Credit Card Terminals vs. POS Systems

If you are comparing credit card terminals vs. POS systems and you don’t know which one you need now – like right now – for your business, here are the main differences.

What is a credit card terminal?

A credit card terminal is a simple method of payment processing via swipe, wave, tap or chip insertion using a bank issued credit card or a debit card. The machine reads the card information, verifies the validity of the card, authorizes a transfer of money from the customer’s card account to the business merchant account, returns an authorization (or decline) to the retail store, restaurant or service provider that is processing the transaction and then transfers the funds to the business bank account.

What is a Point of Sale system?

A point of sale system adds a level of complexity to a simple credit card terminal with features that help the business better manage their customers, the operations of the business and gathers data during the transaction process.

POS systems are designed with an integrated credit card processing methodology to accept payment via the swipe, tap, wave or insertion of a credit card chip. They also have a wide variety of features to help collect, report and analyze specific information about those business TransActions. Many of these are to enhance the customer relationship, while others are to improve the performance of the business by creating efficiency or more effective use of resources.

This information is collected, stored and can later be retrieved through the POS system and includes data points such as:

  • Customer name
  • e-mail address
  • phone number
  • loyalty program information
  • loyalty points available
  • order date
  • fulfillment date
  • delivery or shipping details
  • a detailed list of items purchased or ordered
  • prior purchase history
  • inventory management
  • production of an order ticket (for example in a restaurant or in a warehouse) for fulfillment now or later
  • creating an invoice for any future payment or balance due
  • establishing an automatic, recurring payment and calculating remaining balance due
  • scheduling for staff
  • client scheduling
  • online order or scheduling integration
  • staff time management – clock in/clock out
  • complex daily, weekly and monthly reporting on trends
  • day-time alerts issued via text, e-mail or app (including smart watch)
  • work order and off-site service details
  • e-commerce integration
  • online order management
  • 3rd party delivery order integration
  • Quickbooks® integration

As you can imagine, there are many factors to consider and TransAct works closely with clients who are seeking advice, guidance and support with regard to their POS System choice. There are many system options and while some are specific to an industry, others are flexible and can be used for a variety of business types.

A corollary to understanding the differences between simple terminals and reobust POS Systems would be whether or not you can process credit cards without a merchant account. While the short answer is yes, there are significant pitfalls to consider.

Credit Card Processing vs. Merchant Account

The simplest way to explain this is to share that there are options for credit card processing without a merchant account, but there are added costs that come with this choice.

There are also limitations imposed on the business.

These include reduced ability to fight charge backs, a lack of security, decreased access to your own customer data, limitations of available data and delays in funding.

The most recognized names would include PayPal, Square and Venmo. While these eliminate the need for a merchant account, the business gives up a lot of control, and adds risk – on top of paying more for this 3rd party processing.

What Payment Processing is Right for My Business?

As you may have already assessed, there are many differences in all of these areas. The reasons to choose between credit card terminals vs. POS systems or even whether or not to have your own merchant account will vary on your business needs.

Every day, TransAct works with business owners to choose what is the most cost-effective, efficient and appropriate for their business needs.  Whether they already accept credit cards, are considering accepting credit cards, or are planning on opening a new business, there are many factors to consider.

Our team helps to break it down, make a decision and implement the best option inclusive of training once a decision is made. Plus, we are there, providing hands on support day in and day out throughout the time that we work together.

Since we don’t require a contract, there really is no obligation tying you to TransAct. Our clients stay with us because we add value to the process and support them in their business development, payment processing needs and saving them money over the short and long term.