How to Build Your Own POS System

POS systems are so entrenched in our daily lives that we don’t even notice them. When we buy our morning coffee, fuel our cars, or stock up at the supermarket, we don’t see, or even care about, all the software functions at work which allow us to pay quickly and efficiently.

But it’s the software solutions and the technology behind POS systems which are responsible for our customer experience, the success of every transaction, and the processing and recording of all payments.

You might be wondering how to develop a POS system which is the right fit for a particular industry and how these point-of-sale systems work exactly. In this post, we’re going to look at these questions and more. But first, let’s go over the very beginnings of the POS system as we know it today.

The mechanical cash register was invented in 1879. These early models were first powered by electricity in 1906, but had to wait until the 1970s to become computerised and allow for much higher convenience levels for both businesses and customers.

In the 1980s, so-called legacy POS systems which included electronic registers and credit card readers were established on the market. The year 1992 was marked by the first ever POS system software for Microsoft Windows. Nowadays, PC-based POS solutions are being replaced by mobile and cloud-based ones.

The POS system as we know it today is a combination of a hardware device and software, which varies in features. Since more than 80 per cent of customers are likely to stop shopping at a particular place if they face long check-out times and many out-of-stock items, POS solutions are a tool every merchant needs. They facilitate the payment process and offer businesses opportunities for better stock management.

You should find a niche to focus your POS software development on. There are lots of things to consider:

• Do you want to work with large businesses in several locations?
• Which peripherals might be needed?
• What kind of integrations will you have to provide?
• How many products will be included and will there be any product composites and variables?

Businesses in retail, restaurant, grocery, and other fields all have different operational needs, which define the features they look for in a POS system. You can offer different packages of a similar product, for example, a specific retail POS software solution or an e-commerce specific package.

Most famous POS software and hardware providers offer packages for all types of merchants and services. Square began from solutions for small businesses, such as jam makers, in 2009 and now has four categories: retail, restaurants, services, and enterprise. Clients can use the Square Reader for $35 per month for occasional in-person sales at fairs and pop-up stores or buy a full-featured register for $999.

Shopify and Epos, which produce some of the most popular POS solutions, also work for different industries, mostly retail and hospitality, and vary their offerings accordingly. A complete system by Epos including terminal, software, printer, cash drawer, card reader, and installation costs $1799.

There are some companies that deal with grocery businesses such as eHopper which offers software starting from $40 per month. Vend is focused on small retailers; their Lite and Pro packages cost $99 and $129 respectively. The most famous restaurant-oriented POS solution is made by Toast. They’ve been installing their systems since 2013, and now, their hardware fees start at $899 and software at $79 per terminal.

A typical restaurant POS device should provide a floor plan, an order management system which synchronises with the kitchen, and a convenient checkout function. While working on a restaurant ordering project called Tayble, MadAppGang faced the challenge of integrating as many POS systems as possible.

The app was designed to include all Sydney venues in the service, so we needed a scalable POS solution. To overcome this challenge, we created an all-in-one device with custom POS software for restaurants that didn’t have an existing system. We made cost-effective hardware which was several times cheaper in production than traditional ones.

After you’ve decided on the industry you want to target, find POS software developers with some expertise in the field. They have to be able to explain how to make a POS system for specific purposes relevant to a certain business. Find a team that will be flexible during the POS system development process, ready to adjust the work according to your priorities.

A traditional form of POS hardware is a complex terminal with a monitor, card scanner, printer, and other devices. Nowadays, most businesses switch to tablets linked to a card reader. In some cases, businesses don’t need tablets and can handle their transactions with just a touch-screen monitor.

Tablets

This is the most in-demand solution. There are more Apple-based systems on the market – iOS is considered the most secure because of the timely updates, but both Android and iOS have their benefits. Sometimes, businesses don’t need a portable device and get by with monitors installed at the counter. These differ in size and perform the same function as tablets.

Cash Registers and Card Readers

Since the whole point of installing POS systems is to sell products or services, having a cash register and a card reader is essential.

Other devices you might need, depending on the industry you’re targeting, include:

Receipt Printers

This is still a necessity for most retailers even though there’s a growing tendency these days to send receipts via email.

Barcode Scanners / Barcode Printers

Dealing with the retail industry, you will have to develop barcode printers and scanners to identify the items customers buy.

Customer-Facing Displays

It’s a good idea to provide customers with a chance to track how items are added to the transaction. It’s practically a must for supermarkets and big stores.

Scales

A scale is needed for weighted products. If a business you’re going to work with needs this feature, you have to integrate scales into the system.

Kitchen Printers

It may be hard for restaurants to keep track of every action. They need an automated tool which will print the orders for bars and kitchens as soon as they are requested.

Handheld Devices

Some businesses, for instance, fast-food restaurants, implement handheld POS devices to expediate the ordering process. One of the industry leaders, Toast, introduced Toast Go in 2018 to perform orders and payments from anywhere in the restaurant.

Self-Service Kiosk

The first self-service kiosks were used in the 1970s by a shoe company. Nowadays, such devices are installed in busy restaurants, supermarkets, and many different stores. It can work as a simple ticket machine or include many complex functions. The self-service market is expected to double in size by 2023 so could be a very viable and profitable area of interest.

