POS vs. Terminals: What’s the Difference and Which to Choose?

For businesses in Australia, processing payments efficiently is essential to customer satisfaction and operational success. Whether you run a small café, a growing retail store, or a large-scale business, selecting the right payment solution can impact checkout speed, transaction security, and overall efficiency.

Two of the most commonly used systems are Point of Sale (POS) systems and payment terminals. While both help businesses accept customer payments, they are not the same. Understanding POS vs. terminals is crucial for making an informed decision.

So, should you invest in a full-featured POS system, or will a basic payment terminal be enough? Let’s break down the differences, benefits, and which solution best suits your business.

What is a POS System?

A Point of Sale (POS) system is an all-in-one business management tool that handles transactions while also offering inventory management, sales tracking, customer relationship management, and reporting.

How Does a POS System Work?

1. A customer selects their items for purchase.
2. The POS software scans the product barcode or manually enters the product details.
3. The system calculates the total cost, including discounts and tax.
4. The customer chooses a payment method (cash, card, mobile payments, or BNPL).
5. The POS processes the transaction, updates inventory, and records sales data.

Key Features of a POS System

✔ Multi-Payment Processing – Accepts cash, EFTPOS, credit cards, BNPL, and digital wallets.
✔ Inventory Management – Tracks stock levels in real time to prevent over/underordering.
✔ Sales Analytics – Provides daily, weekly, or monthly reports on business performance.
✔ Customer Relationship Management (CRM) – Stores customer purchase history and loyalty program details.
✔ Employee Tracking – Manages staff working hours, payroll, and commissions.
✔ Integration with Business Software – Connects with accounting tools like Xero, MYOB, and QuickBooks.

Best Use Cases for a POS System

A POS system is ideal for businesses that need:

• Full business management (inventory, sales reports, employee management).
• Multi-location operations (e.g., franchises or businesses with multiple stores).
• Customisable checkout experiences (loyalty programs, discounts, or promotions).

What is a Payment Terminal?

A payment terminal (or EFTPOS terminal) is a standalone device that processes credit and debit card transactions. Unlike a full POS system, it does not manage inventory, track sales, or provide reporting.

How Does a Payment Terminal Work?

1. The business enters the purchase amount on the terminal.
2. The customer inserts, taps, or swipes their card.
3. The terminal connects to the bank for authorisation.
4. The transaction is approved or declined within seconds.
5. A receipt is generated, and funds are transferred to the business account.

Key Features of a Payment Terminal

✔ Card Payment Processing – Accepts Visa, Mastercard, EFTPOS, and AMEX transactions.
✔ Contactless Payments – Supports tap-and-go, mobile wallets, and wearables.
✔ Portable Options – Wireless terminals allow payments anywhere in-store.
✔ Basic Reporting – Some models provide a simple transaction history.
✔ Fast Transactions – Minimal setup and instant processing.

Best Use Cases for a Payment Terminal

A payment terminal is best for businesses that need:

• Simple card transactions without extra features (e.g., market stalls, food trucks, service providers).
• Low-cost payment processing with no need for inventory or staff tracking.
• Quick, mobile payment solutions for on-the-go transactions.

POS vs. Terminals: Key Differences

Now that we understand both systems, let’s compare POS vs. terminals side by side.

A POS system is a more comprehensive solution, while a payment terminal is a simple, low-cost alternative.

Which One Should You Choose?

Choosing between a POS system and a payment terminal depends on your business type, transaction volume, and operational needs. Below is a detailed breakdown to help you make the right choice.

Choose a POS System If…

You manage inventory and stock levels

• A POS system tracks real-time stock updates, preventing overselling and stock shortages.
• Ideal for retailers, cafés, and restaurants where inventory plays a critical role.

You want to improve customer experience with loyalty programs

• POS systems can store customer details, purchase history, and preferences.
• Businesses can run loyalty rewards, automated discounts, and email/SMS promotions.
• Perfect for salons, gyms, cafés, and retail stores that want repeat customers.

You run a high-volume retail or hospitality business

• If you process hundreds of transactions per day, a POS system speeds up checkout.
• Essential for multi-location businesses needing centralised reporting.
• Restaurants can manage table orders, kitchen communication, and split billing through a POS.

You want detailed financial reporting and analytics

• A POS provides real-time sales data, helping business owners make informed decisions.
• Generates reports on profit margins, best-selling products, and staff performance.
• Great for businesses that need to track trends and adjust pricing strategies.

