 24 months

Square’s hardware is more affordable and versatile, designed to be easy to set up and use across various business types. It’s also more flexible, as it can be used with existing devices like iPads, reducing the need for significant upfront investment. However, Square’s hardware does not offer the same level of durability as Toast’s.

For small food businesses, Square’s hardware offers affordability, flexibility, and ease of use. It’s ideal for businesses that need a reliable system without making a large investment. 

However, for mid- to large-sized restaurants, or simply those that want hardware that can endure drops, spills, and heat, Toast’s restaurant-specific hardware is better suited, offering the durability and advanced features necessary for high-volume, fast-paced environments.

Features: Toast is more robust

Table management

*

Menu management

Order and course management

*

Kitchen display system

Add-on fee

Add-on fee

Online ordering

Per-order add-on fee

Add-on fee

Delivery management

Via integrations

Add-on fee

Loyalty programs

Add-on fee

Add-on fee

Gift cards

Add-on fee

Add-on fee

Employee management

Add-on fee

Free for basic tools;
Add-on fee for advanced tools

Inventory management

Ingredient-level tracking requires a third-party integration

Available through xTraCHEF for an add-on fee

Reporting and analytics

*

Restaurant CRM

Restaurant Marketing

Add-on fee

Add-on fee

Mobile POS

On Toast devices only

Guest feedback

Third-party integrations

30+ integrations

120+ integrations

Visit Square

Visit Toast

*Not included in the free plan; access to this feature requires a paid subscription.

When it comes to restaurant-specific features, Toast, which is purpose-built for the restaurant industry, offers a deeply integrated suite of tools tailored to the unique needs of food service establishments. While Square provides many of the same features, its offerings are more basic in comparison. Toast’s features are more robust and designed to meet the heavier demands of larger and more complex food businesses, making it a better fit for restaurants requiring advanced capabilities.

Square, while not exclusively focused on restaurants, offers a versatile platform with many essential, very basic features included at no extra charge, making it an attractive option for small food businesses. Square provides over 30 restaurant-specific integrations to expand their capabilities. 

However, Toast leads in third-party integrations with over 120 options, giving it an edge for larger or full-service establishments seeking a more tailored solution. Overall, Toast’s extensive feature set and deep industry integration make it better suited for larger restaurants looking for a more comprehensive, all-in-one system.

Toast vs Square: Which is best?

Choosing between Toast and Square ultimately depends on the specific needs of your food business. Toast is the clear winner for mid-to large-sized restaurants that require a comprehensive, restaurant-specific POS system. Its robust features, designed specifically for the food service industry, provide the depth and functionality needed to manage complex operations, from advanced inventory and employee management to integrated CRM and detailed reporting. Toast’s specialized restaurant-grade hardware and extensive integrations also make it an excellent choice for businesses with higher demands and the need for tailored solutions.

On the other hand, Square is best suited for small food businesses that prioritize affordability, ease of use, and flexibility. With its no-cost basic features, simple setup, and versatile hardware, Square offers a more accessible entry point for smaller operations or new businesses. While it may lack the advanced capabilities of Toast, Square provides enough functionality to efficiently run day-to-day operations, making it an ideal choice for cafes, food trucks, or small restaurants looking for a reliable and budget-friendly POS system.

If you’re running a small food business with straightforward needs, Square offers an excellent balance of functionality and cost-effectiveness. For larger, more complex restaurants, Toast provides the specialized tools and scalability required to support your growth and enhance your operations.

Frequently asked questions (FAQs)

The post Toast vs Square: Best Restaurant POS System in 2024 appeared first on TechnologyAdvice.

A subscription payment gateway makes recurring billing possible by accepting various payment methods, saving customer payment information, and integrating with popular billing platforms. This guide explores the features and capabilities of subscription payment services.  

What is subscription payment processing? 

Subscription payment processing is a payment service designed to manage recurring payments for subscription-based businesses. When paired with online billing software, it automates most tasks related to recurring payment collection, such as secure card data storage, payment pre-authorization, and embedding payment links on recurring invoices. 

Payment processors that support subscriptions come with a payment gateway that not only captures, authenticates, and sends the customer’s information for payment processing — it also performs the additional function of retrieving payment details from the card vault to automatically charge the customer’s account every billing cycle.

Types of subscription payment models

Subscription payment models refer to the various ways customers are charged for a subscription service. Factors like industry and products determine which subscription model is best for each business type. 

• Fixed recurring: Subscribers pay a fixed monthly, quarterly, semi-annual, or annual fee for a product or service at regular intervals. Example: Netflix streaming service 
• Ramp: Subscribers pay an increasing amount for different levels of service. This model is often used to gate more advanced features with higher subscription fees as seen in most business software subscription plans. 
• Quantity-based: Subscribers pay higher fees based on the number of users that access the service. B2B SaaS companies refer to these as licensing fees for the use of their software.
• Usage-based: Subscribers only pay for what they use. This model is commonly used by utility providers (electricity, water, gas), some marketing platforms (Square Marketing), and digital services like Amazon Web Services.
• One-time: Subscribers only pay a one-time fee for unlimited use of a product or service, such as anti-virus software. Another example is a self-hosted or on-premise POS system that charges a one-time fee for the software and hardware package.
• Pre-payments: Subscribers pay in advance as a credit for future use of services or purchases. This is commonly found in the form of retainers for law firms and ad agencies. 

How to process subscription payments

The best payment processor for subscriptions uses a secure payment gateway to start the process of collecting subscription payments. It captures, stores, authenticates, and eventually communicates the customer’s payment information to financial institutions. And while there are a variety of payment methods that differ in details, the role of the payment gateway is essentially the same.

Step 1: Customer chooses and signs up for one of the subscription plans on your website, filling out a subscription form.

Step 2: Customer chooses a payment method and (card, ACH, bank transfers, digital wallet) provides their payment details, and agrees to your payment policy, typically by clicking on a box on the form stating that the information will be kept on file for automatic payments. 

Step 3: The payment processor validates the payment information with fraud prevention tools, such as IP and address verification. Once validated, the payment details are encrypted and stored in the secure card vault.

Step 4: Every billing cycle, the payment processor automatically charges the stored payment details. The payment processor sends the transaction details to the relevant financial institutions for authentication and approval.

Step 5: Once approved, a digital receipt or post-transaction invoice, which contains the subscription details and payment information, is sent to the customer’s elected email address. The receipt will also contain a link where customers can cancel, renew, or change their subscription. 

If the payment is rejected, a notification email will be sent to the customer along with a request to provide a replacement payment method via a link to their account. The system will then repeat step 5 and attempt to charge the new payment method.

Step 6: Once the payment is successful, the proceeds, net of the transaction fees, are sent to the user’s merchant account where they stay until the funds are transferred to the linked business bank account.

Now that you know what subscription gateways are and how to process payments with one, let’s explore some of the top options on the market. 

Top subscription payment gateways 

While there are many payment processors in the market that offer subscription payment gateways, some stand out for their versatility and overall value for money. 

