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Eight Key Considerations For Your Next POS

Eight Key Considerations For Your Next POSMobile demand, cloud adoption, and changing payment security requirements add weight to the POS selection process.

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Eight Key Considerations For Your Next POS Eight Key Considerations For Your Next POS

Overview

The POS software landscape is changing more

rapidly than at any other point in history. With this

dynamic change comes increased complexity that

creates challenges during the POS decision-making

process. POS software sits at the center of the

merchant’s business systems, and it’s often one of

the most considerable investments the merchant

makes. In addition to the standard considerations

retailers and restaurateurs must contemplate related

to cost tolerance, business size and expansion plans,

and vertical-specific functionality needs, a host of

rapidly-evolving trends weigh heavily on the POS

decision process. In this paper, we’ll offer guidance

on eight considerations for merchants contemplating

a new POS, beginning with the current, critical

trends and including some customary concerns that

should be included in the decision-making process.

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Eight Key Considerations For Your Next POS Eight Key Considerations For Your Next POS

1. Tech Scalability If recent technology developments have taught us anything, it’s

that there’s inherent risk of premature obsolescence with every systems investment a merchant makes. If the POS system you adopt today can’t accommodate mobile POS integration, cloud-based software delivery, online ordering/e-commerce, and social media integration, for instance, you could find yourself in the midst of an expensive integration headache tomorrow.

While an honest needs analysis should protect you from falling victim to the “cool tech for cool tech’s sake” trap, some trends are simply too big to ignore:

• Mobile: According to IHL Group, the global market for mobile POS surpassed $2 billion last year and shipments of non-rugged small format handhelds for mobile POS will increase 380% from 2013 to 2017. That means by 2017, more than 3.6 million tablets will have been shipped for duty in North American retail and hospitality establishments, fundamentally changing the customer experience and expectation. IHL further predicts that all of these handhelds will have a dramatic impact on traditional POS shipments over time, reducing overall POS shipments by 12% in 2016 and in some segments as much as 20% from previously forecast volumes. 1 Even if you don’t see the value of mobile POS today, your customers might simply expect it tomorrow.

• E-CommerceIntegration: If you operate in multiple channels, the consumer demand for a seamless “omni- channel” experience must be a top priority for POS system decision makers. Recent survey data from CFI Group reveals that virtually everyone is a cross-channel shopper; 95% of consumers—with very little demographic variance— say they frequently or occasionally shop a retailer’s website and store, 82% of consumers say the option to place a web order while in the store is at least somewhat important, and 93% of consumers would like the option to return merchandise purchased online to their local store.3 These overwhelming statistics underscore the importance of the omni-channel mindset in the POS decision making process.

• Cloud: To preserve the long-term relevance of your POS system—and its extensibility to e-commerce and mobility—a flexible platform is in order. Cloud-based POS systems can

reduce or eliminate the cost of individual on-site upgrades and server maintenance, as well as the on-site data security concerns associated with traditional licensed systems. Frequent software updates will be necessary to ensure timely feature and security requirement accessibility, and those updates are typically more seamless in a cloud environment.

To ensure the POS system you choose will meet current and future commerce needs, it’s imperative that your systems vendor, dealer and integration teams are able to demonstrate tech scalability.

2. SecurityA full 72% of merchants believe their business faces no—or very little—risk of suffering a breach. Of those merchants, 56% have not validated their PCI compliance.3 What role does POS selection play?

As the merchant community grapples with high-profile breaches and the security risks associated with the sunsetting of popular operating systems (see our paper on Windows XP here), PCI SSC compliance is increasingly becoming an issue for small-to-midsize merchants. Data security has quickly risen to the top of the concern list when evaluating your next POS system. Sophisticated hackers have proven their savvy by exploiting the security of your data in virtually every system; card transactions originating at the POS remain their primary focus. In concert with your payment processing provider, your POS solutions provider should ensure credit card numbers are never stored—even briefly—and that data associated with every card transaction is safeguarded by encryption from the point of data entry and through clearance. Choose partners that offer proven protection of POS systems from viruses and malware, and ensure they can extend that protection to mobile POS devices and e-commerce platforms where applicable.

As with the aforementioned customer-facing technologies coming to bear, your POS and payment solution providers should demonstrate future-proof scalability in the context of security as well. As EMV and chip-and-PIN standards reach the market in the coming months and years, unprepared merchants will be forced to replace or heavily modify payment terminals and POS systems to accommodate them. Thoroughly vetting your solution providers’ technology and product roadmaps will ensure you’re positioned to avoid costly fines and heavy risks associated with noncompliance.

