Difference Between Traditional POS and Cloud-Based POS Software

Nikunj Dudhat

Nikunj Dudhat

Senior editor

Parul Saxena

Chief editor

Last updated: February 17, 2021

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Point-of-Sale (POS) software has made significant progress in the last decade. Many businesses have come to realize the benefits of using a POS system and have jumped into the bandwagon.

Looking for Point of Sales Software? Check out SoftwareSuggest’s list of Best Point of Sales Software solutions.

However, many are still skeptical about implementing a POS system. There are many reasons why, but the most common one is that there seems to be confusion between traditional and cloud-based POS software. 

To clear the air, we laid out the major differences between the two systems. This article aims to help you decide the best option for your business — a cloud-based or traditional system. 

Let’s start with the terminology first. 

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Traditional POS software

A traditional POS software, also known as on-premise or legacy POS, is a system where the data is stored on local servers. It runs on closed networks. 

Cloud-Based POS Software

A cloud-based POS software is a web-based system that runs on a cloud service. All the data are stored online on a cloud server, which can be accessed from anywhere with the internet. It is popularly known as ‘Software as a Service POS (SaaS-POS).’

How Do They Differ?

Let’s look at different aspects at which these two systems differ — 

Integration

A report shows that 61% of retails want fully integrated solutions to automate everything from faster checkouts to detailed sales reporting. 

It is often challenging to integrate new modules into the traditional POS system. Usually, the system takes a lot of time if you want to customize it. It interrupts the whole operations, and thus business ends up using as it is without any modification. 

Whereas, the cloud-based POS system allows you to integrate any new module or third-party apps seamlessly. The cloud system is highly customizable, depending on your business needs. Some of the functionalities that you can integrate are CRM, accounting, loyalty programs, and more. 

Cost

The web-based system has significantly fewer upfront costs and is less expensive as compared to traditional POS systems. 

The traditional POS system requires a high upfront cost as it adds up the expenses of installing huge hardware. Plus, you need to update it manually on-site each time. That’s why it also requires an investment in IT infrastructure. It needs extra maintenance as well. And in case the system crashes, the cost of re-installation can be costly. 

Cloud-based POS software works on a subscription model of a monthly or yearly fee. There are little to no upfront costs because the installation is less complicated, and maintenance is performed remotely. Besides, the subscription fees usually contain the upgradation fees as the service providers automatically keep updating the server. 

One important thing to note is that back-office servers to store legacy data can run as high as $50,000. It is the same with the cloud-based subscription cost. Depending on the number of users, the number of devices, and the size of the operation, it can get as expensive as the traditional POS system in the long run. 

That’s why it is crucial to familiarize yourself with the benefits of both the system before investing. 

Data Accessibility

Another important consideration is data accessibility. 

Using a legacy system, you can only access data on-site. It means that the owner or manager needs to be present physically on the site to operate or access the back-office. But note that, companies like military, government agencies, and more have a lot of confidential information to store, and traditional server works best for them. Not only it keeps the information safe, but it also helps with saving a vast amount of information with ease. 

Cloud-based models have the advantage that you can access the system on-the-go. The data can be accessed from anywhere, using any device from across the globe. However, you will need a secure internet connection to do so. It gives you the liberty to make any changes online with admin authorized permission. 

All the data is stored in a cloud server that syncs in real-time with your primary device. Thus, users can view reporting data in real-time. 

Data Losing Risk

With the traditional POS system, you lose risking all your data if the system crashes or encounters a bug as the information is locally stored on a closed network. If that happens, it will result in substantial losses for your business. 

However, you get a slight advantage over cloud-based POS software. Here, the data is automatically backed up in the cloud. So even if you lose a file, delete it accidentally, or the system crashes, you can immediately restore it. In fact, many advanced software stores the deleted files for 30 days before it completely removes it. You can easily retrieve the deleted documents.  

Hardware

When it comes to legacy systems, the hardware is usually big, heavy, and bulky. The most common size is a 15-inch screen. It offers stable touchscreen capabilities plus an easy-to-use interface. This large screen is often seen as an advantage by many because it prevents theft, whereas some considered it as a disadvantage as it is not portable.

Legal systems are highly recommended for use by big restaurants or fast-food stores.

And, a cloud-based POS system instead uses portable devices such as mobiles, tablets, and laptops. It makes it easy to carry it around. Yet again, you need an internet connection and have your devices charged all the time. 

But the traditional system does not rely on the internet. You can easily run your system smoothly and efficiently, even without the internet. It doesn’t affect your operation. 

Conclusion

At the end of the day, both the system has the same function to perform — to help streamline and automate your business operation. However, they differ in the way the tasks are performed.  

Purchasing a POS system is a long-term investment. That’s why you need to first understand the difference between a traditional POS and a cloud-based POS software before you make any decision. 

By identifying your needs and requirements, you will be able to determine which one makes the most sense for your business.

Nikunj Dudhat
A digital marketing and content curator at SoftwareSuggest, a software recommendation platform. I am passionate about Digital Marketing, and all things digital. Also interested in technology and innovation. In my spare time, enjoy playing cricket, and Badminton.

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