Below are our top recommended subscription payment gateway providers for businesses that require a payment subscription service. 

Best subscription payment gateways compared

Company

Our score (out of 5)

Fee Structure

Volume Discounts

Subscription Platform Integration

Helcim

Visit website

4.48

Interchange plus

Automated, Level 2 & 3 B2B optimization

Helcim subscription management service

Stax

Visit website

4.42

Wholesale interchange

Volume-based subscription

Stax Bill subscription platform 

Stax Pay subscription management service

Stripe

Visit website

4.32

Flat rate, zero monthly fee

Interchange plus by request

Most subscription management software

Braintree

Visit website

4.16

Flat rate, zero monthly fee

Interchange plus by request

Most subscription management software

Square

Visit website

4.09

Flat rate, zero monthly fee

Interchange plus by request

Square subscription management service

Helcim: Cheapest subscription payment processing for growing businesses and B2Bs

Visit Website

Overall Score

4.48/5

Pros

• Free Helcim subscription management service
• Interchange optimization
• Automated volume-discounts

Cons

• Limited business software integration
• Add-on fees for Amex transactions
• Exclusive to Helcim subscription management service

About Helcim

Helcim is a traditional merchant account services provider that also provides a subscription payment gateway. It also offers its own subscription management service that supports recurring invoicing, billing, contracts, and a customer self-service portal. Helcim’s automation features make it stand out from other subscription payment processors. It automatically qualifies businesses for volume discounts, zero-cost processing, and level 2/3 interchange optimization for B2B businesses.

Pricing

• Monthly fees: $0
• Card-present fee: Interchange plus 0.15% + 6 cents to 0.4% + 8 cents
• Card-not-present fee: Interchange plus 0.15% + 15 cents to 0.50% + 25 cents
• American Express transactions: + Interchange plus 0.10% + 10 cents
• ACH fee: 0.5% + 25 cents
• Card-on-file: Interchange plus 0.15% + 15 cents to 0.50% + 25 cents
• Chargeback fee: $15 refundable
• Funding options: Next-day funding

Subscription payment gateway features

• Subscription payment platform integrations: Helcim subscription management
• Payment methods: Credit and debit cards, ACH, Apple Pay, and Google Pay
• Supported invoicing tools: One-time and recurring
• Card data management: Secure card vault, automated card updater, pre-authorization via invoicing, and customer self-service portal

Read more: Best credit card processing companies

Stax: Best for large businesses looking for scalable native billing software

Visit Website

Overall Score

4.42/5

Pros

• Offers proprietary billing software that’s compatible with third-party payment processors
• Wholesale interchange-plus rates
• Advanced customization options

Cons

• Payment gateway exclusive to Stax Pay
• ACH payments are an add-on
• Next-day funding for a fee

About Stax

Stax is a traditional payment processor that offers a wide range of scalable products for large-volume subscriptions. This includes a built-in subscription management feature in Stax Pay — Stax’s payment software for traditional businesses and SaaS platforms, so users do not need to pay for a separate billing software. Stax also has a full-scale native subscription software, Stax Bill, for large-volume subscription transactions that can work with both Stax’s and third-party payment processors.

Pricing

• Stax Pay fee structure: Volume-based wholesale subscription
  • Monthly fee: $99-$199 
  • Transaction fee: Interchange +8 cents (card-present), Interchange+18 cents (card-not-present)
• Stax Bill fee structure: Volume-based wholesale subscription
  • Monthly fee: $199-$399 
  • Transaction fee: Custom (contact Stax for pricing)
• Chargeback fee: $25
• Funding options: Next-day funding with fee

Subscription payment gateway features

• Subscription payment platform integrations: Stax Pay, Stax Bill, Stax Connect 
• Payment methods: Debit & credit cards, ACH, PayPal, digital wallets like Google Play
• Supported invoicing tools: One-time and recurring
• Card data management: Secure card vault, automated card updater, pre-authorization via invoicing

Read more: Cheapest credit card processing solutions

Stripe: Best for compatibility with subscription platforms

Visit Website

Overall Score

4.32/5

Pros

• Instant approval and no monthly fees
• Compatible with most billing platforms
• Machine learning-based fraud protection

Cons

• Takes time to set up
• Limited virtual terminal features
• Requires a developer to make the most out of the platform

About Stripe

Stripe is a popular online payment processor used by numerous business systems, including Shopify. It supports invoicing and recurring payments, and provides its own billing management tools for small businesses that do not currently have their own subscription management software. Stripe is known for its variety of pre-made customization tools to tailor everything from language and currency to fraud detection strategy on your payment gateway. It is also a developer-friendly platform, which means it has nearly unlimited potential for integration with any billing platform.

Pricing

• Monthly fee: $0
• Card-not-present processing fee: 2.9% + 30 cents per transaction
• Keyed-in processing fee: 3.4% + 30 cents per transaction (for first-time recurring payments and card-on-file)
• ACH debit payments: 0.8% capped at $5
• Invoicing: +0.4%–0.5% per transaction
• Recurring payments service fee: +0.5%–0.8% per transaction
• Chargeback fee: $15
• Funding option: Next-day funding, same-day with fee

Subscription payment gateway features

• Subscription payment platform integrations: Stripe Billing, most billing management platforms 
• Payment methods: Debit & credit cards, ACH, PayPal, digital wallets like Google Play
• Supported invoicing tools: One-time and recurring
• Card data management: Secure card vault, automated card updater, pre-authorization via customer self-service portal

Read more: How to accept payments online

Braintree: Best for nonprofits and accepting PayPal payments

Visit Website

Overall Score

4.16/5

Pros

• Developer-based integration tools
• Full PayPal payment method integrations
• Sandbox account for free trial

Cons

• Requires some coding skills to customize
• Largely depends on PayPal for simple integrations
• Requires third-party integration for invoicing

About Braintree

For businesses that have outgrown PayPal’s features, Braintree is the most natural upgrade. Braintree is owned by PayPal and provides a dedicated merchant account in place of PayPal’s aggregate option. Its subscription payment processing service is particularly popular with nonprofits, offering highly customizable recurring payment features that allow users to integrate with any custom billing platform.  Braintree’s own subscription management service is also available if you prefer a simpler solution.

Pricing

• Monthly fee: $0
• Card-present fee: 2.29% + 9 cents (Zettle)
• Card not-present fee: 2.59% + 49 cents
• Keyed-in fee: 2.59% + 49 cents (virtual terminal)
• Charity rate: 1.99% + 49 cents
• International fee: 1%
• Chargeback fee: $15
• ACH payments: 0.75% 
• Funding: Next-day, instant via PayPal wallet, same-day with fee

Subscription payment gateway features

• Subscription payment platform integrations: Nonprofit subscriptions and other billing platforms
• Payment methods: Debit & credit cards, ACH, PayPal payment methods, mobile wallets
• Supported invoicing tools: One-time and recurring
• Card data management: Secure card vault, automated card updater, pre-authorization via invoicing customer self-service portal

Square: Best for small and new subscription businesses

Visit Website

Overall Score

4.09/5

Pros

• All-in-one business ecosystem
• Waived monthly chargeback fees
• Developer-based customization for enterprise businesses

Cons

• Exclusive to Square billing
• Base transaction rates ideal for small businesses
• Limited customer support hours

About Square

For new and small businesses, using Square is one of the fastest ways to set up a subscription business. Square is an all-in-one POS solution that also offers a payment processing service with a subscription billing feature. 

