Pros and Cons of Online Cloud-based POS Systems

The shift to cloud technology has had a profound impact on how businesses operate in this digital world. Cloud based POS systems are the frontend of this transformation. A cloud based POS system allows businesses to manage most of the functions such as sales record, tracking inventory, and handling customer data entirely online.

The cloud based system provides flexibility to access from anywhere and scalability that traditional systems do not provide. Statista reports that the global cloud-based POS market is expected to touch the $6 billion mark by 2027. It indicates its viral adoption across various industries.

Out of 100 about 60% businesses have already moved to cloud-based systems, while the remaining 40% aim to shift in the near future. Adoption of cloud POS systems is expected to grow by 21% annually due to their convenience and scalability.

However, cloud based point of sale may offer numerous benefits but after all it needs uninterrupted internet and recurring costs, which are its main drawbacks. In this guide, we will explore the pros and cons, some of the best cloud-based systems, and how a cloud POS system works. Let’s get to it!

What is a Cloud Based POS System

A cloud based point of sale (POS) system is a modern solution to process transactions seamlessly. It allows businesses to manage operations by the use of the internet rather than relying on traditional on premise hardware.

Unlike the software-based POS systems, a cloud point of sale system is directly connected to the internet with all the data stored on external servers. If you’re curious about the different types of POS systems, explore our comprehensive overview.

So it is sometimes known as the ePOS system as well because of the fact that it can be accessed from anywhere in the world without requiring the same device which happens in software-based POS systems.

A cloud POS system offers more flexibility compared to traditional systems. Business owners have the ability to access real-time data, manage multiple locations, and integrate with other online tools like accounting software and customer relationship management systems (CRM).

How Does a Cloud POS System Work

A cloud based point of sale system takes advantage of the internet to store and process transaction data on remote servers also called as the cloud, rather than local hardware. It means that whenever a transaction occurs, whether it is a sale, return, or inventory update, the data is instantly uploaded on cloud.

As a result, business owners can access this data from anywhere using any device connected to the internet and synced with cloud. No matter from which part of the world the customer has made a purchase, the information will be automatically stored on cloud.

With a cloud based system, customers can opt any payment method. They can use traditional methods of payment with credit or debit cards and they can also use modern payment methods like digital wallet, pay-by-text, and QR code payment methods.

Pros and Cons of Cloud-Based Point of Sale Systems

Cloud POS systems are becoming the standard choice for businesses of all sizes. However, like any technology,it also comes with some advantages and disadvantages. Here, we will explore them in detail.

Pros of using cloud POS systems

1. Remote Accessibility

A cloud point of sale system allows you to access your business data from anywhere, at any time, on any device. This system is particularly a blessing for business owners who are managing more than one business and cannot be there simultaneously.

In contrast, traditional or software-based POS systems require you to be there on all the locations which consumes time and limits efficiency. Additionally, retailers no longer need to install costly devices onsite to manage transactions, everything can be done even on a smartphone or any device you would like to use.

2. Real-Time Data Access

Having real-time access to sales reports, inventory levels, and customer data improves the overall decision making. It also allows you to make adjustments on the go without physical being there. A cloud based POS system makes sure all your devices are synced in real-time.

This reduces the human error which can often occur when using outdated software-based POS systems. Contrarily, Cloud POS systems prevent issues like overselling products or running out of stock as the system will automatically adjust inventory after each sale.

3. Lower Upfront Costs

One of the biggest advantages of cloud point of sale systems is the significantly lower upfront costs. A traditional system often requires expensive hardware and dedicated servers to save data on, whereas a cloud POS only requires a smartphone or a tablet. According to Forbes, businesses can save up to 40% in initial set up costs by opting for cloud solutions.

Additionally, cloud POS systems operate on a subscription model which lets businesses avoid large, one-time expenditures. Paying on a subscription basis allows you to scale up your businesses. This is particularly helpful for small businesses or startups with minimum initial investment.

4. Automatic Updates and Least In-House IT Support

Remember using traditional devices for transactions and when one is not working it is on your end to repair them. However, with a cloud POS system, updates and security patches are automatically handed by the service provider.

In a cloud based POS your system is always running with the latest version with access to new features and you do not need to switch to the latest devices to access updated features. These features reduce the need for in-house IT support and minimizes downtime. Businesses only need to focus on core operations while the system takes care of itself in the background.

