Learn about the pros and cons of using a free POS system for your business.
- The price of a point-of-sale (POS) system often directly correlates to the features, limitations and convenience it offers.
- A free POS system can save you money and is ideal for small businesses that rarely process card payments and don't need advanced POS software functions.
- Most free POS systems are tied to high transaction fees, limited features or multiyear processing contracts.
- To choose a free POS system, analyze your budget, industry, business size and the feature you need.
A point-of-sale (POS) system is an integral component for most businesses, and it's challenging to find the system that's the right fit for your company's specific needs. Since POS software and hardware are available in various combinations and price points, business owners can pick and choose what works best for them. Sometimes, that best option is free of charge.
However, the age-old saying "you get what you pay for" rings true more often than not – and POS systems are no exception. Although using a free POS system to complete your consumer transactions may seem like a great option, it has its own set of pros and cons.
John Moss, CEO of English Blinds, said business owners should be wary of the limitations and additional fees that can come with a free POS system.
"There are free POS systems in as far as there are systems you can get in place without any upfront cost, purchase price, or set monthly fee, but these typically cost more per transaction or have limitations in place in order to counteract this," Moss told business.com. "There is no such thing as a free lunch, after all, just different ways of paying for things."
It is essential for business owners to evaluate the benefits and limitations of free POS software before jumping into a plan that may be too good to be true. The best POS system for your business will depend on your business size, industry, budget and the features your business needs.
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The benefits of using a free POS system
Free POS software is sometimes included with your mobile credit card processing service. This can be the right choice for some small businesses; it all depends on what you need to use the software for. The most obvious (and likely the only) benefit is cost savings. Some POS systems can cost hundreds or thousands of dollars, which may not be practical or even possible for very small businesses that perform few card transactions.
"The pros of using a free POS system are that if you rarely process card payments, you don't have to pay a set or upfront fee for a system you're not getting much benefit from just to serve the occasional client," said Moss. "You also don't tend to get tied into a contract."
Although pay-as-you go pricing and no long-term contract may be the only real advantages of using the free POS option from a mobile credit card processor, it can be beneficial enough that some small businesses prefer it. If you do not need to process many credit cards and don't require the added benefits of many paid POS systems (e.g., inventory tracking, employee and customer management, third-party software integration), a free POS system can be a great addition to your business operations.
If you are not locked into a POS contract, you have the luxury of switching to a different POS system later on, once your business expands or your credit card processing needs change.
The limitations of using a free POS system
Free POS systems are advertised as just that – free – but this is not always the whole truth. Although initial setup costs, a monthly POS software subscription or the purchase of POS hardware may be omitted, you are often still on the hook for credit card processing fees. Keep in mind that free POS systems typically restrict your ability to choose your own processor and come with higher transaction fees than their paid counterparts. This is a setback if you process a high volume of credit card transactions.
With a free POS system, what you save in money is often lost in features. Moss said that these feature limitations vary by POS provider, but it's common for free systems to limit your number of inventory items, registers or users. Although some POS software can be costly, the capabilities typically match the price.
If you anticipate that you will need the added capabilities that many paid POS systems offer, it may be difficult to find a free POS system that can accommodate your needs. Most free systems come with basic purchasing capabilities, not the paid perks. You're unlikely to find a free POS system that has convenient features like inventory tracking, sales data or business performance reports, third-party integrations, and customer and employee management.
Consider which features your business currently needs as well as which ones you will likely need in the future. Although the "free" price tag may be enticing, it might not be a practical option for your business. This is especially true for larger businesses and those that conduct many credit card transactions each month.
The best free POS systems
There are several POS systems that claim to be free; however, they often charge for certain features and add-ons. For this reason, it is important to evaluate POS software and hardware on your own to see if a system suits your specific needs and budget.
When looking for the best free POS system, you will likely find mobile credit card processors that provide free POS software – as long as you use that company as your processor too. Some of the best companies that do this are SumUp, PayPal and Square. Keep in mind that if you choose one of these processors, you will be locked into using one credit card processor, instead of having an open-source POS system that is compatible with a variety of processors. This can be problematic if you want to switch to a credit card processor with lower prices or better features.
Based on our research, Square is the best low-fee credit card processing service available, and its basic POS system is one of the most robust. It charges flat-rate transaction fees and has several features that you can add to your system later as your business grows. These are important benefits to consider when choosing a free POS system.