Ease of use is Square’s strongest feature. With Square, users do not need to apply for a merchant account, and its free POS plan is among the most feature-rich in the market. While this makes Square popular among smaller businesses, it also offers developer-based customization for large businesses looking for a tailored billing management solution on the Square platform.

Pricing

• Monthly payment processing fee: $0
• Invoice monthly fee: $0–$20
• Invoicing transaction fee: 3.3% + 30 cents per transaction
• Recurring payment transaction fee: 3.5% + 15 cents per transaction
• ACH processing fee: 1% per transaction, minimum $1
• Chargeback fee: Waived up to $250 per month
• Funding options: Next day, same day with fee

Subscription payment gateway features

• Subscription payment platform integrations: Square Subscriptions
• Payment methods: Credit and debit cards, Apple Pay, Google Pay, and Square Pay
• Supported invoicing tools: One-time and recurring, progress-based invoices, and multi-package invoices
• Card data management: Secure card vault, automated card updater, pre-authorization via customer invoicing and self-service portal

Read more: Best credit card payment apps

Subscription payment processing best practices 

Transactions processed through recurring payment gateways are charged higher processing rates than most traditional one-time transactions. This is primarily due to the greater risk of fraud and chargeback claims associated with storing payment data and pre-authorizing remote payments. 

To manage the risk and help keep processing rates low, users can implement these best practices and optimizations.

PCI compliance is a requirement by card networks for all businesses that accept credit card payments. This involves regular testing of a merchant’s payment processing system against a set of 12 data security standards (DSS). Subscription-based businesses, in particular, should pay attention to PCI-DSS because regulations around storing customer payment information are strongly emphasized. 

Maintaining PCI compliance is tedious work for business owners to do on their own. That said, this is easily manageable by choosing a PCI Level 1-compliant payment gateway provider. These providers have the technology to encrypt and tokenize customer payment data when stored on their own server, so it can easily take on the responsibility of PCI compliance on your behalf. 

This is a non-negotiable task. Remote payments, especially recurring ones for a subscription payment service, are highly susceptible to chargeback claims. Documenting a customer’s payment authorization essentially protects businesses from complaints of unauthorized charges from a customer’s source of funds. This can be in a physically signed document saved in the customer’s profile or an online signup form completed by the customer and recorded on your website.   

A subscription management platform should have the ability to assist users with creating a payment policy. That said, the content is entirely up to the user, and transparency means ensuring that all necessary information is included, such as: 

• Upgrading and downgrading subscriptions
• Terms and conditions for the subscription plans
• Cancellation and refund policies
• All relevant fees other than the monthly subscription cost
• Guidelines in the event of failed payments

In addition to a detailed document, shortened versions displayed on and around the website can be helpful for customers who find a lengthy payment policy too time-consuming to read. This may be in the form of a payment terms section in the FAQs or a short bulleted list of important terms on the pricing page. If you launch payment policy updates, be sure to highlight these prominently on your website and send out email notifications to all your current subscribers. 

When possible:

• Provide customers with the option to set their payment dates
• Set a manageable payment frequency based on the subscription cost 
• Create and send out automated email notifications at least a week before the billing cycle

Doing these can potentially prevent payment failures due to insufficient funds, not to mention leave the customer with a good impression. 

The account updater is a payment service feature every business that accepts recurring payments should have. By default, payment details provided by the customer at the time they signed up for a subscription do not change unless they voluntarily access their account and manually update the information. Unfortunately, this setup does not account for when cards expire or bank accounts are closed and can cause failed payments.  

With an account updater, the payment processor has access to a central account updater database. The database allows banks to send new information on card renewals and replacements so that customer payment information will be updated automatically. 

While credit card payments are a popular online payment method, some customers may prefer other payment modes, such as bank transfers, ACH, and digital wallets. Look for the latest statistics showing the preferred payment methods of different age, gender, and income brackets, then find where your target customers fall to determine whether you need to adopt alternative payment options. 

Read more: Our roundup of best merchant services providers 

FAQs

The post Complete Guide to Subscription Payment Gateways (2024) appeared first on TechnologyAdvice.

Still not sold? Take a look at a few additional reasons why a cloud-based POS system far surpasses the capabilities of its predecessor:

Read more: 5 Retail POS Systems with CRM Features

1. Access Your Data from Any Location

You’re on vacation, and you want to see how store sales are doing in your absence. With a legacy cash register, this isn’t possible. But with a cloud-based POS system, as long as you have a WiFi connection, you can log in to your account and access your data any time. This is an essential capability that should be expected from any quality POS system. You can stay connected with your business 24/7 without feeling tied to the actual store. 

2. Built-in Sales Reporting

“Tuesday seemed busy, Wednesday was a little slower, then there was that big rush on Friday afternoon. Do the shelves look empty to you?”

When you adopt a cloud-based POS system, you’ll have the ability to track all of your sales data, as well as review sales history, in real time. You can see which items are consistently popular with your customers and when sales peak during the year or specific times of day. Anticipating how many of each product you sell will make inventory planning significantly easier.

Read more: Best Cash Registers for Small Businesses

3. Access to Customer History

Customer Jane walks into your store. She’s come in twice a month for the past five years. You appreciate her business and know her name, but with your revolving door of regulars, it can be hard to remember past purchases. This is another way cloud-based POS outranks the traditional cash register.

Next time Jane strolls into your store, you don’t have to rack your brain to remember her purchase history. Instead, simply pull up her account on your iPad. If you know what Jane likes and has purchased repeatedly, you can offer suggestions for new items to try and make her experience more positive. Improving your upselling efforts through customer history can improve your overall profitability as a business. 

4. Streamlined Inventory

You’ve hopefully already moved beyond keeping track of your inventory on pen and paper, but your old school register certainly isn’t helping when it comes to inventory management. If being understocked or overstocked on specific items in your store is a recurring theme, it may be time to kick your register to the curb.

Managing inventory can be incredibly time-consuming, especially if you haven’t automated your store’s processes and are still working from Excel spreadsheets. Adopting a POS system, however, can significantly decrease the time it takes to complete your inventory management. Instead of conducting counts manually, you can use a portable scanner to streamline the process, and items will automatically update with each purchase. Once you automate this process, you’ll never have to second guess what stock you have on hand. Simply log into your system, view your items, and decide what to reorder. You can also set up triggers to alert you when inventory for specific items runs low.

