When the U.S. Mint stopped producing pennies last year, it confirmed an ongoing shift: consumers are far more likely to tap a smartphone than reach for spare change. By the end of the decade, 6 billion people worldwide are expected to use digital wallets.

At the center of that shift is the modern point-of-sale (POS) system, which continues to evolve alongside consumers’ growing demand for faster, more flexible and more connected transactions. Today’s POS systems process contactless payments in seconds, improving speed and customer experience. The right system can also lower processing costs over time while serving as a central data hub, managing inventory, tracking employee hours, and generating valuable behavioral insights.

That shift carries weight in Austin, home to roughly 42,000 small businesses. Small businesses account for 48.1% of employment across the Austin-Round Rock-San Marcos metro. Austin’s small business shoppers are loyal, with 53% of Austin residents shopping at local small businesses at least once a week and spending the most of 40 major cities surveyed. That means the technology behind each transaction shapes a meaningful share of Austin’s local economy.

While this evolution presents opportunity, it also introduces complexity. With myriad options available, it’s important to select the right merchant services provider and POS system. Here are four strategies business owners can consider.

1. Consider how customers will pay.

POS systems can run on multiple hardware options, from computers to handheld terminals to portable tablets, allowing business owners to customize their setup.

For example, in full-service restaurants, mobile POS devices speed up service by sending orders straight to the kitchen and enabling tableside payments. In quick-service settings, self-service kiosks can also increase speed. Both options reduce lines and remove the need for a single fixed terminal.

POS systems can also connect to accessories like barcode scanners and receipt printers. However, many customers are comfortable signing on a screen and receiving a digital receipt, which can reduce the need for extra equipment.

2. Match the right hardware to the right software.

Beyond processing transactions, a POS system should help run a smarter, more efficient business. The right setup depends on industry, size, business model, and transaction volume.

For instance, a boutique owner with multiple storefronts needs a cloud-based POS system that syncs across locations for centralized inventory management. Meanwhile, a subscription-based business needs a billing solution that can securely store account information and automate recurring payments.

Per Bank of America surveys, owners want their merchant service providers' offerings, including POS software, to help them run multiple aspects of their business, including tracking employee timecards and schedules, managing inventory and collecting customer data. Analyzing that data helps owners optimize their marketing, staffing, and inventory.

3. Understand the cost breakdown.

Everything comes with a cost. Beyond the one-time hardware purchase and ongoing software subscription, owners must consider per-transaction processing fees, which are typically calculated in one of three ways:

1. A flat rate, where owners pay a fixed amount for all transactions. Bundled pricing provides simplicity and predictability by using one rate.
2. A tiered model, where transactions are sorted into pricing categories.
3. Interchange-plus pricing, which breaks the total cost into two itemized parts: the interchange fee set by the card network, plus the processor's separate markup.

Because owners can see exactly what each party charges per transaction, interchange-plus is generally considered the most transparent option. Additionally, as sales volume grows, owners can use that insight to optimize processing costs. Choosing a system that supports Automated Clearing House payments can also help minimize expenses, as these transactions carry lower processing fees than credit cards.

4. Prioritize system security.

POS systems have become attractive fraud targets. According to Hiscox’s 2025 Cyber Readiness Report, 59% of small to mid-sized businesses experienced a cyberattack between Q3 2024 and Q3 2025.

At a minimum, it should meet the PCI Security Standards Council’s compliance standards. Look for card readers that support contactless payments, which use encrypted data for added security. Features like end-to-end encryption and tokenization add further protection by securing payment information both in transit and at rest.

Modern POS systems function as central data hubs, storing customer, employee, inventory and payment data. Therefore, role-based access controls, which limit who can view sensitive information or perform actions like editing inventory or issuing refunds, are essential.

Owners should keep their POS software up to date, as outdated systems are a common target for fraud. Many modern platforms offer automatic updates to quickly fix vulnerabilities.

By evaluating hardware and software needs, understanding processing costs and prioritizing security, business owners can adapt to changing payment options and choose the right POS system that supports that shift and streamlines their business.