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What to look for in POS apps: cost

Gabi James Gabi James - 7th Jun, 2023

Here we explore how UK small businesses can find the most cost-effective Point of Sale system and save a bundle on processing fees.

Welcome back to our series dedicated to helping you find the right POS system for your business! For an overview of what the series is all about, have a look at our introductory POS blog post. And make sure you catch up on our deep-dive into multi-channel solutions, and the importance of simplicity.

In yesterday’s POS systems article, we thought about the importance of providing an easy and quick payment method at the point of sale. Because we all know time is money.

But so is – well, money. And while you don’t need to scrimp on something as pivotal as your Point of Sale system, you also don’t want to spend unnecessarily.

So today’s blog post is all about finding the most cost-effective POS system without cutting corners, sacrificing functionality, or putting sensitive information at risk.


First, let’s understand why POS systems are critical to business growth

Despite the transaction fee and other costs, POS systems in the UK play a major role in business scalability.

We’ll take a closer look at the pivotal role that they play.

Transaction turn-around time:

By reducing the time spent at POS terminals, these systems contribute to the overall shopping experience. Online POS systems support multiple payment methods, facilitate accurate processing, and thereby increase sales opportunities.

Acting as a sales tracker:

Advanced POS systems for restaurants and retail stores provide valuable insights into sales figures. The analytics help you assess product movement trends and peak sales hours.

You can tailor your pricing strategy and customise offers based on tangible data.

Customer relationship management (CRM):

The best POS systems in the UK act as proficient CRM tools. Customised analytics help you build personalised promotional campaigns and loyalty programmes. By creating targeted offers, you can foster long-term relationships with your customers.

Inventory optimisation:

Bottling up working capital in slow-moving inventory? With real-time insights from your mobile POS, you can avoid overstocking and stockouts.

Customers will only return with their favourite products. The automated reordering feature ensures that you always have a sufficient supply of top-performing products.

Team management:

POS systems in the UK come with a host of features that can assist in employee tracking. Productivity reports, sales tracking of individual employees, time tracking, and simplified scheduling ensure effective workforce management.

You will be better equipped to control manpower costs and enhance their productivity.

Omni-channel integration:

The best POS systems in the UK allow you to integrate with eCommerce platforms. This provides a seamless experience for customers across multiple touchpoints, leading to a stronger connection with your business.

Augmented security:

A breach of sensitive private data can have long-term implications for your customer relations. Even the cheapest POS systems for small businesses in the UK ensure that adequate measures are taken to safeguard customer information. Your business information is also stored in a secure environment.

Why are Point of Sale systems so expensive?

Unfortunately, the POS systems that dominate are unnecessarily expensive. Card transactions and digital wallets bring significant processing fees that mean a percentage of every sale is taken by a third party.

On top of that, you’re likely paying a per-transaction fee, and very often a subscription to your POS system provider. Plus, you have to shell out for the hardware needed to process these transactions!


What are the hidden costs of traditional POS systems?

Let’s take a closer look at the cost implications of POS in the UK.

Set-up costs:

Even some of the best POS systems in the UK can charge you for installation, configuration, and initial training. You should always get a clear cost breakdown before committing to a POS for small businesses.

Hardware costs:

While these may not be hidden, small enterprises tend to overlook them. You must factor in expenditures in a traditional POS system, such as tablets, barcode scanners, terminals, receipt printers, and cash.

Aren’t these included in a bundle offer, you may ask?

Yes, some service providers include the required hardware as part of the initial package; others may ask you to purchase it separately. This often leads to a higher initial investment.

You also need to be mindful of evolving technology. Hardware and software that perform perfectly today will have to be upgraded in due course. You must factor these into your budget while opting for a POS system.

Recurring maintenance overhead:

Traditional POS systems are prone to hardware and software breakdowns. This means you have to invest in the regular upkeep of the system.

Many providers have a separate fee structure for technical support, which can vary from monthly subscriptions to per-incident charges.

For small businesses heavily dependent on POS systems in the UK, the maintenance cost can hit the bottom line.

How much do card-based POS systems cost?

Let’s take a look at some of the most popular Point of Sale systems to illustrate the associated processing fees.