Read more: Best Restaurant POS Systems

5. Increased Customer Engagement

All small businesses know that if you want to be successful against the big box stores and online retailers, you need to take customer engagement seriously. How is a legacy system cash register going to help you do that? It won’t. It’s just another area where traditional cash registers fall short, stacked up against cloud systems. The lifeblood of your small business is understanding what your customers want and figuring out how to deliver. It’s also about staying in touch long after the initial sale. Email marketing is one of the best and most efficient ways to do this.

Most modern POS systems let you not only track customer history, but also collect emails at the moment of purchase. Capturing this data and integrating your system with an email marketing program, means you can send engaging campaigns to past customers and stay in touch long after your initial touch point. Use this email marketing capability to send out weekly emails with updates, promotions, and discounts. When was the last time a cash register could help you do all of that?

The benefits of migrating to a cloud-based POS system are numerous and far-reaching. These are just a few. Do your research, talk to your neighbors, then choose a system that makes the most sense for your small business.

As Managing Editor at ShopKeep, a top-rated iPad POS System, Sara Sugar uses her distinguished journalism background to boil down small business and point-of-sale topics.

The post 5 Ways Cloud-Based POS Systems Beat Cash Registers by a Mile appeared first on TechnologyAdvice.

What are B2B payments?

Business-to-business (B2B) payments are transactions where one business accepts payments from another in exchange for goods or services. These are generally characterized as large-volume or large-ticket sales over a set of payment terms (accounts receivable) instead of upfront purchases. Traditional payment methods for B2B transactions are cash, checks, ACH wire transfers, and commercial credit cards.

How do B2B payments work?

The B2B payment process significantly differs from the traditional customer “checkout” experience. Unlike in a consumer relationship, where many customers engage with businesses in small purchases, B2Bs deal with large orders that don’t always happen at a storefront. 

B2B payments components

B2B payments consist of key components:

• B2B seller: The business entity that delivers goods or services to another business. 
• B2B client: The business entity that receives the goods or services.
• Invoice: Document detailing the transaction and terms of payment.
• Seller’s accounts receivable team: Prepares and sends the invoice; reconciles and updates the outstanding payment from the client. 
• Client’s accounts payable team: Verifies the transaction and prepares the necessary documents for payment approval.
• Client’s decision maker/s: Individuals within the client’s company that approve payment requests.
• Merchant account and payment services: Service providers that have the technology to securely send and receive transaction information to the financial institutions on behalf of the seller and client.
• Financial institutions: Entities such as banks and card networks that authenticate and approve the exchange of funds between seller and client.

Stages of B2B payment processing

Below are the stages of B2B payment processing, which starts after the delivery of the product or service: 

1. Invoicing by seller: At this stage, the seller prepares and sends an invoice to the client. The invoice details the goods or services involved, related taxes, and payment terms. Payment processing services often include digital invoicing features to create templates and send invoices. 

In cases where the client defaults or misses a payment due date (for transactions with payment terms), a reminder is sent with an updated invoice attached. This is standard procedure done manually or automated via an invoicing management feature.  

2. Approval by client: Unlike consumer transactions, B2B invoices often go through approval levels that begin with the accounts payable department preparing relevant documents. The payment request, including the payment method to be used, goes up the ranks for approval.  

3. Payment by client: After approval, payment is sent to the seller based on the terms set in the invoice. The customer’s payment goes through the relevant channels for authentication, verification, and approval from the customer’s bank, confirming that funds are available. 

Regardless of the payment method of choice, the seller is responsible for meeting various compliance requirements, such as: 

• Data protection: Businesses are expected to meet PCI-DSS compliance to ensure that the exchange and storage of customer and transaction information are protected.  
• Anti-money laundering: Know Your Customer (KYC) standards require sellers to conduct due diligence to ensure that their customers pay using legitimate sources of funds.

4. Acceptance by seller: The seller is notified that the transaction is approved and waits to receive the payment. Depending on the mode of payment, clearing can take anywhere from 24 hours to several business days. Funds are credited to the seller’s merchant account and eventually moved to a business bank account.

5. Reconciliation by seller: The seller’s accounts receivable team records the payment, crediting the client’s records and adjusting the outstanding balance. A receipt is then sent to the client to acknowledge the payment.

B2B payment methods

Traditional B2B payment methods such as paper checks and wire transfers are still used today. Thankfully, payment technology is finally catching up (albeit slowly) with systems that can automate much of the B2B seller’s payment processing and accounts receivable management requirements. 

Popular B2B payment technologies

Payment processing solutions are equipped with the technology to create platforms for collecting transaction information online, in person, and over the phone. 

• Online B2B payment platform: This includes e-commerce website checkouts, customer self-service portals, payment links embedded in digital invoices and emails, via QR code, and more.
• In-person B2B payment platform: Payment software built into a standalone payment terminal or web-based payment platform accessible via smartphones and tablets.
• Virtual terminal platform for mail order/telephone orders (MOTO): Seller-facing platform accessed via a merchant account where users can manually enter a client’s payment information received via email, over the phone, or live messaging services.

Common B2B payment methods

All of the payment platforms listed above can be configured to accept the most common payment methods used for B2B transactions:

• Paper checks: Some B2B companies continue to accept paper checks today. Some payment processors can track check payments the same way they manage cash payments on their platforms. 
• Credit cards: Credit cards that companies use to make purchases differ from consumer credit cards. These corporate, commercial, or purchase cards have very high limits (at times none) and charge lower interchange rates. 
• ACH payments: ACH payments are bank-to-bank transactions in the US that go through the ACH network. B2Bs often use ACH payments in the form of eChecks (digital checks) and direct debits or credits. ACH is less expensive than credit cards, and many payment processors are equipped with tools to process ACH payments. But because the funding time takes longer, businesses often prefer credit cards.

Fortunately, payment technology is beginning to catch up with the demands for open banking to provide real-time ACH transfers and, in the near future, securely connect banking systems across the globe.

• Wire transfers: Wire transfers are also bank-to-bank transactions, but unlike ACH, these payments are processed directly and do not have an intermediary. It can be used to accept payments from both local and international clients and takes an hour to a few days to receive. The fees for using this payment method, however, are significantly higher than other types, so it is rarely used for regular B2B sales.

Top B2B payment processing solutions

Based on my evaluation, the five best B2B payment processing solutions for 2024 are:

B2B Payment Companies Compared

Company

Our score (out of 5)

Monthly account fee

Pricing

Level 2 & 3 data processing

Helcim

Visit website

4.48

$0

Interchange plus

✓

Stax

Visit website

4.36

$99–$199

Wholesale subscription

✓

Adyen

Visit website

4.33

$0

Wholesale subscription

✓

Stripe

Visit website

4.31

$0

Custom Interchange plus

Via third-party integration

PaymentCloud

Visit website

4.30

$10–$45

Client preference

✓

Helcim: Best overall B2B payments processor

Visit Website

Overall Score

4.48/5

Pricing

4.69/5

B2B processing features

4.75/5

General features

4.25/5

Support and user experience

4.25/5

Average user review scores

4.20/5

Pros

• Automated volume discounts
• Level 2 and 3 interchange optimization
• HIPAA-compliant for B2B healthcare services
• $500 credit if switching from other payment processors

Cons

• Additional fees for Amex transactions
• Interchange optimization fee
• Third-party POS integration requires custom APIs

Why I chose Helcim

Helcim is a traditional merchant services provider that offers interchange-plus rates and complete payment services without any monthly fees. It provides automated volume discounts and built-in free credit card processing programs for businesses that accept ACH payments (for online transactions) and use Helcim’s smart POS terminal (for in-person transactions). Combined with its level 2 and 3 data processing tools, Helcim is an all-around B2B payment processor for businesses of all sizes. 

