What is a POS?
Starting a small business takes a lot of passion and hard work. You might be very knowledgeable about your trade or the products you sell, but you can't be an expert in everything. That's why you need help along the way to take your business from a sketched-out plan on paper to a full-fledged reality. You might already know the kind of items you want to sell or services you want to provide, but you'll need some type of point of sale, or POS, system to help you accept credit card payments. That said, you may be asking yourself: What is a POS?
Put simply, a POS is an all-in-one, smart cash register that allows you to process credit and debit cards and often other alternative payment forms such as NFC payments—the kind that enable the popular mobile wallets including Android Pay and Apple Pay. A POS also typically includes a cash register drawer, bar code scanner and receipt printer, according to Business News Daily. There's more to a POS than just swiping credit cards, though. These complex credit card terminals typically provided additional integrated services that benefit your business. For example, most allow you to keep track of your customers' purchase history.
However, if you're just getting your business off the ground, a POS may be the best and easiest way to start accepting credit card payments. Plus, more shoppers expect businesses to accept credit or debit cards as a form of payment, so if you want to grow your business, it's time to expand the forms of payment you accept.
A POS is best for businesses that feature a brick-and-mortar location. It's also a great tool to use if you own a chain of stores or restaurants and need to keep your sales data in one centralized location that all your locations can share.
What else you'll need
You need more than just a POS terminal to start accepting credit cards. Before you swipe (or dip, in the case of EMV chip cards), you'll typically establish a merchant account. If you want to process payment cards in a physical storefront, you first have to apply for a merchant account through your bank, local financial institution or other provider—including those often directly integrated as options within your point-of-sale system. Once you're approved, you can then accept Visa and MasterCard. Other card providers such as American Express or Discover have separate application processes.
Not only do you need to establish a merchant account for your business, you also need a merchant account services provider, which handles the card transactions between you, the customer and the patron's bank. Merchant services ensure the correct amount of funds are taken out of the purchaser's account and transferred to your business account.
Before you sign up with a payment processor, review his or her list of fees and make sure you read the fine print. Many merchant accounts charge an average fee of $10 per month and $25 per month for monthly statement and minimum fees, respectively. On top of these regular expenses, they also have fees that apply for each transaction made. Do your research and find a merchant account that works within your budget.