5. Easy Scalability

Could-based systems are highly scalable, making them a great option for growing businesses. Whether you are adding new stores, expanding your product line, or hiring new staff, the system can easily accommodate these changes.

Scalability is a critical factor for any growing business aiming to expand. It eliminates the need of changing all the structure and devices each time you decide to expand. With a cloud based POS system you can simply add new devices or locations and continue running business operations smoothly.

6. Data Backup

Ever faced critical data loss? If yes it will not happen in the future with cloud POS systems. These SAAS-based systems always save your data on cloud so basically it is not stored in your devices but on cloud. Even if you lost your device, your data is backed up and can be accessed easily after passing some security checks.

Cons of Using cloud-based systems

1. Internet Dependency

One of the main disadvantages of the SaaS-based POS system is its dependence on stable internet connection. If your internet is lost, your ability to process transactions and access data may be hindered. A recent report from Cisco found that businesses lose an average of $5,600 per minute during an internet outrage.

Although some cloud based POS offer limited offline functionality, it is not the perfect solution. Businesses with unreliable internet may find cloud systems bringing more challenges than they solve.

2. Recurring Costs

Although the upfront costs are lower, but these systems come with monthly or annual subscriptions which means that you have to pay on a regular basis.

It all depends on the services and features you need. If you do not require constant access to cloud services, these monthly or annual fees can become burdensome. So, it is better to calculate the total cost of ownership before shifting to a cloud-based POS model.

3. Data Security Concerns

While cloud POS providers often have strong security measures, some businesses still store some sensitive data offline. In fact, Thales (leaders in critical information security systems) revealed that 44% of businesses raise data privacy concerns as a barrier to shift from traditional POS systems to cloud based systems.

4. Vendor Lock-In

Switching from one cloud-based POS provider to another can be challenging. Many providers have strict guidelines and have proprietary data that leads to vendor lock-in. Many businesses experienced being trapped by long-term contracts and data migration issues when switching to another cloud system.

5. Dependency on Provider

Since all your data is stored on a third-party server, you are all dependent on the service provider to maintain uptime, security, and data integrity. If they face some issues with their servers, it will eventually lead to compromised business operations.

6. Customization Limitations

Unlike on-premise systems, cloud-based POS solutions might not offer the same level of customization. If your business has specific operational needs, this could be a limiting factor.

3 Best Cloud-Based Point of Sale Systems

Before selecting a cloud POS system, make sure you consider factors like ease of use, scalability, integration options, and cost. Selecting the right system can make a huge difference in how smoothly your business runs. Below are three cloud POS systems we found best after using them personally.

A) Square POS

Square is a popular cloud POS system, especially for small businesses and startups. It offers a free plan with essential features like inventory tracking, reporting, sales analytics, customer management with CRM tools, and multistore management.

Square POS is easily scalable as you can upgrade to paid plans for advanced features. One of the standout features of the Square POS is its easy integration with hardware like tablets and card readers. This feature makes it a perfect choice for mobile businesses and pop-up shops.

There is a drawback to using Square POS that it does not allow third-party integrations. For such integrations, we recommend Clover. Shopify and Lightspeed POS systems also offer these integrations but with some fees.

Pricing

Square offers a free plan with no monthly fee and you only pay transaction fees, which is 2.6% + 10 cents per in-person transaction. There are paid plans with advanced features also available, starting at $29 per month for custom reporting, payroll, and marketing tools.

Why Should You Use It?

Square POS offers a very to use interface making it a good option for everyone even with no tech experience. It is ideal for small businesses, food trucks, pop-up shops, and anyone who needs a mobile POS system.

B) Shopify POS

When it comes to e-commerce and selling products online, Shopify stands out in the industry. Shopify POS is a cloud-based system specially designed for retail and e-commerce businesses. Shopify lets you build an online store, manage sales, market your products to target customers and accept payments in digital and physical locations.

Shopify POS provides real-time inventory updates, easy returns and exchanges, and detailed sales reports. It accepts all major credit and debit cards and digital cards.

Shopify POS comes in two versions including a free Lite version and Pro version with more comprehensive features ideal for large businesses.

