Transitioning from mobile payment systems to traditional POS

Transitioning from mobile payment systems to traditional POS

Summary: Mobile point-of-sale (POS) systems running on smartphones are an effective means of doing business anywhere. Things get complicated when setting up a brick and mortar shop.

Image credit: Square

Mobile point-of-sale (POS) apps such as that from Square, have made it simple and cheap to conduct business almost anywhere. Offering the ability to turn a smartphone into a full-blown, albeit small, cash register that handles credit card payments, these systems can work anywhere there is at least a 3G data signal. As good as these systems are at what they do, they're not capable enough for fixed retail operations. Transitioning to a "real" POS system can turn an easy process into a complicated one.

My foray into the POS wilderness came about in a way that others in the same position likely run into. A good friend has been working as a hair stylist for years, renting a chair in existing salons. She's moved around a few times and her mobile POS system has easily moved right with her. It's iPhone based and uses a little credit card swiper to charge customers. It works off the 3G signal on her very old iPhone without issues. She's used it for a few years and loves it because it's easy to use and it just works.

Her practice has grown so successful that she is in the process of opening her own salon. It's an exciting time for her as it's the very definition of the American dream; work hard and reap the benefits.

The build-out of her new salon is in progress and she's attending to a lot of details in preparation of that all-important opening day. She had everything under control until I asked her a simple question: "What point-of-sale system are you going to use in the salon?"

The look on her face made it clear she had not given a POS system a thought. Like others in her position, her mobile iPhone system has worked so well that she figured she'd keep using it.

Many of these POS solutions are cloud-based, which means installing Internet connectivity which would otherwise not be essential.

At first blush that seems reasonable, until you think it through. While her current POS system easily handles the handful of customers she has daily, in the salon she will have two or three stylists working along with her. The increase in customers will overwhelm her little iPhone. Plus, it's unlikely she'll want to be handing her precious iPhone to the other stylists to process important financial transactions. She also has to make sure the stylists don't use their own mobile system to cut the salon out of the transaction. And don't even think about what happens if that smartphone, so critical to her business, gets lost, stolen, or broken. 

Once convinced she needs a full-blown POS system, she began searching online for the right one and talking to other salon owners. That turned into an exhausting process as there are many out there. There are some that are based on the traditional cash register, and others that use a simple PC to run things. They all have some sort of credit card swiping hardware to handle payments.

There are POS software systems tailored to many specific business categories, and the hair salon is no exception. The software choices range from simple payment processing options to full-blown business systems. I suggested she consider one of the latter as it will be very useful to handle all aspects of her salon, from payments to accurately tracking the stylists' transactions to pay them their due cut.

She hasn't settled on one yet, but she's trying several that offer free trials for just that purpose. Some of these systems come as subscription services that provide everything including support and credit card processing services. These are priced at a reasonable monthly fee with additional transaction charges for credit card processing. Those latter fees are similar to what she's paying now for her iPhone-based system.

Adding a POS system to the operation creates other needs she has to consider for her salon. Many of these POS solutions are cloud-based, which means a need for Internet connectivity. Her clients will appreciate having connectivity while waiting for service so that would make the expense easier to bear. It might end up being expensive for a small startup and an expense she wouldn't have to incur if she used her existing mobile system.

While it would certainly be easier and cheaper to keep using that mobile POS system in her new salon, as mentioned it wouldn't be very practical. It wouldn't help run her business, either, and she admits a full-blown POS system will be good. I told her not to give up her iPhone system when she goes "professional". The new POS system will surely have downtime occasionally, and that iPhone will make a great backup system at such times. 

Topics: Mobility, iPhone, Smartphones, PCs

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  • cloud based POS

    Great Article.

    This goes a long way to show how new business owners sometimes side-step the concepts of how important it is at start-up to have a good system in place to manage your sales, customers and generate daily, weekly reporting to help you gauge performance.

    Not enough emphasis is put on a solution to do just that. Modern POS platforms can do so much more than just count the stock and the money. Social integration, Loyalty and payment solutions go a long way to given new and existing business owners a kick-start in improving the many facets of today's new-age trader.

    Good cloud POS systems have hoards of integration to email list builders, on-line shopping carts and accounting solutions. They offer easy scaling from just one device, to multiple devices and beyond to multiple stores and entire chains. Years ago the set-up and support costs of such systems would of run into thousands alone.

    They make use of existing hardware such as notebooks and tablets and use the web-browser with state of the art technology to work both on and offline. With improvements in browser / app technology they deliver a fast responsive experience unlike their earlier counter-parts.

    It is important to realize that POS has undergone a technology change and that change will drive performance to in the same way eCommerce has done for those that adopted it.

    Martin Webb
    [Disclaimer] Founder Cloud / Tablet POS.
  • I have a radical idea....