Unlike other merchant services, Helcim’s level 2 and 3 data processing is built-in and available to all of its approved merchants. Helcim also uses AI to provide its users with interchange optimization that automatically retrieves the customer and transaction information needed to qualify for level 2 and 3 discounts. It supports a variety of industries, including healthcare B2B transactions (i.e., filing and receiving reimbursement from health insurance companies), since Helcim is also HIPAA-compliant. 

Key features

• Compatible business types: Helcim is ideal for businesses with fast-growing sales. It primarily works with businesses that require subscription management, especially those in the retail, automotive, education, professional and contractor services, healthcare, and education industries.
• Payment services: Helcim supports ACH and both card-present and card-not-present transactions. It also comes with a built-in virtual terminal, invoicing, and recurring billing features. Users can also connect a Helcim card reader to a desktop when processing virtual payments as an additional option.
• Fee discount types: Helcim offers interchange plus pricing with built-in automated volume discounts and a native level 2 and 3 interchange optimization feature. 
• Security and fraud protection tools: Helcim comes with a fraud protection service called Fraud Defender that can be customized to reflect the user’s acceptable risk level. 
• Chargeback management: Helcim has a chargeback management function for monitoring and responding to claims directly from the Helcim dashboard.
• Customizations: Helcim offers developer tools to integrate the system with POS platforms and to create customized features for larger businesses.

Pricing

• Monthly account fee: $0
• Domestic transactions:
  • Card-present fee: Interchange plus 0.15% + 6 cents to 0.4% + 8 cents
  • Card-not-present fee: Interchange plus 0.15% + 15 cents to 0.50% + 25 cents
  • American Express transactions: Additional 0.10% + 10 cents
  • Domestic ACH payments:
    • $25,000 and below: 05% + 25 cents per transaction capped at $6
    • >$25,000: +0.05% per transaction
• International transactions: 1% conversion fee plus
  • Visa: +1.45% + 4 cents for card-present and card-not-present
  • MasterCard: +1.45% for card-present and card-not-present
  • Discover: +1% for card-present and card-not-present
  • Amex: +1.3% for card-present and card-not-present
• Volume discount: Automated
• Level 2 and 3 interchange optimization fee: 30% of savings from interchange optimization
• Chargeback fee: $15 (refundable)
• Hardware cost: $99–$329 or $29 for 12 months
• Application/setup fee: $0
• Cancellation fee: $0

Stax: Best B2B billing solution

Visit Website

Overall Score

4.36/5

Pricing

4.38/5

B2B processing features

4.25/5

General features

4.75/5

Support and user experience

4.5/5

Average user review scores

3.9/5

Pros

• Advanced billing solution
• Wholesale subscription rates
• Interchange optimization for Level 2 data
• No additional cost for B2B payment processing

Cons

• Lacks same-day funding option
• May require manual input for Level 3 data
• ACH payment processing is an add-on

Why I chose Stax

Stax is another leading traditional merchant service provider. Like Helcim, it offers interchange optimization for B2B transactions but combined with wholesale rates instead of interchange plus cost. This arrangement creates even larger discounts for businesses that regularly process large-volume sales. Compatibility sets Stax apart from Helcim, as it can work with most POS systems, including Clover, with simple integration. 

That said, I recommend Stax primarily for managing subscriptions for large B2B SaaS businesses. Stax Bill is equipped with everything from pricing and billing models to dunning management and a payment gateway processor to handle one-time and recurring subscription billing. It also provides revenue recovery, revenue recognition, analytics, sales tax automation, accounting tools, and APIs that allow integration with almost any business software.

Key features

• Compatible business types: Stax is compatible with most business types, as it can integrate with POS software with ease. It also supports SaaS platforms, with highly customizable features to manage subscriptions and payments.
• Payment services: Stax is equipped to process card-present and card-not-present transactions. It offers invoicing, recurring billing, and virtual terminal tools that support both card and ACH payments. 
• Fee discount types: Stax offers volume-based wholesale subscription rates, surcharging, and additional custom plans for Stax Bill users. It also supports level 2 interchange optimization, which is built into every Stax transaction, including billing. Level 3 data processing is also available.
• Security and fraud protection tools: Stax comes with high-level payment processing security that includes encryption, tokenization, 3D secure, and multi-factor authentication.
• Chargeback management: Stax also comes with a dispute management platform to handle chargeback claim alerts, responses, and document proof submissions. 
• Customizations: Stax is built to work with most other business software, including custom business systems for large businesses via a variety of integrations, developer tools, and APIs. 

Pricing

• Monthly account fee: $99–$199 (Stax Bill starts at $199 for businesses that process less than $1M in accounts receivable) 
• Card-present fee: Interchange + $0.08
• Card-not-present fee: Interchange + $0.18
• ACH payments: $0
• Volume discount: Wholesale subscription
• Level 2 and 3 interchange optimization fee: $0 for level 2; contact Stax for Level 3 data processing fees (if any)
• Hardware cost: Contact Stax for pricing
• Chargeback fee: $25
• Application/Setup fee: $0
• Cancellation fee: $0

Adyen: Best for global B2B payments

Visit Website

Overall Score

4.33/5

Pricing

4.38/5

B2B processing features

4.25/5

General features

4.5/5

Support and user experience

4.5/5

Average user review scores

4.05/5

Pros

• Dynamic currency conversion
• Single integration for multiple local payment methods
• Long list of B2B integration partners
• Strong omnichannel payment solutions

Cons

• Does not work with high-risk businesses
• Invoicing available via integration
• May require monthly minimum

Why I chose Adyen

Adyen is a global merchant services provider designed for mid- and large-sized businesses. While Adyen is primarily European-based, it is a popular choice for embedded payments by top online platforms such as Recurly, Salesforce, and eBay. This makes Adyen seem similar to Stripe — another global payment processor on our list — but Adyen offers much stronger support for in-person transactions, making it a more well-rounded option.

Adyen’s expertise in both in-person and online payment services across the globe gives it a special place on our list. It allows businesses to accept 30 currencies from nearly 100 countries, including a long list of local European payment methods. At the same time, it supports unified/omnichannel payment features for brick-and-mortar businesses with a large online presence. Customizable embedded payment flows make Adyen a perfect provider for large B2Bs.       

