On-premise POS Vs. Cloud-Based POS: Which one is better?

Brandi Marcene

Jul 19 2020

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If you own a restaurant or a retail store and looking to buy a new POS system, you will have to decide between an on-premise POS vs. cloud-based POS.

An on-premise or traditional POS is a software that stores data on your computer, whereas, a POS system based in the cloud will operate from a virtual cloud on the Internet.

Whether it is a POS for retail or a POS for restaurant, a new POS system is an essential investment, both in terms of money and time. Therefore, it is important to do some research on how to choose a POS system for your business.

Both of these systems may share similarities in their POS features. However, they also have their pros and cons. So, you must learn what to consider when choosing either of these systems.

On-Premise POS vs. Cloud-Based POS: A Discussion

Before we get into the details, let us have a quick look at the definitions of cloud-based and traditional POS systems.

Traditional POS

A traditional POS system is also known as legacy POS. It stores data and information on a local database, ideally on your computer’s hard-drive. Think of it as storing a documentation or report file on a desktop or laptop computer. You can only access it when you have your laptop or computer with you.

Cloud-Based POS

This system stores data and information on a remote online server and allows you to access your data from anywhere in the world. All you need is an internet connection.

For example, Apple users use iCloud, or Android smartphone users have applications like Google Drive to store and access their data, photos, and other documents. Similarly, you can get cloud-based POS for restaurants and POS for retail.

What is SaaS?

Usually, people use the terminologies “cloud” and “SaaS” interchangeably. However, it is important to know that many cloud-based POS systems are hybrid solutions meaning they are not 100% cloud-hosted.

On the other hand, a SaaS system is a true cloud-native application. It is software that is centrally hosted and comes with a subscription-based license. This makes SaaS POS features cost-effective and easier to maintain than a hybrid solution.

Like we said earlier, both POS systems have their advantages and disadvantages; let us elaborate on them. It will help you with how to choose a POS system for your restaurant or retail store.



Advantages of On-Premise POS Software

The on-premise Point of Sale system has distinct advantages over its cloud-based counterpart. All these benefits make it ideal for use by restaurants, retail stores, and large organizations. Two main advantages are:

Diverse Features and Functionalities

Traditional POS systems are not going away anywhere anytime soon. So, you can opt for them without a second thought. They continue to provide distinct benefits to the business, including inventory management, data storage, accounting, and security.

Extensive Display Setup

When you purchase a traditional POS system, it is somewhat similar to buying furniture. They are bulky as these POS systems come with 15-inch touch screens. However, these POS features provide you with stable and easy-to-use touchscreen capabilities.

Therefore, these POS systems come with high recommendations for retail stores, coffee shops, fast-food chains, and fine-dining restaurants.


A traditional POS system operates within your company’s internal network. Therefore, it comes with certain features and capabilities such as backup servers, backup drives, dedicated data servers, and huge space.

Companies with an existing and vast IT infrastructure can look into implementing a traditional POS system and benefit from it using their current hardware and devices.

Disadvantages of On-Premise POS Systems

Like any solution, these traditional POS systems do have some shortcomings as well, which are:

Expensive to Implement

The implementation of traditional POS for retail or POS for restaurants can be quite expensive. One of the main reasons is you will need additional hardware that is compatible and necessary to run the system. Thus, this solution is not for small businesses operating on a tight budget.

Lack of Mobile Optimization

This is one of the main drawbacks of using an on-premise Point of Sale. You do not get the flexibility to access it remotely. Businesses that do not have remote access to their POS features require someone to be present at the terminal to conduct any transaction or access data, etc.

One of the most common and best on-premise POS systems is TouchBistro.

Advantages of Cloud-Based POS Systems

A cloud-based POS system has much to offer than an on-premise POS. Thanks to cloud technology, and supporting ground-breaking tools evolutions to assure these myriads of benefits.


Inventory tracking and sales associated issues have long plagued small businesses and their operations. Businesses lose precious time while trying to identify errors, which causes adverse effects on their prospect of sales and growth.

A cloud-based POS does not require manual entry of data, minimizing the chances of errors. This, in turn, increases sales and growth prospects.

Remote Access

The most significant advantage of a cloud-based POS system is how it allows you to access your system and data from a remote location. This way, you do not have to be present at your store or restaurant to know if everything is running smoothly on the ground.

You can access this cloud-based POS feature from anywhere in the world while you are resolving other business-related matters. You do not have to be physically at the premise for supervision. A cloud-based system will even provide you updates on tasks that you usually perform at your restaurant or retail store.

Subscription-Based License

You can purchase a cloud-based POS system on a subscription basis. A cloud-based service provider will charge little to no upfront price at all. Hence, these POS systems are ideal for smaller businesses to keep the initial investment to the minimum.

The monthly subscription comes with POS features, including system upgrades and data backup. However, you must remember that a subscription-based POS system does not suit all businesses and may prove as expensive as the on-premise POS system in the long run. So, do your math before choosing this option.

Data Security

These systems are cloud-based, so you never have to worry about losing your data. All transaction data is automatically backed up online and remains safe, even if you lose your device, or it gets crashed.


A monthly subscription-based cloud-deployed POS will give you the flexibility to increase or reduce how many devices your business uses. It is ideally applicable for organizations that get a lot of holiday business. Furthermore, the scaling POS feature does not need additional hardware, hence saving your budget.

Business Insights

A cloud-based POS system will enable you to track all transactions, including the purchase history of each sale. You will be able to view these records anytime, anywhere, both personally and online.

One-Stop Solution

All good cloud-based POS systems now feature a variety of useful tools for your business. This often manifests as cost savings for your business as you do not need to buy new marketing software, which is very expensive.

If you choose a POS system adequate for your business type, it will suffice and save your precious time, money, and efforts.


Disadvantages of Cloud-based POS Software

Despite all the benefits mentioned above, cloud-based POS systems do come with their own set of flaws. Therefore, as a business owner, while considering a cloud-based POS solution for your establishment, you must also consider these shortcomings before making a final decision.

Inability to Customize

A cloud-based POS system deploys from a cloud, which makes it rigid to customize. It is not an issue for small businesses with a limited budget and time as they are least interested in upgrades. However, large enterprises do prefer customized POS systems to retain their brand identity.

Internet Dependency

Cloud deployed POS demands stable and constant internet connectivity. You may run the risk of service disruption if you do not have a reliable internet connection.

Thus, you must take precautionary measures, such as having an alternate network to serve as a backup if one suffers downtime. This is important if you wish to avoid losing sales due to the system’s downtime.

Limited Customer Support

Despite offering the POS features and benefits of online support, a cloud-based POS system often does not support tailored customer support. The reason is the generic interface of this POS is easy to use and intuitive.

Hence, for some businesses, restaurants, and retail stores, a traditional POS system may be a recommended solution as it offers functionality to customize customer support.

Some of the most popular cloud-based POS systems include Lightspeed and Toast.

Choose Wisely

Now that you know on-premise POS systems are different from the cloud-based POS systems, you can weigh both options. It will help you make an educated decision on which of these POS systems may suit your business needs. In case you wish to dig in a bit deeper, why not check out full reviews of some of the based POS systems available out there.

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