In the latest and possibly the most hotly debated retail industry trend, merchant service providers (MSPs) have begun to offer free or deeply discounted POS systems as an incentive for their customers to sign a long-term payment processing agreement. But just as there’s no such thing as a free lunch, “free” POS may not really be free after all. Here are three questions to consider in determining whether so-called “free” POS systems are actually worth it—or if you should walk away from the deal.
1. What costs are set forth in the payment processing agreement? Some MSPs promote free POS technology bundles, but build in higher processing fees to compensate for the fact that merchants aren’t paying for hardware (and software) outright. Others distribute free POS technology and collect additional fees for installation, training, support and/or upgrades.
For best results, compare payment processing fees set by MSPs that offer a free POS with processing fees set by one or more MSPs that put a price sticker on POS technology. If the free POS provider’s rates are higher than normal, you’re probably better off purchasing the equipment outright rather than choosing the free POS option. The same is true on the installation/training/support/upgrades sides. If the rates for processing and/or support are out of sync with the norm, and you move ahead with the free POS anyway, you could eventually end up shouldering a bigger financial burden than would have been the case had you paid for a POS system in the first place.
2. What degree of functionality is offered by the free POS? While cheaper may seem better, many free POS systems are bare-bones options that offer limited functionality. They may allow you to perform such basic functions as ringing up sales, but probably not much more. They may not be configured for your particular type of business or suit your business needs. For example, the software may not interface with inventory management and accounting modules or support mobile POS.
Without proper configuration and/or the right POS technology features, you could encounter transaction processing errors, mistake-ridden sales reports, missing inventory, customer dissatisfaction and a host of other problems. So, you may very well be better off paying the price of a feature-rich system that allows your operation to run efficiently—however higher that price may be. Ask yourself: Is it more important to reap the long-term benefits of the right POS system for my business? Meaning enhanced productivity, the ability to better serve customers, and a healthier bottom line. Or do I care more about possibly saving some money up front with free POS?
3. How will upgrades of the free POS be handled? In many cases, taking advantage of a free POS system—or a discounted POS system, for that matter—is not an option unless you’re willing to commit yourself to a long-term contract with the MSP. However, technology continues to evolve at a rapid pace—and POS technology is no exception to the rule. This makes it important to ask the MSP whether it offers an upgrade path to help you keep up with the latest POS technologies. If so, you need to know what that path is and how long you will be asked to wait from the time an upgrade is announced to the time it hits your POS system. You also need to know what assistance you will receive in completing the upgrade. If there is no upgrade path or you will be left on your own to handle the enhancements, you may want to re-think the idea of accepting free POS technology.
While the idea of a free POS system has the appeal of saving money—even if it’s only up front—this should not be your first consideration in selecting a POS solution. That free POS system could cost you a pretty penny down the road.
