Cloud-Based POS or On-Premise POS: Which is better?

Before retailers acquire a POS system, you should know whether on-premise POS or cloud-based POS is suitable. In fact, on-premise POS ruled the roost until recently, the web-based has become a “king” thanks to its versatility and convenience. However, that does not mean legacy POS systems are dead. Many POS vendors still offer on-premise POS and advanced hybrid models. Before you come up with the final decision, let’s grab more information on these different POS types.

What is a Cloud-based POS? What is SaaS?

You might have heard the term “cloud computing” that users will utilize the network of remote servers to store, manage, and process data rather than your computers’ hard drive.  

Similar to cloud-based POS, it is a system for data storage and processing online instead of locally on your personal devices or on-premise servers. In-depth, cloud POS system allows you to access it from anywhere with an internet connection. For instance, you probably use Google Drive and DropBox to store and retrieve data. 

Sometimes, you can see “cloud” and “Saas” used interchangeably. Saas stands for Software as a Service (SaaS) that is truly cloud-native. Like cloud POS systems, external servers offer SaaS POS via internet access. 

Advantages and disadvantages of Cloud-based POS

There are myriads of benefits that a web-based POS can bring to owners for productive store management. 

• Cost-efficient

When using cloud POS, shop owners can save ultra-expensive spending on buying a hard drive to keep data locally. SaaS POS can be installed in existing devices from PC, tablets to mobiles. 

• Real-time processing

Cloud POS system has a core benefit when it synchronizes all actual transactions. POS will automatically update all data between online and offline stores at the happening time. It is extremely beneficial if you operate multi-stores at different locations. For instance, when you sell an item at a specific store, the available amount of that item on that outlet will be changed accordingly. In addition, the level of stock is immediately deducted in the warehouse. 

• Remotely accessible

Cloud POS allows access to all information regarding orders, inventory, customers, staff, etc from any device as long as it has a browser. From smartphones to tablets, you can monitor multi-store operations from remote locations in a blink of an eye. This way, you do not have to be present at your shop all the time to make everything run smoothly on the ground. 

• Mobile inside the store

Apart from managing the business from home, cloud POS systems enable users to be more mobile inside the store. The software can be used in any portable device that allows customers to do self-checkout in seconds. On the other hand, shoppers can instantly scan barcodes for product information like price, attribute, style, color, etc, from that quickly giving eager buyers the needed information. 

• Smoothly scalable

As a store owner, business growth and expansion is one of the long-term targets and aspirations. It also means you need to scale up your POS system in order to fulfill your needs. Cloud POS obviously takes you less effort, time, and money for an upgrading plan. 

POS deployed on the cloud which is often paid monthly subscription. You can easily switch from standard to premium and advanced packages with a wider range of handy features. Besides, scaling a cloud POS won’t call for additional hardware, hence saving your budget.

• Highly secured

It is a misbelief that “the local” is safer than “the cloud”. In fact, local servers have a highly potential threat of physical access. In addition, there are very few ways to secure local devices which are only passwords, PINs, and built-in firewalls. 

Concerning cloud storage, the level of security has been robustly enhanced. Depending upon the vendors, your database will be secured on the “cloud” by the following methods:

• Advanced firewalls: While the simple firewall examines the source and destination of data, an advanced one will verify the whole data and map to known security threats. 
• Intrusion detection: This method allows you to identify when someone tries to break into your database. Multiple levels of detection make hackers and cybercriminals more hesitant to intrude into your system. 
• Event logging: This technique will record all the network actions that security analysts will predict and prevent threats before they happen.  
• Internal firewalls: It limits the number of accounts that can access your data. This method ensures that not all accounts are completely accessible to your database.
• Encryption: If an attacker steals encrypted files, access will be denied. This technique makes sure that your data is worthless to anyone who does not have a key. 
• Physical security: Cloud data centers are secure 24/7 with fingerprint-locked and armed guards. 

A cloud based POS system is heavily dependent on the Internet.

Stable and constant internet access is a must for a cloud POS to work in high productivity. Retailers should keep in mind that it is a risk of a service disruption when you do not ensure a reliable wifi connection. 

For this reason, retailers should be well-prepared in case there is Internet downtime. If not, internet outages can cause missing out on sales opportunities and a significant amount of gross profit. According to Business Wire, IT downtime costs North American companies 700 million dollars within a year. A viable solution may be a backup Internet provider or prepaid 4G data. 

In addition, most POS vendors offer offline mode that allows your POS to function well even though there’s no Internet. Not all features will work offline, however, certain functions are still maintained such as looking up products, adding products to cart and creating customer profiles.

3 best Cloud-based POS systems

• ConnectPOS is a leading cloud based POS system that integrates all essential features for every aspect of retail business in one package. 

ConnectPOS is a reliable option among various cloud POS developers.