You accept multiple payment types beyond just cards

• A POS system supports cash, mobile wallets (Apple Pay, Google Pay), Buy Now Pay Later (Afterpay, ZipPay), and even invoicing.
• More payment flexibility means higher customer satisfaction.

You want to integrate with accounting, payroll, or online ordering

• POS systems can sync with Xero, MYOB, QuickBooks, and other accounting software.
• Businesses can automate tax calculations, payroll, and supplier orders.
• Hospitality businesses can integrate Uber Eats, Menulog, and online ordering platforms.

You plan to expand your business

• If you plan to open multiple locations, a cloud-based POS system allows you to manage all stores from one dashboard.
• Scalable for franchises, multi-store retailers, and growing cafés/restaurants.

Choose a Payment Terminal If…

You only need basic card processing

• A payment terminal is perfect if you don’t need inventory, reporting, or staff management features.
• Ideal for small market stalls, mobile vendors, and service providers.

You operate a small business with low transaction volume

• If you process less than 50 transactions per day, a POS may be unnecessary.
• Payment terminals allow businesses to accept card payments without additional complexity.

You want a simple, low-maintenance payment solution

• Payment terminals require minimal setup and maintenance.
• No need for software updates, system integrations, or complex training.
• Ideal for businesses that just want a fast and easy way to accept card payments.

You don’t need customer tracking, loyalty programs, or staff management

• Payment terminals don’t store customer data or offer CRM tools.
• If you don’t run promotions, loyalty points, or email marketing, a terminal is enough.

You operate a mobile or on-the-go business

• Payment terminals are portable, making them ideal for food trucks, mobile beauty services, and event vendors.
• Can be used anywhere with mobile internet or Wi-Fi connectivity.

You want lower upfront costs

• A basic payment terminal costs less than a full POS system.
• No need to invest in POS hardware, software, or additional accessories.

Can You Use Both? The Hybrid Approach

Many businesses combine a POS system with a payment terminal to increase efficiency and offer flexible payment options.

Examples of a Hybrid POS and Payment Terminal Setup:

Retail Stores

• Use a POS system for in-store checkouts, inventory tracking, and customer loyalty.
• Offer a mobile payment terminal for pop-up events, warehouse sales, or fast checkout during peak hours.

Restaurants & Cafés

• A POS system manages orders, tables, kitchen communication, and reporting.
• Portable EFTPOS terminals allow tableside payments for faster service.

Service-Based Businesses (Salons, Mechanics, Home Services)

• A POS handles appointments, invoicing, and customer history tracking.
• A payment terminal lets customers pay on the spot after receiving a service.

A hybrid system ensures smooth business operations while providing quick, secure transactions for customers.

How PayFlo Can Help You Choose the Right System

Choosing the right payment solution is crucial for business success. At PayFlo, we help Australian businesses find tailored POS and payment terminal solutions that match their unique needs.

✔ Need a full POS system? We provide advanced, cloud-based POS solutions with inventory tracking, reporting, and integrations.
✔ Looking for a simple payment terminal? We offer cost-effective EFTPOS devices for fast, secure transactions.
✔ Want both? We customise POS and terminal setups to ensure smooth business operations.

Not sure which option suits your business? Contact PayFlo today for expert advice.

Final Thoughts

When comparing POS vs. terminals, there is no one-size-fits-all solution. A POS system is best for businesses that need full management features, while a payment terminal is ideal for simple transactions.

For growing businesses, a hybrid approach offers the most flexibility—combining a POS for operations and a terminal for quick payments.

If you’re still unsure, let PayFlo guide you. Our team will help you select the best payment solution to improve efficiency, speed up transactions, and enhance the customer experience.

Get in touch with PayFlo today to explore the best POS and terminal options for your business.

FAQs

1. Can I use a payment terminal without a POS system?

Yes, payment terminals work independently for card processing. However, they don’t track sales, inventory, or customer data like a POS system does.

2. Is a POS system more expensive than a payment terminal?

POS systems generally cost more upfront due to additional hardware and software. However, they offer advanced features that justify the investment for high-volume businesses.

3. Do all POS systems come with an integrated payment terminal?

Not always. Some POS providers require separate payment terminals, while others offer all-in-one solutions with built-in payment processing.

4. Can a POS system and a payment terminal be used together?

Yes, many businesses use both. The POS system handles sales, inventory, and reporting, while a payment terminal processes card transactions.

5. Which option is better for small businesses—POS or payment terminal?

It depends. Small, cash-heavy businesses may only need a payment terminal, while those managing inventory, staff, and promotions benefit from a POS system.