What’s the difference between a cash register and POS system?

The 1870s have a lot to show for themselves, with the most riveting to us in the tech space being the inventions of both the telephone and cash register.

Looking at the transformation the phone has gone through in the last nearly 150 years, it makes sense that we would have seen the cash register go through dozens of variations as well, no? Probably not as many as you’d think. Today’s basic cash registers really aren’t far cry from what inventor James Ritty first debuted in 1879 at all.

That being said, other technology that builds on what cash registers can do has come to market. If you’ve landed here, you’re probably already at least a little familiar with the terms “point of sale” or “POS.” What you might not be familiar with, though, is the difference between a cash register and POS system. Clearly they look different, but at the end of the day, don’t they do the same thing?

We’re glad you asked.

The critical difference between a cash register and a POS is that cash registers are only useful for processing transactions. POS systems on the other hand are the heart of your entire business operation.

In addition to taking and recording payments, restaurants, retail stores, service businesses and others use their POS for inventory management, customer relationship management, employee management, sales reporting, ecommerce…we could keep going (and we will — keep reading).

Before we dive in, though, let’s take a step back and define some differences even between types of cash registers and modern POS systems.

Difference between basic cash registers and electronic cash registers

The most basic cash registers really aren’t much more than large calculators with cash drawers and receipt printers. Traditional cash registers have analog screens, and many require you to calculate and add tax and discounts manually. And while there’s definitely something to be said for their ease of use, the caveat is, they’re easy to learn and train on because, well, there isn’t a whole lot to them.

The same is essentially true for electronic cash registers, but ECRs are slightly more advanced. Users have the advantage of a digital display, and some have barcode scanners so you don’t have to manually type the item price. Some even have basic reporting and inventory features, but we’ll cover those later.

Difference between cloud point of sale systems and on-premise point of sale systems

Cloud POS systems use subscription-based software that stores your data in the cloud — that is, over the internet, instead of on a physical server or hard drive. You can access this data from anywhere with internet access, and it’s updated in real time.

On-premise (also called legacy or server-based) POS systems require the user to be – literally – on premise to ring sales. And unless you’re willing to conduct some tedious workarounds that involve logging in remotely, you can’t access any part of your back office if you’re away from home base, since data is stored locally.

OK, now that you have a grip on those definitions, back to the real question at hand: POS versus cash register — let’s go!

The difference between cash register and POS hardware

POS system

Whereas most of today’s cash registers have the same look and feel, point of sale systems can take many forms.

Most cloud POS software can be run on desktop and laptop computers, smartphones, iPads and other touchscreen tablets.

Most cloud POS software can be run on desktop and laptop computers, smartphones, iPads and other touchscreen tablets. POS companies may lease proprietary hardware, or you may be free to choose your own.

They come in all shapes and sizes too — like Heartland’s Terminal+, which doesn’t look like much more than a sleek credit card processing terminal. But it’s actually an entire mobile POS in the palm of your hand. Users can track inventory, take card payments with a built-in card reader and print receipts with a built-in receipt printer. You can even log into the back office to run reports and manage things like taxes and promotions.

For on-premise point of sale systems, though, add a server to that hardware checklist — since data is stored locally on it, instead of in the cloud.

Whether using an on-premise or cloud system, you’ll also likely need a cash drawer if you accept cash, and if you operate a retail business, a barcode scanner (many modern POSs support Bluetooth scanners, instead of a clunky plug-in). Depending on your POS software provider and payment processor you will either have a separate card reader, or one that is already built into your main POS device.

Cash register

With a cash register – for better or worse – what you see is what you get. Cash drawers and receipt printers are most often built into the same physical device as your keypad and screen. That means they’re pretty bulky, so where you set them up in your store or restaurant is where they will stay, versus flexible tablet or mobile POS systems.

Sure, an all-in-one hardware bundle does simplify things when you’re shopping for solutions. You have one provider to turn to when things malfunction, for starters. But on the other hand, it may mean replacing your entire system. Or even if it’s just a repair of one element, that renders the whole system unusable — distruping your business for who knows how many days.

89% of consumers want the option of a digital receipt – a feature traditional cash registers lack.

