08/21/2014 08:57 am ET Updated Oct 21, 2014

4 Misconceptions About Cloud Based POS Systems

For the uninitiated, a POS system is simply a computerized network operated by a main computer and linked to several checkout terminals. Cloud based systems have moved that main computer off site, typically to a number of servers hosted and maintained by a third party service. Cloud based options have allowed for greater flexibility in regard to scale, integration and remote user management.

With more and more point of sale (POS) systems moving to the cloud users of traditional POS as well as new business owners find themselves sifting through a lot of (mis)information. Sorting through security issues, hardware needs, scalability and other concerns can make using a cloud based POS a scary venture for the uninformed.

The Cloud Is an Unsecure Digital No Man's Land

Of all the concerns about cloud based software, POS included, security is by far the biggest. A lot of that concern comes from not understanding how the cloud works. The cloud serves two main functions. To shift computing workloads off site and to mobilize data. Many of us use applications like Dropbox and iCloud daily to perform these functions transmitting photos music and documents to the cloud. The biggest difference however is that while individuals essentially rent space on a giant server farms. Cloud based POS systems maintain private highly secure cloud systems that are typically in several geographic locations. A traditional POS system would reside on site in a backroom server making it vulnerable to individual hackers as well as catastrophic failure due to fire, flood and a host of other incidents. Well designed cloud systems provide a much higher level of security through encryption and multiple backups. Put simply your data is better off in the cloud.

Cloud Based POS Systems Must Be Tethered to the Internet at All Times.

It's bound to happen at some point the internet at your store will fail. Maybe for an hour, maybe even a day. Regardless, your store can't take a timeout for the problem to correct itself. While it's easy to believe that a cloud based POS needs continuous internet access, this is far from the case. Almost all quality cloud systems have up to 25 megabytes of internal memory. While this generally would be considered a small amount of memory, a sales transaction takes a very small amount of data. That 25 megabytes can store thousands of transactions indefinitely (or at least until you are back online). This also means that your data is generally safe against power outages as well.

Cloud Based POS Systems Are Difficult to Setup and Operate

SaaS (Service as a Software) based technologies like your favorite cell phone apps have become a mainstay because they are extremely light in terms of memory usage, easy to use and scalable. Where a malfunction of a traditional POS system might require a technicians visit any downtime with a SaaS is mitigated with remote technical services and downloadable software updates. SaaS user interfaces are also generally quite intuitive, greatly reducing the learning curve. Add to this the ability to integrate with other software like your inventory and accounting systems, cloud based POS can be a great tie in for all your day to day operations.

Setup Costs and Transaction Fees for Cloud Based POS is Too High

Compared to a typical POS setup, cloud based POS systems are extremely inexpensive. As an example, Shopify starts at $29 per month with credit card swipes as low as 2.15 percent per transaction. A standard POS setup can start at $1000 with some credit card transactions running over 5 percent. Add the fact that there is no long term commitment and the cloud becomes a financially friendly option.