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Cloud POS vs. On-Site POS vs. Hybrid POS Systems: What are the Differences?

March 14, 2024 / 8 minute read / By Zoya Naeem

Learn the pros and cons of the 3 different types of POS systems

Starting your search for a new Point-of-Sale (POS) system for your retail business? It may seem like an easier process, but once you start your search, you will find that there are so many POS software providers and POS options to plow through.

As you research, you’ll quickly discover that there are three main types of POS systems; cloud POS, on-site POS (also sometimes called legacy POS), and hybrid POS systems.

You might be asking yourself, “Do I need a cloud-based, on-site, or hybrid POS system?” Our goal for this article is to help you decide.

Having worked with thousands of retailers from different retail industries for over 20 years, we have seen what works for retailers and what doesn’t.

There is no one-size-fits-all when it comes to POS systems; it takes a careful review of your business needs, your timeframe and budget, and determining which POS system best meets your needs for today and your future growth.

The Three Types of POS Systems:

Cloud-based POS Systems
A cloud-based SaaS POS system stores all your data and information remotely on the cloud. It allows you to access data from anywhere with an internet connection.
On-premise POS systems
An on-premise POS system, also referred to as a traditional or legacy POS system stores all your POS data locally, usually in an on-site server or on your computer’s hard drive.
Hybrid POS systems
A hybrid POS system offers the best of both worlds. It combines the accessibility of cloud-based POS with the reliability of an on-premise POS system.

What is a Cloud-Based POS system?

A Cloud-Based Point-of-Sale (POS) System is a modern solution that stores data in the cloud, making it accessible from anywhere with an internet connection.

Benefits of Cloud-based POS Systems:

Lower upfront costs
The initial costs for Cloud-based POS systems tend to be less, since there are less hardware requirements and the system leverages limited technology.
Remote accessibility
The POS system is mobile friendly and can function from tablets with remote access into your business from anywhere.
Simpler Installation
Considering there is no on-site servers and equipment, the setup tends to be easier, only requiring internet within the store.

A cloud-based POS system is ideal for SMBs with limited budgets or technical expertise and a need for remote management. The biggest drawback, however, is that your internet needs to be rock solid.

Downsides to Cloud-based POS Systems:

Internet dependence
Any internet hiccups can disrupt the flow of transactions, especially in remote areas. Your entire store will be down and you won’t be able to process sales, if you lose the internet.
Ongoing monthly subscription fees
While a cloud-based POS system requires lower upfront fees, there are monthly recurring fees for as long as you are using the system.
Limited control
While the cloud offers diverse functionality, don’t expect complete control. Your POS provider often holds the reins, offering limited flexibility to personalize the system.

So, should you embrace the cloud-based POS? It depends on your business’s nature, and how much can you depend on your internet connectivity?

What is an On-site POS System?

An on-site POS (Point-of-Sale) system is like a self-contained headquarters for your retail operations, that resides right inside your physical store.

Unlike cloud-based POS systems accessed via the internet, an on-site POS functions independently, managing everything from sales and inventory to customer data and reporting, all within the confines of your business.

But just like any other system, an on-site POS comes with its own set of strengths and challenges.

Benefits of On-Site POS Systems:

More Control
You have full control over how your POS functions and you will have the ability to customize more of the software, depending on the POS provider you choose. You can update the software on your terms,
Data Security
Your data is locally housed and remains securely locked away within your own domain.
Zero Internet Dependency
Your POS system is self-contained, meaning you have absolutely zero worries about internet dependence or external access.

Downsides to On-Site POS Systems:

Big upfront investment
Building your own self-contained command center requires a significant initial investment, both in terms of hardware and software.
Much more maintenance
Making sure the software timely updates, data backups, and troubleshooting any technical hiccups that might arise becomes your responsibility.
Limited mobility
While all your data stays secure within your walls, mobility takes a backseat. Accessing data from remote locations or via mobile devices becomes a big hurdle, if not impossible, limiting your ability to manage your business from afar and manage customers and sales from anywhere.