    Buy 4 iPod Touches for the shop and setup wifi... Then the stylists can use those as Mobile POS like the Apple Store does... Problem solved..
  • Real POS is only solution

    These half baked POS cloud systems can't do it all, case in point lets see a Grocery do it on a cloud application. Sell and accounting for a few items isn't the same thing as 50,000 items is it? I call POS cloud applications LITE versions and fine for small size locations but more then 50 items you need a real solution that can expand to multiple lanes and results....not to mention reporting!
  • "Real?"

    With all due respect, there are a growing number of solutions from established POS providers like VeriFone and NCR that are plenty robust for a multi-unit retailer with thousands of SKUs (including reporting and back-office integration). I suspect that if companies like VeriFone and NCR are pushing their solutions as replacements for "real" POS systems then it might be time to revisit the definition of what "real" is.
  • Most places also need to handle cash.

    I wouldn't really call a card swiping thing a "full-blown" POS system. Most places also need to handle bills and coins, and handling checks on an iPhone, while possible, is clumsy (it involves taking photos of the checks).

    . . . and as you have already said: It doesn't scale very well to a full staff.

    . . . and as much as futurists love to dream about the "cashless" society - I really don't think that's gonna happen in the next 50 years. Maybe it will happen someday, but not in the near future. It's still firmly engrained into the way we do business with brick and mortar.
  • Sorry, the internet is down, so we're closed!

    One problem with using the "cloud" as a real time data storage system, as opposed to using it to back up local storage, is that the business must shut down if the internet access is temporarily out of service. Also, with the cloud server not knowing about "paper backup" transactions until the network is fixed, opportunities to reorder products in a timely manner may be lost. If I owned a store I would want to be able to check my inventory, make a special order for a customer, and collect other-than-plastic payments as long as I had the local POS computer running. A backup, such as a smartphone payment system, could serve as a backup to take plastic. But DEPENDING on access to a cloud server to keep the business open could be trouble; there's always a construction crew that might fail to call 811 and end up cutting a trunk cable. Not to mention privacy issues and server going out of business issues.
    • Offline use supported

      Many of the cloud POS systems have offline use. One auto senses loss of web connectivity and switches to offline use automatically.
      • Offline doesn't always work, when people expect to pay with debit or credit

        cards, and have no cash or not enough cash to pay for transactions.

        As an example, last year, I was at a mom-and-pop grocery store, and service from Bright House was down in the neighborhood. The grocery store wasn't able to complete transactions with their on-line POS system, and could not make sales that were over the cash amount that people had with them. The pizza shop next door was in the same predicament, and could not make any sales either, and all of their pizzas were $8.99 and up, and so, if people didn't have the cash, the pizza shop couldn't sell very many pizzas, and so, they decided to just post a sign on the door stating that the shop was closing for around 2 hours. That's 2 hours of no sales at lunch-time, which was worth more than $1000 to the pizza shop. The grocery store also lost a lot of business for those 2 hours. Multiply that by the hundreds of shops in the neighborhood, and Bright House easily lost more than $100,000 for the local shops.

        Online is great when its online and works, but an offline system needs to be able to handle cash and credit/debit cards, for small and large amounts.
  • How to decide on using Cloud POS systems?

    Just depends on how little you care if your customers wait and are inconvenienced while all sorts of communications based things occur. It is all part of the race to the bottom. Your choice.
    Woned B. Fooldagan
  • WHy not just keep using Square

    Why not just purchase an iPad, newly announced Square stand, cash drawer, and receipt printer and set it up as the register in the salon. I have this setup for out business (less the stand because it was not available at the time I put it together), and it all plays nice together. The recent version of the Square app handles cash, check and CC transactions all with ease and supports a catalog of products/services on the iPad app. And obviously no "swipe charges on cash or check". I even run mine over WiFi so there is no need for a data plan on the iPad if desired.

    I currently have a traditional POS arrangement with one of the big players as well, but as a small business who has had good experience with Square, I am in the process of shutting down the POS arrangement, and moving exclusively to Square. No hoops to jump through on PCS certification, no monthly charges, no complex fees arrangements that are simply impossible to keep track of, plus other issues -- just a fixed predictable swipe charge, and only when I swipe. I would not recommend your friend give up Square. Just use something to power it besides the personal iPhone. The Square app is very nice.


    PS I receive no compensation from Square nor do I have a financial interest in the company. Just a satisfied customer.
  • "Overwhelm Her Little Iphone"

    That sounds so condescending, doesn't it? What volumes of transactions are we looking at here? Four stylists working an eight-hour day, say no more than half an hour per customer, that's not much more than 64 transactions per day. You think a little old Iphone can't cope with that?
  • Payment Card Security

    Adding public WiFi and Payment Card applications to the same Internet segment or a LAN can have its own complexities, headaches, and security issues as well. Payment Card Industry (PCI) security requirements can be kind of tricky for a small business when mixing different kinds of data and access on the same network segment. Just a reminder...