Management Tips

Are POS for all business?


Most people use to pay with credit card when shopping. It is a common payment method and there are several tech business trying to find new formulas to improve the actual systems and payment processes.

While we wait for the arrival of these systems, commerces need the POS to charge for their products and services. But some business are claiming for the high commissions that banks apply to these financial services. Despite this high fees, some professionals consider the POS an essential tool, but others are considering to give up and only accept cash. Is it worth for all kind of business to accept payments by credit card?

POS: Benefits of use for business

POS allows customers to pay with their credit cards, giving some benefits to them and also to the commerces:

  • Better service to customers, who can choose between paying with cash or credit card.
  • If customers can pay with credit card, they can access to financial options or discounts offered by banks to card holders.
  • There is a lower number of treasury movements, being the workflow more secure and less money in cash at the end of the day.
  • Also commerces need less visits to banks in order to get cash for cash back or to deposit the money in the bank account.
  • All operations paid by credit card are clearly registered and there is less risk of robbery, or at least, there is less to be robbed from the cash register.

Some benefits of POS in commerces impact directly over their customers, who can access to products and services and also to financial services offered by banks to card holders. Commerces without POS can’t satisfy this kind of customers that want to finance operations. Low cost and turnover products and services demand less POS than other with higher costs and turnover.

How Much Does a POS System Cost?

POS costs depend on the bank and the customer’s profile. The most common fees charged for POS service by banks are:

  • Monthly fee and maintenance: it depends on the POS system (it doesn’t cost the same a POS over DSL than other over 3G networks) and customer’s profile.
  • Operation fee (and minimum amount): It depends on customer’s profile.
  • Hardware deposit: It depends on the bank, sometimes they ask for a deposit that is returned when the service is canceled and the hardware is in perfect condition. If you work with your own POS, you don’t need to pay this deposit.
  • Extra annual turnover: It sound unusual but some banks charge if annual turnover exceeds a sum. It’s more frecuent when you pay a flat rate.
  • Phone calls: when POS work over land-line or mobile.

Taking a look to the costs we can conclude that POS are not for all commerces. The ones selling low cost and turnover products will obtain less benefits than others with higher rotation and turnover products. For example, a butcher or a bakery doesn’t need a POS, whereas it’s a must have for a computer shop.

Achieving a return from a POS

It’s hard to achieve a return from POS to business with a low annual turnover. In order to improve the POS return and avoid to lose customers and money, we can develop some strategies:

  • Show the POS to customers.
  • Tell to the customers that they can pay with credit card.
  • Re- negotiate the POS conditions with your bank.
  • Work with other banks if they offer better conditions.
  • Check if your POS hardware is the right for your business: 3G over mobile networks is good for cabs but not necessary for a computer store, and maybe more expensive than other solutions based in DSL.

If you can’t find a revenue with your POS, maybe the problem is that your business does not require a POS to charge transactions. Or perhaps the problem is that you don’t have a good annual turnover and you must act in other fields before taking in consideration the POS systems.

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  1. Nevermind: January 13, 2012 01:46 pm

    I always thought that POS are very useful, and needed in almost every commerce, but the fees to pay are really high.

    There was a movement some time ago among sellers to offer discounts depending on the paying method, and nowadays, some online shops do charge you different fees depending on how you pay.

  2. bachelorette: January 13, 2012 05:24 pm

    I’m a crazy credit card defender and can’t agree more with you: as an user I don’t need to bring a lot of pocket money with me just in case I’m eventually purchasing some expensive thing!
    Besides feeling safer I don’t run the risk of “feeling I have a lot of money at hand so why not…? then I save or at least don’t expend extra money!