July 10, 2019

Cloud-Based vs On-Premise POS. What’s the Difference?

If you’re looking to open up a restaurant, one of your biggest investments will be a point-of-sale (POS) system. Any basic POS can process and record transactions. But some systems are equipped with additional features—such as data reporting, inventory tracking, and delivery management—to offer restaurants a total business solution.

With so many POS systems in the market, it’s important to first determine the needs of your restaurant. The next step is choosing between the two POS categories: on-premise and cloud-based.

On-premise POS is also known as “legacy” or ”traditional” systems. As the name implies, the system stores data on local servers and runs on an internal network. Think of this as an application that you install and can only use on your desktop computer.

Cloud-based POS, known as Software as a Service (SaaS) or mobile-based systems, store and process data online. Examples of this kind of application include all internet-based services such as Netflix, Google Drive, and Facebook, all of which can be accessed from anywhere in the world.

There are five factors worth considering when deciding between the two. We’ve listed them down below to help you decide on which system would be a better choice for your business.

1. Contracts and Hardware

On-premise systems come with a long-term contract and a significant amount of property hardware. The requirements include a (preferably) dedicated data server, extra backup servers, computers, and backup drivers. The additional cost of implementation and maintenance should also be factored in. Depending on the model, this can add up to tens of thousands of dollars per year.

On the other hand, cloud-based POS offers a pay-as-you-go subscription model with monthly or annual payments. Typically the more affordable option, prices can go as little as $60 per month. As a web-based software, the majority of technical resources (servers, backups, etc.) are housed and maintained by the POS provider.

2. Data Security

Unless you set up a terminal server, data from on-premise systems can only be accessed on location. Restaurants are responsible for their own security which, if inadequate, puts their data at risk. As the data is stored locally, it cannot be restored if the servers crash, catch a bug, get stolen, or damaged.

Cloud-based POS systems store data online, meaning that it’s retrievable from anywhere in the world. Security is handled by the POS providers who have the budget and expertise to safely store the data. Data is automatically backed up in the cloud and, in the event of a system crash, can easily be restored.

3. Accessibility

As mentioned, on-premise POS data can only be accessed on location. This means that you have to be physically present in your restaurant to make any menu changes or view the daily business report.

Data from cloud POS, however, is accessible from anywhere in the world. You can easily make menu changes or monitor your restaurant’s activities at any time—even from your mobile phone halfway across the world.

4. Updates and Integrations

On-premise updates are infrequent (as little as once a year) and have to be implemented manually. While on-premise POS comes with a diverse range of features, it’s limited to whatever has been built in. Typically, acquiring new features is only achievable by switching to a different model.

As a software, cloud-based updates are free and frequent, getting automatically implemented the next time you log in. Multiple add-ons, such as loyalty programs, online ordering, accounting, and kitchen display systems; can be enabled with just a few clicks.

5. Scalability

On-premise POS are licensed to be used in only one location. If your restaurant is seeking to open up a new branch, you would need to purchase a new system and any additional hardware requirements to run it.

Using a flexible pricing method, cloud POS subscriptions can be upgraded or downgraded depending on the business needs—from opening up a new branch or a temporary pop-location to closing up for the season—and requires zero proprietary hardware.


The right POS is fundamental to the success of your restaurant. As all establishments are different, it’s important to find a system that can easily adapt to your business needs. As POS systems regularly update and improve to catch up with the ever-growing restaurant business, it’s exciting to see what both industries will offer next.

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