Key features

• Compatible business types: Adyen is ideal for large B2Bs with both in-person and online presence. 
• Payment services: Adyen offers omnichannel payment services, connecting in-person and online sales from both local and international locations in one platform. It supports custom POS integrations, subscription management, virtual terminals, and online checkouts, to name a few.
• Fee discount types: Adyen offers interchange plus rates that vary per payment method. Level 2 and 3 data processing are available through custom-developed payment tools. Contact Adyen for custom volume-based discounted pricing.
• Security and fraud protection tools: Adyen offers a range of risk management tools that employ a combination of machine learning and customizable risk rules. Advanced settings are available for users to conduct A/B testing of fraud detection tools to match their acceptable risk level.
• Chargeback management: Adyen allows users to respond to chargeback claims directly from the platform.  
• Customizations: Adyen provides large businesses with customization features that include simple integrations, developer tools, and open APIs. 

Pricing

• Monthly account fee: $0
• Monthly minimum: $120
• Transaction fees: Interchange + 13 cents for Visa and MC, 3.3% + 23 cents for AmEx, 3%–3.95% + 13 cents for other card brands
• ACH payments: 13 cents plus 27 cents markup per transaction
• Volume discount: Custom volume-based pricing
• Chargeback fee: $5-$100
• Application/Setup fee: $0
• Cancellation fee: $0

Stripe: Best for custom online payment processing

Visit Website

Overall Score

4.31/5

Pricing

4.38/5

B2B processing features

4.25/5

General features

4.25/5

Support and user experience

4.25/5

Average user review scores

4.47/5

Pros

• Custom interchange plus pricing
• Instant bank account verifications
• Highly customizable features with well-documented APIs
• Excellent security and anti-fraud tools

Cons

• Lacks built-in level 2 and 3 interchange optimization
• Limited virtual terminal functionality
• Requires heavy coding for advanced customization

Why I chose Stripe

Stripe is one of the leading online payment processors in the industry, with a long list of simple and advanced customization tools. It offers flat-rate transaction fees for small businesses and custom interchange-plus rates for large-volume and enterprise-level companies. Stripe’s customization capabilities make it possible for businesses to accept a variety of online payments, including multi-currency transactions, with real-time authorization. 

These features make Stripe a standout B2B payment processor for online businesses. Stripe has direct integration with global card networks and issuers. For large businesses with custom systems such as SaaS and online platforms, Stripe can be customized to process level 2 and 3 data. Customization options vary from simple third-party integrations to developer tools. Stripe can even connect businesses with partner web developers and integration consultants to get the process started.    

Key features

• Compatible business types: Stripe is compatible with both startups and enterprise-level businesses. It works best for businesses that maintain e-commerce, SaaS, marketplaces, and other platforms.
• Payment services: Stripe is an excellent choice for accepting online credit card and ACH payments. It supports payment tools such as invoicing, recurring billing, virtual terminal, multi-currency, cryptocurrency, and embedded finance.
• Fee discount types: Stripe offers volume-based custom interchange plus pricing. Level 2 and 3 data processing are available with custom developer tools.
• Security and fraud protection tools: Stripe is well-known for its long list of payment security features. It encrypts credit card numbers with AES-256 algorithm and 256-bit encryption for other payment information. It also has a native global ID verification feature and machine-learning fraud prevention tools.
• Chargeback management: Stripe provides a platform for managing disputes, allowing users to monitor, respond, and even assess the likelihood of winning against the claim.
• Customizations: Stripe is built with customization in mind. It offers simple and advanced customization tools to fit the needs of all types of businesses.

Pricing

• Monthly account fee: $$0
• Small business transaction fees:
  • In-person: 2.7% + 5 cents (card-present), 2.9% + 30 cents (touchless)
  • Online: 2.9% + 30 cents per transaction
  • Keyed-in: 3.4% + 30 cents
  • Invoicing 0.4% with 25 free invoice processing per month or 0.5% per invoice
  • Recurring billing: 0.5% per month or 0.8% per invoice
• Large business transaction fees: Custom interchange plus pricing
• ACH payments: 0.8%, $5 cap per transaction
• International payments: +1.5% fee, 1% currency conversion
• Chargeback fee: $15
• Application/Setup fee: $0
• Cancellation fee: $0

Read more: Stripe alternatives and Square vs Stripe

PaymentCloud: Best for mid- to high-risk B2Bs

Visit Website

Overall Score

4.30/5

Pricing

4.06/5

B2B processing features

4.5/5

General features

4.5/5

Support and user experience

4.25/5

Average user review scores

4.65/5

Pros

• Supports high-risk B2Bs
• Customizable fee structure
• Integrates with most payment gateways
• Instant ACH transfers

Cons

• Lacks same-day funding
• Add-on monthly fees for payment gateways and virtual terminals

Why I chose PaymentCloud

Large-volume and card-not-present transactions are common between high-risk businesses and B2Bs, so our list would not be complete without PaymentCloud. As a leading high-risk merchant services provider, PaymentCloud offers a wide range of payment services that most B2Bs require to run their business. Its expertise in high-risk merchant processing ensures secure and easy-to-use payment solutions for businesses of any size.

What PaymentCloud does best is its ability to work and integrate its system with the most unique business models. PaymentCloud supports B2Bs with a virtual terminal to accept MOTO payments. It is also gateway-agnostic, which means PaymentCloud can work with any payment gateway for seamless migration. PaymentCloud can also provide a payment gateway that can better support a company’s payment processing requirements, such as level 2 and 3 data. 

Key features

• Compatible business types: PaymentCloud lists homebuilders, software startups, landscaping, insurance agents, dealerships, manufacturing, nonprofits, general contractors, mechanic & auto repair shops, brokerages, law offices, and logistics and freight as supported B2Bs. 
• Payment services: PaymentCloud supports both card-present and card-not-present payments. It can process credit card and ACH transactions on invoices, recurring billings, and virtual terminals for MOTO payments. 
• Fee discount types: PaymentCloud offers custom volume-based pricing. Both virtual terminals and payment gateways can process level 2 and 3 data processing. 
• Security and fraud protection tools: PaymentCloud provides the highest level of payment security for business clients. It offers strong fraud protection tools to minimize chargebacks and full encryption of payment information.
• Chargeback management: PaymentCloud monitors chargeback claims and allows its users to respond to chargebacks without leaving the platform. 
• Customizations: PaymentCloud offers excellent customization and seamless integration to business systems. It particularly does well in optimizing payment gateways so that users have all the necessary payment tools, such as level 2 and 3 data processing, to maximize their sales.

Pricing

Please note: PaymentCloud offers fully custom pricing. The figures below are estimates provided by PaymentCloud and can vary significantly depending on your business profile.