Ultimately, the choice of an on-site POS system boils down to your needs and priorities. If you value complete control, offline operation, and cost-efficiency in the long run, an on-site system might be ideal. But be prepared to invest time, resources, and effort to keep your POS running smoothly.

Lastly, let’s discuss the third POS option.

What is a Hybrid POS System?

A Hybrid POS system offers the best of both worlds—the flexibility and scalability of the cloud with the security and control of an on-site system.

If you value flexibility, control, and offline peace of mind, it can be the perfect blend for your retail journey.

Benefits of Hybrid POS Systems:

Top-notch On-site security
Keeps your data remains securely stored within your store, giving you peace of mind and control over privacy.
Cloud-like flexibility
It offers the accessibility and scalability of cloud-based systems, allowing you to manage your system from anywhere and scale as your business grows. You can easily update POS features and add terminals with just a few clicks, even from your phone.
A store that is never down
Even if the internet goes down, your POS system keeps processing sales. No more worrisome stares at frozen screens – your store keeps running, and your data safely syncs back to the cloud once the connection returns.

Of course, no system is perfect. Hybrid POS also comes with its own set of challenges.

Downsides to Hybrid POS Systems:

Higher initial investment
You might need to invest in additional hardware for on-site servers, compared to purely cloud solutions.
Additional hybrid setup
Balancing cloud and on-site features might require more planning and configuration than simple cloud-based or traditional POS systems.

Hybrid POS is quickly becoming the popular choice when it comes to retail business. It is ideal for setups that value both online and offline functionality, and might operate in areas with a lot of internet disruptions.

Pro Tip:

All hybrid POS systems ensure that your store can continue processing sales when the internet is lost, but many only allow you to ring sales. Depending on the POS system you choose, the more advanced ones allow you to not only process sales but also enable complete access to all POS functions even when the Internet is down, such as customer look-ups, pricing, promotions, returns, gift cards, holds, layaways, special orders, and more.

Cloud vs. On-Site vs. Hybrid POS Systems: Side by Side Comparison

Having a clear understanding of the differences between cloud-based, on-site, and hybrid POS systems is an excellent starting point, but it’s only the first step of the decision-making process.

Here’s a quick comparison between the three POS systems to provide you an overview:

Feature	Cloud-Based	On-Site	Hybrid
Accessibility	Anywhere with internet connectivity.	Within the store only.	Anywhere with internet access, offline functionality is also available.
Updates and Scalability	Automatic, easy to add/remove terminals in a few clicks.	Manual updates. You have to purchase additional hardware.	Automatic, easy to add/remove terminals in a few clicks.
Cost	Lower upfront cost with monthly subscription fees.	Higher upfront. No ongoing software fees, but extensive recurring fees for support and maintenance.	Moderate upfront costs with monthly subscription fees.
Security	Data stored only in the cloud. Potential security risk.	Data stored locally, more control over security.	Data stored locally and on the cloud, layered security approach.
Internet Dependence	Fully internet dependent. Outages disrupt operations.	Not required at local stores, but recommended for data sync.	Important, but offline functionality is available in the case of an outage.

Ultimately, the best way to choose the right POS system is to carefully consider your business needs and priorities, research different options, and consult with POS system providers and industry experts for personalized recommendations.

In a hybrid POS system, you have the system reliability with a local server on-site, but the mobile flexibility and your data backed up to the cloud. With this solution, you can enjoy the best of both worlds while avoiding all the disadvantages.

If you have decided that a hybrid POS system is best for your business, your next thought might be how much would a hybrid POS system cost? The article below can help answer that question.

How much does a POS System Cost?

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Cloud POS vs. On-Site POS vs. Hybrid POS Systems: What are the Differences?

Learn the pros and cons of the 3 different types of POS systems