3. UsabilityNo matter how feature-rich, secure, and scalable the POS system, its value won’t be realized if it isn’t intuitive to the associates who

According to IHL Group, the global market for mobile POS surpassed

$2 billion

last year and shipments of non-rugged small format handhelds for mobile POS will increase

380% from 2013 to 2017.

Choose partners that offer

proven protection of POS systems

from viruses and malware, and ensure they can extend that protection to mobile POS devices and e-commerce platforms where applicable.

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Eight Key Considerations For Your Next POS Eight Key Considerations For Your Next POS

operate it. Before narrowing your options to a short list, identify your shortcomings. Involve stakeholders, from POS associates to executive leadership, and assess their needs. • Whatcumbersomeoperationsareimpactingefficiency

atthePOSinterface?Daily system interface frustrations are a leading cause of turnover, especially in a workforce comprised largely of millennial, consumer tech savvy associates. Identifying opportunities for efficiency improvement at the POS will pave the way to a solution that enables increased sales throughput, improved morale, and a better customer experience.

• Whatinventory,labor,andfinancialtasksarestillbeing

handledmanually? Modern POS systems facilitate automation in many disciplines. Identifying the manual processes that slow your store operations will help you narrow your search for a solution that solves your specific business challenges.

• Howdisruptiveisittotrainnewassociatesinahigh-turnover

environment? The more modern and consumer-device- like your POS interface, the easier it is to bring associates up to speed on its operation. Seek simple, intuitive design and look for solutions providers that offer on-site training.

• Whatexecutivedecision-enablingdataismissingordifficult

toacquire? Sales data can be extracted from virtually any POS system, but there’s massive disparity in reporting granularity and ad-hoc reporting capability from one platform to the next. Identify what data you need, what data you don’t have, and what data you’d like to have. Modern POS systems typically feature much deeper reporting than best sellers and frequently-returned merchandise. Look for graphic, easy-to-read reporting on the data that will help you differentiate, such as unit-level margins, promotion performance, labor efficacy in relation to hourly sales by hour, and transaction exceptions.

A thorough needs analysis will help you ascribe value to the features and usability afforded by modern POS systems, helping you prioritize your absolute requirements and the “nice to haves” you seek in a new system. When a short list of vendors/solution providers is established using the criteria you identified, engage the same team of stakeholders in the evaluation process.

4.VerticalRequirementsOne of the most common mistakes small merchants make is the assumption that all POS software is created relatively equal. In truth, most POS providers have honed their systems to cater to specific merchant segments; there is no single POS software solution that fits every business, and attempting to manipulate your POS investment on the back-end to fit your specific needs (whether through code or third-party software integration) adds massive amounts of time and expense to the solutions’ TCO.

Merchants are best to assess their proprietary needs well in advance of narrowing their search for a POS system. For instance:

• Retailersthatsellregulatedmerchandise such as firearms, ammunition, alcohol, and medicine should seek solutions with a proven track record of solving the dynamic regulations challenges around transaction record keeping, reporting, and inventory control.

• Restaurantsthatoffertake-outanddelivery services should

look for POS systems—and dealers—that feature the modules and expertise to accommodate those transaction types.

• Anymerchantwithspecificinventorychallenges(think

fresh item and deli management in grocery, ingredient tracking in restaurants, and SKU dynamics in fast-fashion) should be seeking out vendors with demonstrated mastery of those challenges and the reporting and automation features that help merchants manage them.

• Anymerchantwithacustomercentricitymandate should

thoroughly evaluate the solution’s capacity to administer customer loyalty and stored value card programs that meet specific needs.

• Retailerswithstrategicandongoingpromotional

propositions such as “kitting” and BOGO offers should ensure the solution accommodates those strategies.

These are just a few of the myriad vertical-specific issues to consider when determining your next POS. Deli scale integration, customer queuing, returns and exchanges, drive-thru modules, exception reporting, and menu screens are a few more. No single offering fits all your business requirements, so vertical-specific due diligence is a prerequisite to choosing a POS system that best meets your needs.

A thorough needs analysis will

help you ascribe value to the features and usability afforded by modern POS systems, helping you prioritize your absolute requirements and the “nice to haves” you seek in a new system.

Merchants are

best to assess their proprietary needs well in advance of narrowing their search for a POS system.