The only drawback we faced using Shopify POS was its in-depth reporting. For that purpose, you can use a better option in the form of Lightspeed. The latter option comes with robust reporting options and they will let you help understand anything you are looking for with Shopify POS.

Pricing

There are three plans available for Shopify, and each comes with a built-in Lite POS system. You have to pay an additional $89 per month to upgrade to the Pro POS system. However, you can also customize your plan by buying Pro POS as a separate product. Here are Shopify’s three plans:

➣ Basic plan costs $39 per month

➣ Shopify plan costs $105 per month

➣ Advanced plan costs: $399 per month

The advanced plan offers additional features like staff permissions, in-depth analytics, and custom receipt printing.

Who Should Use It?

It is the best option for retailers who want to sync their online and in-store sales. If you run an online store and want to blend it with a physical retail space, Shopify POS is the cloud system you are looking for.

C) Lightspeed POS

Lightspeed is another handy cloud based POS system for large retailers, restaurants, and businesses with complex inventory needs. Lightspeed R-series makes you capable of managing all the basic needs of a retail store. It includes:

➣ Stock tracking across various channels

➣ Sales channels integrations

➣ Inventory management

➣ CRM tools

➣ Customizable checkouts

➣ 24/7 customer support

We found Lightspeed POS performing best for larger and complex inventories. It comes with granular matric inventory tools with enhanced management and reporting capabilities. It also works best for restaurants where it offers table management, order tracking, and detailed sales reporting.

Advanced plan users get access to premium features like automation of custom reports, store analytics, and customer behavior reports. However, Lightspeed may come with enhanced reporting features but it is a bit costly than other POS systems.

Pricing

Lighsped starts at $89 per month for the basic plan. Three higher plans are also available with advanced features.

➣ Standard plan is available at $149 per month

➣ Advanced plan is available at $269 per month

➣ Enterprise plan comes with customization options and is priced accordingly

Although there is no free plan available in Lighspeed POS, it comes with a 14-day free trial to test the features.

Who Should Use It?

If you run a high traffic shop or a multi-location business, Lightspeed’s advanced reporting features help you streamline everything from stock management to customer loyalty programs.

Cloud Based VS. Traditional POS System

The choice depends upon your specific needs, but overall, a cloud-based system offers more advantages over the traditional POS system. Here both the systems and their features are compared:

Feature	Cloud Based POS	Traditional POS
Data Storage	Data stored in the cloud, can be found if the device is lost or stolen	Data stored on-site local devices, cannot found if the device is lost or stolen
Accessibility	Accessible from anywhere in the world with any device via the internet	Require physical presence at the store and same device to access data
Cost	Subscription based with lower upfront cost, usually starts around $30 to $100 per month	High upfront costs for hardware and software often require thousands of dollars
Maintenance	Automatic updates and backups are handled by the system provider with no need of in-house IT support	Requires manual updates and on-site IT support is must which adds to overall cost and lower efficiency
Scalability	Easily scalable, ideal for growing businesses with multiple locations or mobile operations	Scaling requires purchasing new hardware and separate systems for each location
Offline Functionality	Can operate offline and data is automatically synced once the internet is restored	Depends on local hardware and in case of a system crash or failure, data recovery is challenging
Integration	Integrates with third-party tools like accounting, CRM, and ecommerce platforms	Limited integration solutions and may require costly custom solutions to add new features
Installation Time	Quick to set up on any device and often ready within minutes to hours	Prolonged installation process, requiring professional setup that takes days or weeks
Mobility	Supports mobile transactions and ideal for pop-up shops or events	Fixed to a specific location and lacks mobility
Security	Highly secured with automatic backups, password protection, and encrypted transactions	Security depends on in-house measure, sometimes may be more secure as it not accessible to everyone online

Conclusion

Choosing the right POS system is crucial for the smooth operation and growth of your business. Cloud based POS systems have revolutionized the working of businesses and how they manage sales, inventory, and customer data.

A cloud based POS system offers several benefits over traditional POS systems. It is accessible from anywhere and on any device via the internet. It allows real time access, scalability, and integration with other tools with minimal upfront cost.

Ultimately, the decision between a cloud-based POS and a traditional POS depends upon specific requirements of the businesses. If you value mobility, ease of use, and future scalability, a cloud based point of sale system is the better option for you.

Frequently Asked Questions (FAQs)