As a small business owner, choosing the right point-of-sale (POS) system can make or break your daily operations. Whether you run a retail store, café, or service-based business, the right system streamlines checkout, tracks inventory, and keeps your customers happy.
Two types of solutions dominate: cloud POS and hybrid POS. While both systems offer advanced features and mobility, they differ in handling connectivity, data storage, and more. A cloud POS option is more convenient as you can access it from any device via the internet. But it also involves full dependence on a third-party company’s data storage capabilities.
Meanwhile, a hybrid POS stores some data locally. As a result, you retain control over a portion of your operations, even when the internet goes down. But it involves more maintenance and technical knowledge on your part.
Let’s explore these differences to help you decide which option best suits your small business.
What is a cloud POS?
A cloud POS is a point-of-sale system that operates entirely over the internet. All data, like sales transactions, inventory management, and customer information, is stored in the ‘cloud’. This location-agnostic perk makes it accessible from anywhere with an internet connection.
Chain stores with many locations, like franchised restaurants, are great candidates for this approach. That way, you can instantly see real-time data from every branch.
This type of POS system is geared toward flexibility, allowing business owners to monitor and manage operations remotely. Popular cloud POS brands include Square, Lightspeed, and Shopify POS, which offer subscription-based pricing models and frequent software updates.
Cloud POS systems are championed for their ease of use and lower upfront costs. However, they’re heavily dependent on a stable internet connection. So, if your link to cyberspace goes down, your ability to process transactions also sinks with it. Many systems do boast an offline mode for basic functionality, but that’s typically a far cry from full functionality.
See also: Best mobile POS systems
What is a hybrid POS?
A hybrid POS combines elements of both cloud-based and traditional POS systems. It can operate online and offline, providing business owners with more flexibility.
Businesses with sensitive data and operations are great for this setup. For example, entities in highly regulated industries like healthcare and insurance may need this approach’s on-site reliability.
This option still employs cloud technology, however it retains a higher percentage of local data storage capabilities. This difference means that during an internet outage, it can still process transactions and sync data once the connection is back online.
Hybrid POS systems, like Toast and Revel Systems, offer the best of both worlds: cloud flexibility and offline reliability. But they aren’t perfect as they tend to have higher initial costs compared to cloud-only systems. Still, they’re a better option in environments with inconsistent internet service.
Key differences between cloud POS vs. hybrid POS
Both cloud-based and hybrid POS systems have key advantages and disadvantages. Let’s break down the marquee differences between the two system types:
| Features | Real-time updates, remote access from anywhere | Offline capability that can withstand internet outages, syncs when online |
| Cost | Lower upfront costs, requires monthly subscription fees; potentially increased liability due to dependence on third-party data storage | Higher upfront costs and ongoing maintenance fees that may still involve subscription costs; potentially less liability thanks to on-site data storage |
| Internet Dependence | Nearly full dependence on internet; some limited, temporary capabilities available offline | Operates offline, syncs when online |
| Data Access | Only via internet; limited offline access | Full access offline and via internet |
| Scalability | Easy to scale with business growth | Scalable but may require hardware |
| Security | Cloud-based security measures | Mix of local and cloud security |
Cloud POS pros and cons
Pros:
- Lower upfront costs as hardware requirements are minimal
- Convenient, worldwide access from any device connected to the internet
- Easily scalable with faster access to add-ons and software updates
Cons:
- Full dependence on internet connectivity, which can disrupt transactions during outages
- Higher subscription costs can accumulate over time compared to a hybrid arrangement
- Increased data security risks as all information is stored remotely, which mandates vigilant security measures.
Hybrid POS pros and cons
Pros
- Reliable offline functionality ensures transactions even during internet outages.
- Local data storage adds an extra layer of security and reliability.
- Offers both cloud and local capabilities, making it versatile and adaptable to various environments.
Cons
- Higher initial costs, as hardware setup is more involved
- Maintenance and software updates can require on-site support, adding to the cost
- May require manual syncing if offline mode is used frequently
SEE: POS Security Guide and Checklist
Should your business use a cloud POS or hybrid POS?
Neither option is objectively better. Instead, the choice between cloud and hybrid POS depends on your business needs. Here are the main points to help you decide:
Choose a Cloud POS if:
- You have a stable internet connection.
- You want lower upfront costs and easy scalability.
- You manage multiple locations and don’t need top-tier offline functionality.
Choose a Hybrid POS if:
- Your internet connection is unreliable, and you need offline functionality.
- You want a balance of cloud features and local data storage.
- You operate in high-volume environments like restaurants or busy retail stores.
FAQs
Why do business owners use hybrid POS systems?
Businesses use hybrid point-of-sale (POS) systems to store data both locally and on third-party cloud servers. This arrangement allows greater control over data storage, plus the ability to keep operating even without the internet.
Why can cloud-based POS be more advantageous for a business?
Cloud POS is more cost-effective and scalable, with real-time updates and remote data access, making it ideal for growing businesses.
What is the difference between smart POS and traditional POS?
Traditional POS systems focus on the basics, like processing payments and calculating sales. They’re usually lower priced and geared towards simpler operations. Meanwhile, smart POS is a more advanced offering, delivering features like mobile payments, cloud storage, and analytics.
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