Be wary of processors that offer free POS systems but require you to sign lengthy contracts. For example, some providers offer free POS hardware if you sign a multiyear contract for processing, but you usually still have to pay for a monthly POS software subscription. The contracts aren't very merchant-friendly, as they're noncancelable – even if you go out of business.
The free POS systems from eHopper and Loyverse are good options for small businesses like cafes, beauty salons and retail stores that are looking for a free mobile POS system. However, these free systems have limitations. For example, Loyverse charges a monthly fee for additional features like inventory or employee management, and you'll need a to subscribe to eHopper's paid plan to be able to call customer support.
What is the best free POS system for bars or restaurants?
If you have a small counter-service restaurant or cafe, you may be able to successfully use free POS software. It'll be significantly more difficult if you have a full-service restaurant or bar and need restaurant-specific features like ingredient-level inventory tracking, tab management, tip tracking, and menu or table management.
Loyverse has a restaurant version of its free POS software that has a good selection of features, such as order management with modifiers and inventory management that can track ingredients. However, you'll likely want to subscribe to its paid advanced inventory module so you can make stock adjustments, conduct inventory counts and manage purchase orders.
Likewise, eHopper's free POS software offers some restaurant features, including order modifiers and tip management, but you'll need to upgrade to a paid plan to access a menu builder, ingredient management and low-stock alerts.
How to choose a free POS system
Given that there are several free POS system options available, each with its own capabilities and limitations, it is important to assess your current business needs before choosing a system.
To help you choose the best POS system for your business, here is a checklist of important factors for you to analyze your specific POS system needs.
Budget: Set a realistic budget for how much you can spend on a POS system. This budget should include the cost of POS software, POS hardware and credit card processing. If you are starting a new business, your budget for your point-of-sale system may be tight; however, keep in mind that your budget may increase as your business scales.
Business size: The size of your business and the number of registers and locations you have can affect the type of POS system you need. A very small business with few credit card transactions may get away with a free POS system, whereas a large retailer with several registers – or even multiple storefronts – will need a more comprehensive POS system.
Industry: The industry you are working in will determine which type of POS system you need. Do you need a restaurant POS system that can accommodate reservations and seating arrangements, or are you a small retailer that needs basic inventory management?
- Features: In addition to industry features, the POS capabilities you need will depend on your personal preferences. Are you OK with a simple POS system that is limited to purchasing transactions? Do you want comprehensive POS software that integrates with your accounting and marketing systems to automate business operations? These features will determine whether you can partner with a free POS system or require a paid version.
Hardware features to look for
Before selecting a POS system for your business, you want to review different types of hardware available.
At a minimum, card readers should come as part of your package. Card readers may be standalone devices or attach to a smartphone to process transactions.
Systems with barcode scanners enhance the capabilities of the system. With a barcode scanner, you manage inventory through your POS system.
Another hardware feature for a POS system is a receipt printer. Although some customers prefer emailed copies of their receipts, many still ask for a paper copy.
Finally, cash drawers are an available feature for POS systems. Although many businesses prefer cashless transactions, you expand your customer base by accepting cash. According to Square Up, choose a POS register that syncs well with the rest of your POS software features. POS cash registers reduce the need for cashiers to count bills and coins during transactions manually.
Software features to look for
Inventory management systems keep track of products in stock and on backorder. Most importantly, inventory management systems highlight best-selling items within your catalog and what products are underperforming and could potentially be eliminated from your stock.
Search for POS systems that can generate reports. The best POS systems allow for reporting options filtered by store and even by the cashier. Reports assist in forecasting, reordering and following sales trends. Sales performance by cashier permits employers to track productivity among workers.
Customer management is another essential feature of a POS system. Save customer details within the software and better manage returns and client loyalty programs. Cross-channel return capabilities within a POS system help smooth out the returns process.
A POS system can drastically impact the effectiveness and accuracy of your business. Consider all of your specific needs to determine the best option for you.
"If you only take card payments occasionally, a free POS might be a good fit for you and serve all of your needs at the lowest relative cost," said Moss. "However, if you keep a large inventory, receive a lot of card payments, process high-value transactions, or need to operate across multiple registers, users or locations, a free POS system probably won't meet your needs or be cost-effective."