The system supports real-time synchronization: Information regarding products, orders, customers, tax info, inventory and other settings will be automatically updated between multi-stores.  

Additionally, business expansion and development will require more complex tasks of management. ConnectPOS allows retailers to customize the system based on their specific needs. ConnectPOS tailor-made cloud POS system is clearly a decent and suitable choice for any fast-growing business.

• Vend is also a decent option among dozens of POS systems. The provider offers a customer-facing display that shoppers can see exactly what is processing. Also, Vend’s prominent with powerful control over every transaction that store owners can get a printable record of daily sales. 

• Like another cloud POS software, Lightspeed brings multiple stores in one place. Users can access the system remotely, from iPad to mobile devices. Lightspeed focuses on offering other expert tools to customize a POS system whether retailers run a restaurant, hotel, golf course, etc. 

What is on-premise POS?

An on-premise POS, also known as traditional POS or legacy POS, stores and processes information on local servers that can be on your computers’ hard disk. Most of the time, POS vendors must install and set up proprietary hardware. 

Advantages and disadvantages of On-premise POS

A traditional POS system has distinct benefits over its cloud-based counterparts. Ideally, it is a perfect option for large enterprises and restaurants.

• Not relying on the Internet

Unlike cloud POS, a legacy system does not depend on the internet as servers are in a closed network. Thus, POS can work smoothly and efficiently with the wifi disconnection. On-the-go businesses should integrate on-premise to ensure a seamless operation in peak hours when the internet is disruptive. 

• One-time payment

Most of the time, a legacy POS is sold with one-time cost. Unlike the monthly subscription fee of cloud POS, you only pay once to own an on-premise POS. You won’t be concerned that service is disrupted because you forgot to send payments every month to POS vendors.

On the other hand, retailers should be aware of some drawbacks of a legacy POS before coming to a purchase decision.

• Expensive to implement

Shop owners should take into account the cost of additional hardware required. This platform matches more with large and medium enterprises whose budgets are more generous and flexible. 

• No mobility

A traditional POS will be rooted in a specific area that users must present at the terminal to be able to transact. Any managerial tasks have to be implemented in-store and retailers can not bring POS anywhere else, like on a beach vacation, in an airplane, etc.

Top 3 on-premise POS systems 

• QuickBooks: This retail POS system allows customization, faster payment processing, and streamlined operations. It is a go-to option if you want both POS hardware and software. QuickBooks offers three plans for one-time purchases ranging from $720 to $1140 with no hardware included. You probably buy POS machines separately that are various from EMV Ready PIN Pad to pole display. 

• NCR Counterpoint: It is reliable and old-branded on the on-premise market. Not only serving retailers with the omnichannel business but also NCR Counterpoint offers special packages for banks & credit unions, restaurants, telecom & technology, the public sector, etc. Especially, POS machines and terminals have optimized any size to fulfill users’ needs. Besides, NCR does not put their prices publicly on the website hence, you have to contact sales associates for consultations. 

• Paladin Point of Sales: One of its core functionalities is inventory management, reporting, loyalty program, and customer management. Paladin technological solutions support numerous business types such as pet stores, feed, and seed, lumber, and pharmaceuticals. The vendor also offers various POS hardware with an intuitive user interface and in-system chatbox.  

A hybrid model is a better choice?

Like a hybrid car powered by electricity and petrol, a hybrid POS is made from two elements. One is a local connection within the retail store and the other is access through the cloud. 

A hybrid model makes use of benefits and eliminates the disadvantages of the 2 above POS systems.

With stable local access on a hybrid POS, your store won’t rely heavily on the Internet anymore. The flexibility of a native cloud-based POS will allow you to access data when needed and no matter where you are. hybrid POS won’t take up much space as a bulky on-premise POS. You can make every inch at the counter more valuable with the display of impulse purchase items and gift cards. On the other hand, scaling up hybrid POS is simpler and more flexible. There is no need for licenses or technicians as a permanent on-premise POS. All you have to do is add POS terminals and locations of your new stores in the network.  

An example of a POS hybrid provider is TouchBistro.

It is noted that TouchBistro is an Ipad-based POS specialty for restaurants.

The system is more stable when it can work seamlessly on the cloud via an Internet connection and local servers. For this reason, TouchBistro does not have an “offline mode”.

The vendor also sells various hardware platforms in case you need easy-to-use POS machines instead of your iPad or smartphone. 

On the whole, 

POS deems to be the backbone of the entire process of managing retail stores. With numerous benefits such as mobility and affordable price, cloud POS systems vastly outweigh on-premise POS. This is also proved by research of Forbes that revealed 61% of merchants want to make their POS system to be cloud-deployed instead of a giant on-premise POS. 

However, depending on the business types, needs, and scale, retailers should take careful consideration to select between a cloud-based POS and traditional POS system, or even a hybrid model.