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Complete List of POS Charges and Fees

Donna Fuscaldo
Donna Fuscaldo
Senior Finance Writer

Thanks to a downward trend in pricing and advances in technology, every size business can benefit from a POS. Here's what you can expect to pay.

Gone are the days when POS hardware cost several thousand dollars to buy, and the service contracts were hundreds of dollars a month. Today there are price points to fit every sized business. Still, when it comes to choosing a POS system, price matters a lot. Small business owners can't afford to overpay for the services they need or worse, throw away money on features they won't use. That's why it's important to understand the costs associated with a POS before choosing a provider.  

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What do POS systems cost?

POS systems are comprised of hardware and software designed to facilitate and process card payments for products and services purchased at retail locations. Depending on the business, a POS terminal can include a cash draw, credit card reader, PIN pad, barcode scanner and receipt printer. The software works behind the scenes to manage orders, track inventory and process card payments. The fees associated with the hardware and software are typically broken out as separate items.  

"The biggest upfront cost is the device that many people call the countertop register," Rishav Chopra, group product manager at QuickBooks Payments told Business.com. "The device can range from a cheap portable reader to very expensive hardware."

Merchants have two choices when it comes to acquiring the POS hardware. They can buy it outright or lease the equipment. Some vendors offer "free" POS hardware but there's a catch: You must sign a contract to lease or rent the equipment. You save money upfront, but you are locked into a long-term contract that can last three to five years. Most contracts are noncancellable and often you end up paying more for the POS terminal.  

One factor that can have an enormous impact on the price of your POS system is whether you're using an on-premise solution or cloud-based POS. With an on-premise POS, the hardware and software reside on-site and can cost several thousands of dollars. This setup is less common these days, thanks to cloud-based POS. With a cloud-based POS all the software lives on the Internet. The software cost is much cheaper to install and run, and hardware requirements are minimal.

"When we entered the space, POS was quite expensive. You could look at $5,000 to purchase and then $200 to $300 a month to support the installations, "said Mark Schulze co-founder of Clover, the POS vendor. "Those are still being sold, but the market has moved to a modern POS that integrates tightly with e-commerce."

These days, small businesses can pay as little as $50 to as much as $250 a month for access to POS software. The most common payment model in the POS market is monthly subscriptions where merchants pay a monthly fee to access the POS software in the cloud.

Types of POS fees

POS hardware and software costs aren't the only fees small business owners have to pay attention to when shopping for a POS solution. There is payment processing, extra hardware, add-on features and services, and several other charges to be mindful of. Here are five items to pay attention to when you're comparing systems.

1. Payment processing fees

Outside of the hardware and software costs, payment processing fees are a big component of POS pricing. Some POS vendors allow you to work with a third-party credit card processor – some tack on an extra per-transaction fee, but not all do. Other POS vendors require you to use their in-house processing service. Either way, it's important to know what you're paying to accept credit and debit card payments.

"Payment transaction expenses hit the margins of businesses," said Chopra. "If a coffee shop is selling $6 coffee on a regular basis and the payment provider takes away 50 cents from every transaction, at the end of the day margins are getting depleted."

2. Number of user accounts

Depending on the size of your business, you may require one staff account or several. Usually, the more POS logins your business needs, the more the POS solution costs. If you need several staff accounts, look for a POS provider that offers an unlimited user package.

3. Number of registers

A POS solution typically includes one register to handle card payments. If you need more, expect to pay monthly for each additional one.

4. Card reader

The credit card reader is an important part of the POS system. Card readers accept and process payments, including contactless payments. If you're working with a third-party payment processor, it may provide a free card reader, but in most cases that's just a card swiper that only reads the magnetic stripe on the back of the credit card. You'll need to upgrade to a higher-end card reader that properly accepts EMV chip cards, so you won't be liable for counterfeit fraud that occurs at the point of sale. You'll also want a card reader that can accept contactless payments, including contactless cards and mobile wallets like Apple Pay. If your customers prefer paying with debit cards, you may also need a card reader that comes with a PIN pad.  

5. Add-on features

POS systems are much more than a means to process card payments. They can integrate with your back-end systems, enabling you to streamline ordering and inventory management. Some POS solutions can provide advanced reporting, support e-commerce, issue and accept gift cards, or run a loyalty program. All those add-ons don't come free. Vendors charge varying rates depending on the services you need.

The amount your business will pay in POS fees depends on the size of the operations, your sales volume, and the features you want out of your POS. If you're a retailer with several locations, your POS system will cost more than if you're a business owner operating a one-person shop. If you're looking for third-party app integration, advanced reporting, and other features, you'll pay more than if you just want a basic POS system that makes it easier to ring up sales and process payments. "There are lots of options," said Schulze. "You don't want to get overwhelmed. It's worth it to poke around online to see what you want."

The cost of your POS will vary from one vendor to the next, as will the features you get for your monthly expenditures. To get a sense of what a POS will cost you all-in, here's a look at what some of the leaders in the industry charge.

  • Square POS: Square POS is a leading POS provider and payment processor that caters to small and medium-sized businesses. It's hardware bundles range from $526 for the iPad mini kit to $1,329 for the Square register kit. Square's processing fees are 2.6% + 10 cents for every swiped transaction, 2.9% + 30 cents for invoices and e-commerce payments, and 3.5% + 15 cents per transaction for virtual terminal and keyed-in transactions.

  • Clover: Clover is a POS known for its tech prowess. Clover's hardware tends to range from $500 to $1,695 depending on the configuration and number of devices. Software ranges from $9.95 to $79.95 a month. Third-party apps can be purchased through the Clover app store, and vary based on the app maker.

  • QuickBooks Desktop Point of Sale: QuickBooks takes a different approach to pricing its POS software. Instead of charging a monthly subscription fee it has a three-tier system of flat rate prices. It's POS Basic package cost $720, its POS Pro package is $1,013, and it's POS Multi-Store package is $1,140. Prices can fluctuate, though, based on QuickBooks promotions. The hardware is separate and costs $900 for a bundle that includes a cash drawer, receipt printer, wired barcode, and PIN pad.

  • Lightspeed: Known for its mobile POS, Lightspeed has several packages, with pricing starting at $69 a month for its basic plan to $229 a month for its advanced plan. Each plan supports one register. If you need more the cost is $29 each per month. Lightspeed Payments, its own payment processing service charges 2.6% + 10 cents for in-person sales accepted using a card reader and 2.6% + 30 cents for online and keyed-in transactions.

  • Vend: This retail-centric POS systems' pricing starts at $99 per month billed annually or $119 billed monthly for its Lite plan, which is for retailers with a single store and transaction volume of $20,000 or less a month. The Pro plan costs $129 per month billed annually or $159 billed monthly. Customers get advanced reporting, a loyalty program, and access to gift cards for the stepped-up price. Vend charges $49 a month billed annually or $59 a month billed monthly for each additional register.

 

Image Credit: Koonsiri_Boonnak / Getty Images
Donna Fuscaldo
Donna Fuscaldo
business.com Staff
See Donna Fuscaldo's Profile
A lifetime New Yorker, I am a veteran finance and business journalist that has contributed to several national media outlets including Forbes, Investopedia, and Bankrate.com. I have spent my career providing consumers and business owners with advice and guidance to help them navigate the world of finance. As a senior finance writer, I report on all aspects of finance from managing cash flow to choosing the best accounting software.