– Green America

POS systems triumph over cash registers in multi-channel businesses

POS system

If you do business in more than one location or channel (meaning – for example – online and in-store), a cloud POS with multi-channel functionality gives you a real advantage. Say, for example, you’re a retail business owner with three stores, plus an ecommerce site. You can be in any one of those three locations but just as easily keep an eye on the others. You can also take online orders via your website and fulfill them from any location, while still sourcing the sale to your ecommerce business.

Cash register

Unlike cloud POS software, most traditional cash registers can’t speak to one another — even if they’re under the same roof. This creates extra manual work and more room for error. Businesses with stand-alone registers have to manually tally each one’s sales at the end of the day. Restaurants who take delivery orders have to distribute them to the kitchen, ring up the transaction and dispatch the order — all separately and manually. Hello headaches.

POS system reporting features tower over cash registers

POS system

Reporting tools are an incredible asset to merchants of all sizes. Nearly all modern POS systems have built-in retail POS analytics tools, but the extent and sophistication of them varies. Some solutions come with, say, 10 pre-built reports. Others offer unlimited custom reports. But whether you have the ability to run one or 100, know that the more data you have, the better business decisions you can make, helping you grow profitably and stay competitive.

Cash register

Some electronic cash registers do offer basic reporting. Print, or even export to a thumbdrive, simple reports like daily sales, sales by clerk and sales by department or category.

Integrated payment processing is a key advantage for POS systems

Cash-only business? We know you’re tempted to skip this part, but hear us out. People who carry cash have – on average – $20 or less on them at any given time. That means smaller transaction totals for you and just one reason why a cash-only model is bad for business.

POS system

Modern POS systems support integrated payments, meaning your point of sale and payment processor speak to each other. When you total a purchase, the amount is automatically shown on your payment terminal, which a customer can then use to pay by card or digital wallet. That completed transaction’s data is then sent back to the POS. This means less margin of error – since you won’t be entering anything manually – a speedier checkout process and a quick end-of-day close.

Cash register

While some traditional cash registers have built-in card terminals, it is not the norm. In most cases, you’ll ring up a sale on your register, then manually type in the amount owed on your payment terminal. So, you’re looking at longer lines, an increased risk of human error and more manual reconciliation at every close of day.

Integrations are a unique benefit of POS systems

Simply put, cash registers don’t integrate with anything or anyone. Most POS systems – and especially those that are cloud-based – offer multiple add-ons and apps that help businesses grow and compete. That includes things like loyalty programs and gift card programs, accounting software (Quickbooks, for example) ecommerce, marketing and customer data software.

Cash registers are an upfront cost; POS system fees are recurring

POS system

The best POS system providers offer a number of plans to fit individual small business needs and budget. These days, many are cloud-based, and therefore a SaaS (software as a service) model. That means you pay for the subscription monthly or annually. Some users rent the equipment – building that into their monthly fee – or purchase it upfront.

Cash register

Because there’s no software involved, traditional cash registers are most often purchased outright. Many models are under $200, and there are no recurring costs. This, understandably, is a strong selling point for them.

While cloud point of sale systems may feel like they stretch the wallet further – since you’re likely paying a bill each month – they’re far more likely to save you money in the long run. Updates are automatic, and you shouldn’t ever be charged for maintenance. Plus, think about all the man hours you’ll save by automating tasks that a traditional cash register forces you to do manually.

Which is right for me?

Trying to decide between a cash register and POS system? If you have any of the following needs, you’re going to be Team POS:

  • Automated promotions and discounts
  • Customer profiles and customer relationship management
  • Integrated loyalty program
  • Inventory tracking and management
  • Integrated purchase orders
  • Reporting beyond daily sales reports
  • Online ordering or online storefront

If you have just one location, limited inventory and aren’t worried about setting different permissions for different users, you may be able to get away with a traditional cash register.

Keep your goals and growth plans in mind as you make your decision: You can easily buy as many cash registers as you need to fill locations, but cloud point of sale solutions grow with you — giving you a single back office and smart tools to manage your business, whether you have one location or 100.

Learn how Heartland’s restaurant POS and retail POS solutions help businesses of all sizes simplify, speed up and enhance everything from back office tasks to the customer experience.

Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us