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Eight Key Considerations For Your Next POS Eight Key Considerations For Your Next POS

5.StoreSize,Count,AndExpansionPlansYour POS software needs will vary significantly whether you operate a single store, a chain of restaurants, or a cross-channel enterprise. All too often, merchants invest in a minimalist POS system that barely meets their current needs, only to face an upgrade requirement in short order as their store count, channel activity, or merchandise offering expands. When choosing a POS system, ensure your decision is made in concert with an assessment of your long-term business plan.

• Areyoupurchasingenoughterminals/licensestokeepupwith a growing number of patrons or customers?

• WillyourPOSterminalcountadequatelymanagetheaddition

of more seating, or an influx of store traffic during busy seasonal and holiday periods?

• Ifyouoperatemultiplestoresorrestaurants—orplanto

in the future—does the POS system you’re considering enable centralized data? Is the software capable of supporting a multi-site environment?

• Ifyousellinstoresandonline—orplantointhefuture—does

the POS system support a single view of cross-channel sales, customer, and inventory data?

• Ifyouoperatewarehousing,distribution,andfulfillment

operations—or plan to in the future—does the POS system support or integrate with these back-office functions?

While it’s difficult to obviate for every eventuality, technology decisions—especially those as important as the POS software on which your business stands—should be made in close accordance with your business plans and growth projections.

6.CostToleranceOver the past few years, the cost of POS system acquisition has been driven down. Cloud and Software-as-a-Service applications, commodity hardware pricing, and low-cost entry-level packages have lowered the barrier to entry for small merchants. Today, feature-rich POS systems that cost merchants between $5,000 and $10,000 up-front per station less than a decade ago can be acquired for less than $2,000, and often considerably less.

Still, the time-tested mantra “you get what you pay for” applies, and despite the low cost of entry afforded by today’s popular

subscription-based software models, their true TCO requires close scrutiny. The more obnoxiously inexpensive a POS solutions provider’s deal looks, the deeper you should investigate. Don’t settle for anything less than a complete understanding of the expenses you’ll incur for:

• Monthlyaccess/licensing.Ispricingtieredbasedonthe functionality/modules you use? If so, factor future usage into the TCO equation.

• Hardwareupgrades.Especiallyincommodityhardware

environments, plan on a minimum three-year refresh cycle. • Servicecalls.Understandwhatservicesareincludedinyour

monthly subscription and what services aren’t, and factor in any costs not covered up-front. Understand who, exactly, will be performing those services (vendor, dealer, third- party, or any combination of these). Merchants are typically more satisfied when there’s just “one throat to choke.”

• Break/fixcoverage.MerchantenvironmentsarehardonIT;

it’s not a question of if your POS will break, but when it will break. Fully explore warranties, and if you’re not willing to embrace a rapid refresh cycle, factor in the cost of warranty extension.

• Paymentprocessing.Understandwhetherthesolution

requires you to use a specific credit card processor, and demand transparency in the explanation of payment processing fees.

Determining your POS cost tolerance as a percentage of sales requires some simple analysis of your anticipated benefits. Will a single-store, single-station POS investment result in a double-digit percentage inventory cost reduction? Can you estimate the sales increase you’ll experience by enabling payment card acceptance? Can your solutions provider demonstrate other means by which your POS system will cut costs? With a full understanding of POS system expenses and an educated prediction of the costs it will mitigate, your systems cost tolerance and ROI should be quite simple to calculate.

7. SupportPOS systems support is critical for tightly-staffed small-to-midsized retailers, and it’s almost always best provided by sourcing your POS solution through a proven, qualified, local systems dealer. Taking a “do-it-yourself” approach to POS systems might have been feasible

When choosing a POS system,

ensure your decision is made in concert with an assessment of your

long-term business plan.

With a full understanding of POS system expenses and an educated prediction of the costs it will mitigate, your

systems cost tolerance and ROI should be quite simple to calculate.

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Eight Key Considerations For Your Next POS Eight Key Considerations For Your Next POS

in the cash register’s day, but it’s almost always a recipe for disaster in today’s complex and integrated commerce environments. Equally dire is the “IT generalist” support plan. Modern POS systems are not glorified PCs and should not be installed, nor supported as such. POS uptime and systems longevity starts with qualified engineering and installation, and the local, qualified dealer/integration party responsible for that planning and installation best manages ongoing support. Find a dealer willing to be on-site during systems launch, and clearly outline your expectations for immediate support during the critical first weeks after go-live.

Once the implementation bugs are ironed out, the support policies and warranty terms negotiated in the contract phase will factor heavily into your success—and your customers’ experience. Response time is critical—whether you have a software functionality question for the telephone help desk or need an immediate hardware replacement. Evaluate these support offerings and expenses in the context of your operating hours and busy periods.