Square POS

Square offers a popular and robust POS system. The processing rate for transactions varies according to the payment method:

  • 1.75% of each Chip and PIN or contactless payment for every major debit and credit card, Apple Pay and Google Pay
  • This raises to 2.5% for Virtual Terminal and Invoices
  • Online transactions have not just a percentage deducted, but a flat fee on top of that: 1.4% + 25p for online transactions with UK cards, and 2.5% + 25p for online transactions with non-UK cards

(As published at 24/05/24)

Stripe

Another widely used provider is Stripe. Their fees are:

  • 1.5% + 20p for standard UK cards
  • 1.9% + 20p for premium UK cards (including all business and corporate cards)
  • 2.5% + 20p for EU cards
  • 3.25% + 20p for international cards outside of the EU

If currency conversion is required, there’s an additional 2% fee on top of the above.

(As published at 24/05/24)

Shopify

With Shopify, you’ll have a monthly subscription fee of at least £19, plus these per transaction fees:

  • 2% + £0.25 online
  • 1.7% in person

(As published at 24/05/24)

Mammoth savings

All of these fees and percentage deductions can add up fast. Especially if you have high-volume transactions, or are selling frequently and using a POS system that adds a flat fee on top of its percentage deduction.

But thankfully, there is another way.

If you add instant Open Banking transactions to your current payment methods, you can save a bundle.

Look at Wonderful’s pricing model: we don't calculate our fee based on the value of each transaction.

In fact, with our intuitive One app, you pay £9.99 per month for 1,000 transactions - (that's just 1p per transaction).

That’s right: for just £9.99 each month, you can take 1,000 payments! Compared with the ever-growing mountain of per-transaction fees and deductions, that means enormous savings for almost every business or service provider, whether you’re selling hand-knitted scarves, teaching ESL one-on-one, or selling thousands of pastries each day.

How can we offer such a generous model? Because we don’t need to factor in the huge expense of processing card payments. We cut out the middle man, so customers move money directly from their bank account to yours. And remember, we offer a seven day, no quibble, money back guarantee. See why Open Banking is at the forefront of POS technology!


What are the different subscription models for POS in the UK?

We looked at the potential upfront costs of a POS system. The real game is to dive deeper into the overall value proposition of various subscription plans.

How can you navigate this tricky challenge? Let’s dive in:

Annual vs. monthly subscriptions:

Most POS systems in the UK provide monthly and annual subscription plans. The current working capital requirements, scalability, long-term budget, etc. will determine the ideal model for your business.

Typically, monthly plans provide more flexibility, while annual subscriptions come with attractive discount offers.

Assess your business’s stability and growth projections before deciding on a plan that fits with your business goals.

Tiered offers:

Subscription plans come with clubbed bundled features broken into multiple tiers. The basic plan usually processes transactions and shares sales reports. Higher-tier plans may additionally cover customer relationship management (CRM) features, inventory management, and employee tracking.

Select the package that you will be effectively using in your small business. For instance, if you have a small team, do you need a detailed employee tracking function? Well, perhaps not. Opt out of features that don’t add value and try for a custom plan that meets your business needs.

Beyond transactional features:

Some POS for retail shops come with exciting features like loyalty programs, marketing platforms, and eCommerce integration.

While these can be useful for your small business in the long run, analyse their immediate utility.

Do you have enough active customers to run a loyalty program? If yes, then explore these added benefits that can be bundled with the initial offer.

Embrace the future of Point of Sale systems

To future-proof your business, provide Open Banking instant bank payments at the point of sale.

Not only will you get the newest, safest and most cost-effective payments technology, but you’ll enjoy a whole host of benefits like:

  • Increased satisfaction for staff and customers
  • A streamlined checkout process
  • Boosting sales
  • Instant payments
  • Heightened security
  • Inherent CSR

Plus, our friendly team is on-hand to support you through the simple onboarding and integration process, so that you can have instant bank payments sitting alongside your existing methods in no time. Get started today!

And come back tomorrow to learn more about POS systems and how you can move from weekly or monthly deposits to instant payments.


Conclusion

Investing in one of the best POS systems in the UK can do wonders for your business. However, you must match the services with the package cost before finalising the deal.

Wonderful’s One app leverages advanced features of the Open Banking system to provide cost-effective solutions for small businesses in the UK.

FAQs

What happens if there’s a disruption in the internet connection?

Modern POS systems allow offline transactions. The data is stored locally and updated on the cloud platform when the internet connection is restored.

Can POS systems help me with compliance?

Many online POS systems in the UK assist in generating compliance reports based on sales data and tax calculations. This helps enterprises stay ahead of regulatory norms by submitting taxes on time.

Can I manage my mobile business with POS systems?

Mobile POS systems cater to the growing business of pop-up shops, food trucks, and market vendors to process transactions on the go. By connecting cloud-based software with their smartphones or tablets, these businesses can access all the features of an advanced POS system.

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