• Monthly account fee: $10–$45
• Card-present fee: 2%–$4.3%
• Card-not-present fee: 2%–$4.3%
• American Express transactions: $0
• ACH payments: Not disclosed
• Virtual terminal fee: $15–$45/month
• Payment gateway fee: $15/month
• Volume discount: Volume-based custom pricing
• Level 2 and 3 interchange optimization fee: Included in custom quote
• Chargeback fee: $25
• Application/Setup fee: $0
• Cancellation fee: Waived early termination fee

How to choose the best B2B payment processors

Consider the following criteria when choosing a B2B payment processor:

Determine what payment methods you want to accept 

Choose a provider that can accept B2B payment methods that your business needs — credit cards, ACH payments, and wire transfers; maybe even paper checks. Also, consider payment methods that your company may need in the future. The payment processor should provide you with a custom plan that considers all these factors.

Decide what other tools you need

The best B2B payment processor should provide businesses with the right payment services. This includes virtual terminals, subscription management, and the ability to process cross-border transactions. The most important factor is a payment processor’s ability to automate interchange optimization for level 2 and 3 data processing. Chargeback management and customizable fraud protection are also both crucial B2B payment tools.

Compare pricing 

Because B2Bs regularly deal with large-volume and high-ticket sales, the best payment processor should offer cost-saving features. These include being able to offer interchange plus instead of flat fees to qualify for level 2 and 3 interchange rates, free credit card processing programs, wholesale subscription pricing, and custom plans, so you only pay for features that your business needs.

Make sure your specific industry is supported

The best B2B payment processor should support a variety of business types. This can include nonprofits, wholesalers, professional services, and SaaS platforms. These business models may require a level of expertise to get approved for a merchant account, which a payment processor should be ready to provide.

Finding the best B2B payment processor for you

The cost of accepting payments takes away a huge portion of revenue from any business, especially B2Bs. So, when finding the right payment processor, B2Bs should look for a provider that offers cost-saving and customizable payment processing features that will help maximize your savings.

Helcim is our most recommended B2B payment solution if you need a payment processor that combines the most efficient automation with a range of cost-saving features. Stax is your best choice if you want to efficiently scale a subscription-based B2B business. Stripe and Adyen offer the highest level of customization for businesses that are comfortable with web development. But if you run a business that’s been qualified as mid- or high-risk, choose PaymentCloud.    

Read more: If you need more budget-friendly recommendations, check out our list of the cheapest credit card payment processors.

FAQs

The post The B2B Payments Guide: Overview & Solutions appeared first on TechnologyAdvice.

In any business, managing transactions manually can lead to errors, slower service, and unhappy customers. A point-of-sale (POS) system is a valuable and practical tool to avoid the drawbacks of manual processes. POS systems speed up transactions and reduce the risks of human error. They also streamline business operations by making inventory management easier, providing quick access to business data, and integrating with your other business systems.

What is a POS system?

A basic POS system is a combination of hardware and software that allows businesses to accept payments efficiently. Beyond just processing payments, a POS system may also complete or help coordinate key business functions like inventory management, customer relationship management (CRM), and sales reporting. 

In essence, a POS system is the nerve center of any brick-and-mortar business, and there are different types of POS systems to fit different business needs. 

Key components of a POS system

Several essential components make up a POS system. These components work together to facilitate seamless transactions:

Hardware components

• POS terminal: The POS terminal is the main device that processes sales transactions. This device may be a computer, a tablet, a mobile phone, or a specialized POS terminal. It runs the POS software and connects to other hardware components.
• Card reader: A device that accepts payments by reading card information by swiping, tapping, or dipping the card into the device. Some POS terminals may also function as card readers, and some POS software can use mobile phones to function as card readers.
• Receipt printer: Provides printed receipts for customers, confirming their purchase details. Many newer systems also offer digital receipts via email or SMS.
• Barcode scanner: Helps quickly input product information into the system by scanning barcodes, speeding up the checkout process and reducing errors. 
• Cash drawer: Securely stores cash transactions. It connects to the POS terminal and opens automatically when a cash payment is processed.

Although some POS set-ups have these components as separate devices, many providers also offer all-in-one terminals that function as a card reader, a receipt printer, and a barcode scanner.

Software components

• POS software: The application that runs the entire POS system. It can be installed locally on the device/terminal or cloud-based.
• Sales reporting: Provides detailed reports on sales trends, employee performance, and other key metrics. Most POS systems have reporting capabilities, only differing in the complexity and level of insight the reports can provide. This can range from basic daily sales reports and product performance to more complex summaries.
• Inventory management: Not all POS systems have inventory management capabilities. However, those that do can typically track stock levels, update quantities as sales are made, and generate low-stock alerts.
• Customer relationship management (CRM): Stores customer data, including purchase history, preferences, and contact information, enabling personalized service and targeted marketing efforts.

How does a POS system work?

A POS system makes sure that a sales transaction proceeds smoothly from start to finish. Here’s how it typically works:

1. Customer initiates the purchase: The process starts when a customer decides to purchase a product or service. The cashier or store employee scans the items using a barcode scanner or manually enters the product details into the POS system.
2. Total amount calculated: The POS system automatically calculates the total amount due, including any applicable taxes or discounts.
3. Payment is processed: Once the total is calculated, the customer may choose the payment method they’d like to use from the options accepted by the POS system. Some common payment methods are cash, credit or debit card, and mobile wallet. 
4. Transaction is completed: After the payment is approved, the POS system finalizes the sale. If the POS system has inventory management, the inventory is updated as well. A receipt may also be printed out or sent digitally to your customers.
5. Transaction is recorded: The POS system records all transaction details, storing them in the system’s database, which may be accessed and analyzed at any time. This information is then available for generating sales reports, tracking employee performance, processing future returns or refunds, and providing insights into customer behavior.   

Benefits of a POS system

Using a POS system offers numerous advantages that extend beyond basic transaction processing. These benefits can significantly enhance the efficiency, accuracy, and overall management of your business operations:

• Improved efficiency: A POS system speeds up sales processes by automating tasks like price calculation, inventory updates, and payment processing. This reduces customer wait times and frees staff to focus on other important aspects of the business.
• Decreased errors: Automating data entry and calculations will help improve accuracy and lessen human errors that often happen with manual processes. 
• Easier inventory management: Even a POS system’s most basic inventory management feature can significantly improve inventory efficiency and accuracy. 
• Enhanced business insights: POS data helps provide quick access to reports and analytics, provides better insights into your business, and helps you make more informed decisions.
• Better customer experience: Speeding up transactions, reducing errors, and offering features like digital receipts and loyalty programs will help improve the overall customer experience. 
• More streamlined operations: Many POS systems can integrate seamlessly with other business tools, such as accounting software, ecommerce platforms, and CRM systems. This integration streamlines operations and ensures all your business systems work cohesively.