• Doyouneed24/7support,orwill8-5accesssuffice? • Howmuchcostwillyouincurforsupportoutsidetheterms

of your contract? • DoesthedealerorsupportorganizationofferremoteIP

support, or will you incur extra expense when a field service call/truck roll is in order?

• Dobreak-fixservicesincludeloanerequipmenttominimize

disruption to daily operations?

Support and warranty plans should also be evaluated beyond standard first year promises and guarantees, as POS systems are typically a minimum three-to-five year investment. Avoiding support surprises and holding solutions providers accountable begins with a deep understanding of the terms and costs of their commitment.

8.PaymentsIntegrationAbove and beyond the bells and whistles provided by modern POS systems, their core function remains transaction processing. As such, the POS solution decision should be made with the payment processor in mind. Many independent merchants make the mistake of limiting their payment acceptance by selecting low-cost, off-the shelf POS solutions that lock them into an entry-level processing environment with limited features and functionality. When evaluating your next POS system, ensure the processing environment it affords

will work in concert with your business plans, not the processor’s interests. That assurance is gained by choosing a payment processing solution that offers:

• Fastprocessingandpaymentfunding,enablingquicker access to your earnings.

• Competitive,transparentrates,themarkofintegrityinan

industry characterized by complex rate schedules. • Securetransactions,demonstratedbycommitmentto

standards put forth by the PCI SSC, ISO, and the SANS Institute.

• Highreliability,markedbysupportofstand-inauthorization

to provide continuous transaction approvals, even if the authorization network fails.

• Value-addedpromotionaloptionssuchasgift/stored

value cards that help grow your business and delight your customers.

• POSanddevicechoiceflexibility,whichhelpsensurethe

freedom to scale per your business strategy. • No/minimal,hardware/softwaretopurchaseandsupport,

which has the potential to save retailers thousands of dollars.

• Supportofthemostcommonpaymenttypes,including

credit, debit, check, EBT, and gift/stored value cards. • Automatedtransactionreportingfeatures,thetoolsthat

enable you to see your money in real time. • 24/7customerserviceforfundingandcreditcardprocessing

related requests, call routing, and other questions. • Technicalsupporttohandlemoredifficultfundingrequests,

bulk processing requests, and POS, ECR, and terminal support issues.

• EMVreadinesstoensureyou’renotleftinthelurchwhen

new market regulations come to pass.

Modern POS systems are not glorified PCs and should not be

installed, nor supported as such.

Above and beyond the bells and whistles provided by modern POS systems,

their core function remains transaction processing.

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Eight Key Considerations For Your Next POS Eight Key Considerations For Your Next POS

1 IHL Group, http://www.ihlservices.com/ihl/product_detail.cfm?page=&ProductID=83 (2013)2 CFI Group: http://cfigroup.com/resources/industry-studies/retail2/omni-channel-insights-april-2014/ (April 2014)3 ControlScan, https://www.controlscan.com/infographics/acquirers-perspective-small-level4-pci-compliance.php#sthash.BCvufF7F.dpbs (2013)

Finally, because payments are the lifeblood of the POS it’s imperative that your payments provider knows POS technology. By choosing a payment processing partner with proven integration to hundreds of POS systems, you further ensure scalability, future-proof your transaction processing environment, and rest assured knowing the integration and support of your payments/POS environment is proven.

ConclusionPOS system decisions aren’t to be taken lightly. Even as the cost of average POS solutions rapidly falls, the payback on the right POS system rapidly increases. In a growing retail theater marked by rapid technology evolution, increased regulation, dire threats to data security, stiff competition and consumer demand complexity, the POS plays the starring role. Use these guidelines to ensure you cast the best system to play the part.

AboutMercuryPaymentSystemsMercury works with thousands of resellers and developers to offer small and medium size businesses a comprehensive portfolio of integrated payment products and services that help control costs and increase revenue.

Founded in 2001, Mercury’s mission is to provide tech-enabled services that help small-to-medium-sized merchants compete and thrive. We are dedicated to providing our merchant and partners with the best customer service and technical expertise in the industry, 24/7.

ContactMercury-Durango,CO150 Mercury Village DriveDurango, CO 81301

800.846.4472 salessupport@mercurypay.comics@mercurypay.com

Mercury-Denver,CO4610 South Ulster St.Suite #600Denver, CO 80237

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Eight Key Considerations For Your Next POS