Despite the clear benefits POS systems bring, most of them have lots of weak points in terms of user experience. This UX case study shows that there are many complexities in POS design which are not often taken into account. There could be errors made by employees because of the illogical grouping of information or the increased risk of employees stealing money which is not prevented by the interface. Little details like lightning in the room where POS monitors will be installed also make their impact.

Any POS interface should evolve according to the needs of clients. For instance, feedback from their very first clients led to Square rebuilding the function which allowed customers to leave a tip: it grew from an unnoticeable sign to a huge option which practically guilts clients to tip.

Inventory Management

Real-time tracking and control over the items sold is essential. If you have both a physical store and an e-commerce outlet, you will need them to be synchronised. There should be automatic updates about which products are available. Flexible POS solutions allow for better stock management and mean that customers will always receive relevant information.

Access Levels

There should be an admin profile to add and remove staff members, and employee accounts with access to item management and checkout process. Apart from giving analytics on employee performance, it should have fraud prevention tools to eliminate accounting disasters.

Analytics and Marketing Tools

There are a wide array of sale reports your POS solution can collate and display. Thanks to this data, you can analyse which products are in high demand or which discounts are the most effective. You can also track customers’ behaviour to provide them with personalised offers. Research shows that 58 per cent of people are comfortable with retailers using their purchase history to enhance their shopping experience.

There are lots of ways you can use customer purchase history to create marketing offers. For example, integrating your POS system to email solutions or other marketing software is an important sales tool. The effective use of POS systems allows merchants to make data-driven decisions and better connect with their customers.

Payment Processing

The more payment methods your POS solution accepts the better. The system should also be able to manage payments completed with gift cards and in combination with other means.

The necessary payment capabilities of a POS system include ‘send sale’ (purchasing items located in another store if there are several of them), and ‘endless aisle’ (ordering items that are not present in the store).

Artificial Intelligence and Virtual Reality

Suggesting a unique, out-of-the-ordinary feature is a good move when it comes to attracting businesses. Several hotels and restaurants have implemented the innovation which triggers PayPal profile pictures. Customers simply show their faces to POS monitors to check out.

Amazon built a revolutionary checkout-free system which uses the same technology as self-driving cars to make shopping smart and automated. All items are added to a virtual cart on a smartphone and the price is charged from the client’s Amazon account. The first VR-based POS concept introduced by HTC Vive provided customers with the opportunity to virtually configure the kitchen they want to buy.

These innovative solutions are only at the beginning of their journey but it’s expected that AI will be implemented further in POS systems in the future. To keep it competitive, you must think ahead today and predict features that will dominate tomorrow’s market.

Traditional POS devices, whether they are a terminal or a desktop solution, keep all the data on-site. Mobile or cloud-based solutions, on the other hand, store everything online. With the latter option, you don’t need to rely on a single local server and can access your information from anywhere. Cloud-based retail POS software was rated in 2014 as the most important technology in the industry. It is forecasted that cloud-based systems will dominate the market by 2024.

Mobile POS devices are very convenient as they allow businesses to perform transactions without the traditional on-site terminal. More and more business owners are switching to this model, preferring to pay for cloud subscription services instead of buying expensive POS hardware.

Only large retailers still choose traditional POS systems. Installing all the equipment and software on-site is more time-consuming and requires professional assistance. If it makes sense for you to deal with businesses that prefer keeping their data on premises, develop such solutions. However, the industry in general is moving toward cloud-based POS solutions as this technology represents a more flexible means of analysing customer behaviour and sales reports. Cloud POS software enthusiasts even claim that most users of traditional POS devices hate them because of slow updates.

There are numerous problems POS systems can suffer from. From technical issues such as invalid receipt printing issues and touch screens losing their sensitivity all the way to the very real threat of hacker attacks, there’s a lot to be kept in mind.

Valuable information related to payments and customer history should be stored securely. PCI compliance is an aspect every business considers when choosing POS software. You also need to guarantee the integrity of your system and its access points.

Effective error handling and reporting flexibility are other features that should be guaranteed by a POS system. A full 35 per cent of shrinkage (inventory loss) is due to errors at the point of sale. There should be solutions to deal with mistakes at the checkout, for instance, Everseen sends alarms for unscanned items. Decent after-purchase maintenance is also needed.

To stay competitive, you should offer reasonable pricing. Any business will consider the cost for a POS system’s initial setup, monthly fees, ongoing support, and transaction fees. Explore what POS-producing companies already have on offer. For instance, Square offers the first portable card reader and an app for free – this is one way to attract new clients.

But the most important thing to bear in mind here is that your solution should be scalable. Your POS system should be able to grow and expand and have the ability to implement new features as and when needed. Without scalability, your POS system can’t grow alongside the businesses it helps to thrive and, as such, won’t thrive in return.

We hope you’ve found this guide to the key considerations involved in building your own POS system useful. If you’re a bit overwhelmed by the sheer amount of features and functions needed, or the mammoth task of pulling the system together into a cohesive whole, please get in touch with us to find out how we can help.

07 May 2019