The short version
- Card processing is the one cost every POS has. You pay it on each card sale, free plan or not.
- Software is either a monthly fee per location or nothing at all on a free plan.
- Hardware is a one-time purchase if you buy it, and a long bill if you lease it.
- Contracts, early termination fees and junk fees are where small shops overpay.
- Want the real numbers? They're on our pricing page.
What goes into the cost of a POS system?
Seven things, and they don't all get billed the same way. Some come every month, some come with every sale, and some you pay once and forget. That's why two quotes for "the same POS" can look nothing alike.
- Monthly
Software subscription
The monthly fee for the POS app itself, usually charged per location and sometimes per device. Higher tiers add features like loyalty, staff scheduling or table maps.
- Every card sale
Card processing
What the processor keeps from each card payment before the money reaches your bank. Cash costs nothing to process.
- Once, if you buy
Hardware
Card readers, a tablet stand or countertop terminal, receipt and kitchen printers, a cash drawer, a barcode scanner. Some businesses need almost none of it.
- If you turn it on
Add-ons
Paid extras switched on one at a time: payroll, marketing, loyalty, a kitchen screen app, advanced inventory. Each one is usually its own monthly charge.
- Once, sometimes
Setup and installation
Building your menu or item list, configuring printers, on-site installs and staff training. Free with some systems, a line item with others.
- Only if you sign one
Contract and early termination
A term you agree to stay for, and what it costs to leave early. Month to month plans don't have one.
- Shouldn't be there
Hidden and junk fees
Statement fees, compliance fees, monthly minimums and a dozen other small lines that never come up on the demo.
Not sure what a "free" offer actually leaves out? Our guide is a free POS really free? goes line by line through what a free plan includes.
How does card processing pricing work?
Card processing is a small cut of every card sale, and it's the biggest POS cost for most businesses over time. Processors price it in one of three ways, and the model matters as much as the headline rate.
Flat rate
One posted rate for each way a customer pays, like in person, online or keyed in. The same card always costs the same.
Good for: small and new businesses that want to predict their fees.
Watch for: at high volume, a negotiated rate can come in lower.
Interchange plus
You pay the card network's own cost for each transaction, plus a fixed markup from the processor. Statements are longer, but you see exactly what the processor keeps.
Good for: businesses with steady, larger card volume.
Watch for: monthly fees and minimums that often come with it.
Tiered
Cards get sorted into buckets with names like qualified and non-qualified, each at its own rate. The processor decides which bucket a card lands in.
Good for: hard to say. It's the toughest model to compare.
Watch for: a low quoted rate that only applies to a few of your cards.
Most free POS plans use flat rate pricing, which is part of why they're easy to compare. Whatever the model, ask for the full rate for every payment type you take. Keyed-in and online payments usually cost more than a card tapped at the counter.
How much should you plan for POS hardware?
Less than you'd think, if you buy only what the job needs. A market stall can run on a phone. A busy counter needs a reader, a stand or terminal and probably a printer. A restaurant adds kitchen printers or screens. The bill scales with how many stations you run, not with the software.
How you pay for it matters more than the sticker:
- Buy it outright. You own it, it's paid off on day one, and most card readers and printers keep working for years.
- Pay over time through the provider. Some offer installments. Fine if it's clearly an installment plan you can pay off early.
- Lease it. The one to be careful with. Equipment leases often run for years, can't be canceled, and can add up to far more than buying the same gear.
- "Free" with a contract. The hardware gets paid for somewhere else, usually in a higher processing rate or a long term.
Our POS hardware guide shows the setups that cover most businesses, and which pieces you can skip.
What about setup, installation and contracts?
Setup costs depend on who does the work. With a self-serve app, you download it, import your items from a spreadsheet and you're selling the same day, so setup costs you an afternoon. With a dealer-installed system, expect a quote for installation, menu programming and training, and sometimes a charge for each return visit.
Contracts are where small businesses get stuck. Three terms to look for before you sign anything:
The term
How long you've agreed to stay. Month to month means you can leave anytime. Anything else needs an end date you can find.