POS software features

Software is the backbone of any POS system. While features can vary depending on the specific software and industry, here are some of the most common POS software features:

• Sales and transaction management: At its core, POS software handles sales transactions efficiently, processing payments, applying discounts, calculating taxes, and generating receipts. It ensures that every sale is accurately recorded and streamlined.
• Payment processing: POS software supports various payment methods, including credit/debit cards, mobile payments, gift cards, and more. Some systems also allow for split payments, installments, and deposits.
• Ecommerce integration: For businesses with an online presence, POS software can integrate with ecommerce platforms to manage online orders and accept online payments.
• Inventory management: POS software often includes robust inventory management features for tracking stock levels in real-time, setting reorder alerts, and managing supplier information. This helps prevent stockouts and overstocking.
• Customer relationship management (CRM): Many POS systems integrate CRM tools to manage customer data, track purchase history, and implement loyalty programs. These features help businesses personalize the customer experience, promote repeat business, and improve customer satisfaction.
• Employee management: POS software often includes features for managing employee schedules, tracking work hours, and monitoring performance. POS software also typically allows businesses to assign different access levels to employees, ensuring that sensitive data is protected while allowing staff to perform their duties efficiently.
• Sales reporting and analytics: Advanced POS software provides detailed reporting and analytics on various aspects of your business, including sales trends, top-performing products, and employee performance. These insights enable you to make data-driven decisions that can boost profitability and operational efficiency.
• Multi-channel integration: Modern POS software can integrate with other sales channels, such as online stores or mobile apps. This ensures that your inventory, sales data, and customer information are synchronized across all platforms.
• Mobile POS capabilities: Many POS software solutions offer mobile POS capabilities that allow you to accept payments and manage sales from a smartphone or tablet. This is particularly useful for businesses that operate in multiple locations, offer on-the-go services, want to take payments on the sales floor, or sell at events.
• Security features: POS software often includes built-in security measures, such as encryption, user authentication, and fraud detection, to protect sensitive data and ensure compliance with industry standards, such as PCI DSS.

How to choose a POS system for your business

Selecting the right POS system for your business is a critical decision that can significantly impact your operations, customer experience, and profitability. Here are key considerations to guide you in choosing the best POS system for your business:

1. Assess your business needs 

Start by evaluating your business’s specific needs. Consider factors such as the size of your operation, your industry, and the complexity of your sales process. For example, a retail store might prioritize inventory management features, while a restaurant might need robust table management and quick service capabilities.

2. Determine your budget

Establish a budget that includes the POS system’s initial cost and ongoing expenses like monthly fees, transaction fees, and add-on features. Understanding your budget constraints will help narrow your options and ensure you choose a system that provides good value without overspending.

3. Consider ease of use 

The POS system should be user-friendly, with an intuitive interface that’s easy for you and your staff to learn and use. An overly complex system can slow down operations and lead to frustration. Look for a system that offers a clean, straightforward design and has adequate help and training resources.

4. Check for essential features 

Make a list of your business’s must-have features, such as inventory management, sales reporting, CRM, and multi-channel integration. Ensure that the POS system you choose offers these features and aligns with your business needs and goals.

5. Evaluate flexibility and scalability

As your business grows, your POS system should be able to scale with you. Choose a system that offers flexibility, such as adding new locations, integrating with additional software, or handling increased transaction volume. This ensures that your POS system can support your business as it expands.

6. Ensure security and compliance 

Security is critical when choosing a POS system. To protect customer payment data and personal information, ensure that the system complies with industry standards, such as PCI-DSS and GDPR. Additionally, look for features like encryption, user authentication, and fraud detection to safeguard your business.

7. Research customer support

Reliable customer support is essential for addressing any issues that may arise with your POS system. Check the availability and quality of customer support services, including hours of operation, response times, and support channels (phone, email, chat). A system with strong customer support can minimize downtime and ensure that your business continues to run smoothly and you have access to support if anything goes wrong.

Best practices for using a POS system

To maximize the effectiveness of your POS system and ensure smooth operations, it’s crucial to follow these best practices:

• Regularly update software and hardware: Ensure that both POS software and hardware are up-to-date with the latest features and security patches to maintain optimal performance and protect against vulnerabilities.
• Train staff thoroughly: Provide comprehensive training for all employees on how to use the POS system efficiently. Proper training minimizes errors and maximizes the system’s capabilities.
• Back up data routinely: Implement a routine backup process for all data stored in the POS system to prevent loss in case of system failures or other issues.
• Monitor and analyze reports: Review sales reports, inventory levels, and customer data to make informed business decisions and identify areas for improvement.
• Integrate with other systems: Integrate the POS system with other business tools, such as accounting software and CRM systems, to streamline operations and ensure consistency across platforms.
• Implement strong security measures: Use encryption, strong passwords, and access controls to safeguard sensitive information and comply with industry security standards.
•  Review system performance: Evaluate the POS system’s performance periodically to ensure it meets your business needs and consider upgrades or changes if necessary.

Future trends in POS systems 

The POS landscape has already seen significant shifts due to technological advancements and changing consumer behaviors. Cloud-based POS systems and mobile POS solutions are becoming the standard as they offer flexibility and allow businesses to process payments on the go. The mPOS market value in 2023 is $34.72 billion, while the cloud POS market is growing at a rate of almost 25%.

Additionally, there is a growing demand for integrated omnichannel experiences, where POS systems synchronize data and functionality across online, in-store, and mobile platforms. Around 71% of merchants consider integration with other systems as a top functionality they look for in their POS.

Contactless payments are also widely adopted, driven by the need for faster and more secure transactions. These developments have set the foundation for the possible next wave of innovation in POS systems.

The future of POS systems will increasingly rely on artificial intelligence (AI) to deliver personalized customer experiences and automate routine tasks. AI is a top priority for 57% of businesses when choosing POS systems. 

AI will enable POS systems to analyze vast amounts of customer data, predict preferences, and offer personalized recommendations. This will enhance customer satisfaction and increase sales and loyalty. 

AI-driven chatbots will automate tasks such as inventory management, reordering, and even customer support, further streamlining business operations.

According to a Grand View Research report, the global advanced analytics market will grow at a CAGR of 21.1% from 2022 to 2030. While basic reporting is now standard, future POS systems will offer more advanced data analytics, providing businesses with predictive insights. These systems will analyze historical sales data, market trends, and customer behavior to forecast demand, optimize inventory, and even predict staffing needs. This level of foresight will allow businesses to make proactive decisions.

Security will remain a top priority. To secure transactions, future POS systems will incorporate cutting-edge technologies like biometric authentication (e.g., fingerprint or facial recognition) and blockchain. The biometric market is expected to grow 19.7% from 2020 to 2025, while the global blockchain technology market is expected to grow roughly 68% from 2022 to 2030.

These technologies provide an additional layer of protection against fraud and data breaches, ensuring that customer information is kept safe.

The self-service kiosk market is expected to grow by 5.6% from 2024 to 2036. This trend will continue to grow, with future POS systems incorporating more advanced autonomous checkout solutions. Technologies such as computer vision and AI will allow customers to check out by simply placing items in their cart and walking out. This will reduce wait times and enhance the shopping experience, particularly in high-traffic retail environments.

The global voice recognition tech market is expected to reach $50 billion by 2029. With the rise of voice-activated technology, future POS systems may incorporate voice commands for tasks such as ringing up sales, managing inventory, or generating reports. This hands-free functionality could speed up operations and make POS systems more accessible for businesses with busy environments or those looking to reduce physical contact points.

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