Free POS Isn’t Really Free: What Business Owners Should Know

FREE POS Isn’t Really Free: What Business Owners Should Know

“Get a FREE POS System.”

It sounds like an easy decision. Why spend thousands of dollars on point-of-sale equipment when another company is willing to give you the system for free? The problem is that FREE POS rarely means free. Point-of-sale providers are businesses too, and the cost of that hardware has to be recovered somewhere. In many cases, the real cost gets built into payment processing rates, monthly services, contracts, required add-ons, or other fees that may not be as obvious when you first sign up. Before choosing a POS system based on the word “FREE,” it is important to understand the entire agreement.

Start With One Simple Question: How Is the POS Company Making Money?

A modern POS system includes hardware, software, support, payment processing, installation, ongoing updates, and other services. All of those things have a cost. If the terminal, tablet, handheld, or other equipment is being provided at no upfront charge, ask how the provider is recovering that cost. Frequently, payment processing plays a major role. A small difference in your credit card processing rate may not seem significant on an individual transaction, but over thousands of transactions—and several years—it can add up to far more than the original cost of the POS equipment. For a business processing hundreds of thousands or millions of dollars annually, those differences matter.

Look Beyond the Price of the Hardware

Business owners sometimes focus heavily on the upfront POS cost while overlooking the larger expenses that continue every month.

When comparing systems, look at the complete picture, including:

• Credit and debit card processing rates
• Monthly software fees
• Hardware costs
• Installation and setup fees
• Support charges
• Online ordering fees
• Gift card fees
• Third-party integration costs
• Contract requirements
• Early termination fees
• Equipment replacement costs
• Additional location or terminal fees

A POS system with an upfront cost but better long-term pricing could ultimately cost significantly less than a system advertised as free.

Your Credit Card Processing Rate Matters More Than You May Think

Payment processing is one of the largest ongoing expenses associated with operating a POS system. Consider a restaurant or retail business processing $1 million in credit card sales each year. Even a relatively small difference in the effective processing cost can translate into thousands of dollars annually. Over a multi-year relationship, that can become a substantial amount of money. That is why DBS believes payment processing should be part of the POS conversation from the beginning—not something discussed after you’ve already selected a system.

“FREE” May Also Mean Less Flexibility

Another important question is what happens if you decide the system is no longer right for your business. Can you change processors? Can you change POS systems? Do you own the equipment? Is the equipment usable with another provider? Are you committed to a multi-year agreement? Are there termination costs? The answers vary from provider to provider, which is exactly why business owners should understand the terms before signing. An attractive introductory offer matters much less if it locks your business into an expensive arrangement for years.

Be Careful With “Cash Discount” and Credit Card Surcharge Programs

Another trend is for businesses to offset payment processing expenses by charging customers more when they use a credit card or offering a lower price for cash. For some businesses, these programs may make sense. But they should not automatically be treated as the solution to high payment processing costs. Before passing those expenses along to your customers, it is worth asking another question:

Are you paying a competitive processing rate in the first place?

DBS regularly works with businesses to review their payment processing programs and help identify opportunities for better pricing. A properly structured payment program may allow you to reduce costs without simply shifting every expense to your customers.

Support Should Be Part of the Equation Too

Price isn’t the only factor that determines the value of a POS system. What happens when your POS stops working during your busiest hour? Who answers the phone? Are you talking to someone who understands your business and your system, or are you navigating an automated support queue? Does someone help configure your menu, database, printers, payments, integrations, and hardware? And after installation, are they still there when you need help? A POS system is one of the most important technologies inside a restaurant or retail business. Choosing a provider based solely on the lowest advertised upfront cost can overlook the value of implementation, training, programming, and ongoing support.

Compare the Total Cost—Not Just the Advertisement

There is nothing inherently wrong with a POS company offering free or discounted equipment. The important thing is understanding why it is free and what you are agreeing to in exchange.

Before making a decision, compare:

The initial cost.
What are you paying today?

The ongoing cost.
What will you pay every month?

The processing cost.
What percentage of your sales will go toward payment processing?

The contract.
How long are you committed?

The support.
Who helps when something goes wrong?

The flexibility.
What happens if your business changes?

When you evaluate all of those factors together, you get a much clearer picture of what the POS system will actually cost your business.

Let DBS Help You Compare the Real Numbers

At Delaware Business Systems (DBS), we don’t believe the right POS decision should start with the word “FREE.” It should start with understanding your business. DBS works with restaurants and retailers to compare POS technology, payment processing, hardware, software, installation, programming, and ongoing support so you can understand the complete solution before making a decision. We work with multiple POS platforms, which means our goal is to help you find the solution that fits your operation—not force every business into the same system. And because DBS also works directly with payment processing solutions, we can help evaluate your current rates and identify opportunities to reduce processing costs.

Thinking About a New POS System?

Before signing up for a “FREE POS,” talk with DBS. We’ll help you compare the real cost of the system, payment processing, support, and long-term agreement so you can make an informed decision for your business. Contact DBS today to schedule a POS and payment processing consultation.