Early termination fee
What leaving early costs. Some are a flat fee. Others charge for every month left on the term, which can be a lot.
Auto-renewal
Many contracts renew on their own unless you cancel inside a short notice window. Put that date on your calendar the day you sign.
Already stuck in one? Our guide to switching POS systems covers reading the old contract and getting out cleanly.
What should you ask any POS vendor before you sign?
Ask these and get the answers in writing. A vendor with nothing to hide can answer all of them in one email.
- What's the monthly software fee, per location and per device, and what's included at that price?
- What's the processing rate for in-person, online and keyed-in payments, and which pricing model is it?
- Is there a contract? How long is it, and does it renew on its own?
- What does it cost to cancel early, and how do I give notice?
- Do I buy the hardware, or is it a lease? Can it be used with another processor if I leave?
- What does setup, installation and training cost, if anything?
- Is there a monthly minimum, a statement fee, a PCI fee or an annual fee?
- How fast do deposits reach my bank, and is faster access extra?
- Which of the features you showed me need a paid plan or add-on?
- Can I export my items, customers and sales history if I leave?
We keep a shorter list of red flags for "free" offers on our pricing page, next to the current numbers.
Why does a free plan change the math?
Because it turns a fixed cost into one that only shows up when you make a sale. A paid plan bills you every month whether it was your best month or your worst. On a free plan, a slow month costs you less, because the only thing you're paying for is processing on the sales you actually made.
That doesn't make paid plans a bad deal. They usually take a little less per card payment and add features some businesses really do need. A paid plan earns its keep when those features save you time or money, or when your volume is high enough that the lower rate covers the monthly fee. Our guide to free POS vs paid POS walks through where that line falls.
Want to compare the free options side by side? Our best free POS systems roundup covers them, and the pricing page has the current figures for the plan we recommend.
On Square Free
Where Square Free lands on this bill
Square Free is the free plan we set most people up on, and we're an authorized Square reseller. Here's how it lines up with the pieces above, from Square's own pricing pages. The current numbers are on our pricing page.
- Software: no monthly fee on Square Free, and no long-term contract. Square Plus and Square Premium are optional paid plans with a free trial.
- Processing: flat rate, with one posted rate each for in-person, online and keyed-in payments. Cash and checks cost nothing.
- Hardware: optional. Tap to Pay on iPhone and Android takes contactless cards with just your phone, and Square hardware can be bought outright.
- Setup and leaving: you can set yourself up, and there's no early termination fee to cancel Square Free.
The current plan prices and card rates are on our pricing page, and readers and counter hardware are on Square rates and hardware.
Questions people ask
How much does a POS system cost for a small business?
It depends on four things: the monthly software fee, the processing fee on card sales, the hardware and any contract terms. A small business on a free plan with a phone or one reader pays mostly processing. A restaurant with several stations, printers and a paid plan pays a lot more. Current numbers are on our pricing page.
What's the biggest POS cost over time?
For most businesses it's card processing, not the software. It's charged on every card sale, so it grows with your sales. That's why the pricing model and the rate matter more than a small difference in monthly fees.
Are there POS systems with no monthly fee?
Yes. Free POS plans charge nothing per month for the software and earn their money on card processing instead. Our best free POS systems roundup compares them, and our guide is a free POS really free? covers the catches.
Is it cheaper to lease or buy POS hardware?
Buying is almost always cheaper over the life of the gear. Leases tend to run for years, often can't be canceled, and keep charging after you've paid the hardware's value several times over. If you can't pay up front, an installment plan you can pay off early beats a lease.
What hidden fees should I look for on a POS quote?
Statement fees, PCI compliance or non-compliance fees, monthly minimums, batch fees, chargeback fees, early termination fees and automatic renewals. Ask the vendor to list every fee that could show up on your statement, in writing.
If you go with Square
How much does Square POS cost?
The Square Free plan has no monthly software fee. You pay a processing fee on each card sale, and hardware is optional. Paid plans add more features for a monthly fee. Every current price and rate is on our pricing page.