Every retail establishment needs to be prepared for the day when the power goes out or the internet connection fails. Imagine being ready to run a customer’s credit card to complete a large purchase only to find the credit card terminal can’t connect to the payment processor. Instead of losing the sale, the solution is to have point of sale software with offline capabilities.
If you’re a retailer that requires the ability to access inventory records and customer information while in offline mode, you need to be sure that all data recorded in offline mode syncs automatically once the internet connection is restored. You must also take steps to protect sensitive customer data while it is stored temporarily on the store’s POS system and ensure the information is deleted once the sync is complete.
How the Point of Sale Software Offline Mode Works
Offline transactions are often referred to as “store-and-forward” transactions. When processing a transaction in offline mode, POS software encrypts the personal account number (PAN) and other sensitive customer information collected from the card swipe, insert, or contactless near field communication (NFC). Once the connection to the payment processor has been reestablished, this information is erased from the local POS system.
Retailers who accept offline payments take on the risk of the transaction not being approved by the payment processor. In the absence of real-time authorization, approval may take from one day to several days. Some payment services limit the amount of offline transactions to minimize the overall risk. Some payment services even require that the link to their system be restored within 72 hours of the transaction, after which the charges will expire.
Another risk faced by retailers is that the customer will dispute the charge and request a chargeback. Retailers must balance the benefits of preventing lost sales due to an outage with the added risk of fraudulent or otherwise unauthorized charges. For example, a store that has a low number of declined transactions or chargebacks may not face a significant risk while operating point of sale software in offline mode. Conversely, large transactions with first-time customers may be too risky to accept offline.
How to Minimize the Risks Associated With POS Software in Offline Mode
Many businesses may find they don’t need the ability to complete transactions without a direct connection to their payment processor. An example is a business that has only a handful of high-value transactions with customers who can wait for the link to be reestablished.
The opposite case is a coffee shop or fast-food restaurant that processes hundreds of small transactions on a typical day. In this case, the cost of losing potential business is greater than the risk of unauthorized payments. Here are the techniques that retailers can use to reduce the risks entailed in processing transactions offline:
- Put a cap on the amount of transactions. The appropriate limit depends on the type of business, but for many retailers a cap of $100 will suffice.
- Use the telephone to authorize transactions. Call the customer’s credit card provider directly; each payment processing service offers instructions on how to conduct telephone authorizations.
- Verify the card’s expiration date and signature, and ask the customer for an alternate ID. While these are all part of best practices for any retail business, real-time authorizations typically omit their use.
- Ask the customer to complete a one-time payment authorization form. These forms are available as templates in Microsoft Word and other word processors, and they provide the added benefit of allowing the retailer to collect the customer’s contact information for use in future marketing efforts (with the customer’s permission, of course).
Retailers also need to confirm that their POS system is PCI-compliant offline as well as online. This is the best way to assure your customers that it is safe for them to complete their transactions in offline mode.
Which Online POS Features Will Retailers Need While in Offline Mode?
The ultimate goal of point of sale offline functionality is to allow businesses to operate normally. These are important POS features that are available in offline mode:
- Create and save open orders. When running the POS software on an iPad, the orders will be saved only on the device that created them.
- Accept payment by cash, check, credit card, or other method.
- Local pre-authorization, which allows credit cards to be validated, if the card reader supports the ability to turn off the “validate card” option.
- Employee sign-in via the PIN screen.
Other online features may be accessible in limited form, such as gaining access to functions by overriding options that require a network connection. Online features that will be unavailable offline include the following:
- Gift card and store credit validations
- Refunds and exchanges
- Reports and customer lists
- Order syncing between iPads
- The ability to edit a restaurant’s menu or adjust a retailer’s inventory
One of several solutions to POS system problems, such as a dropped internet connection, is to rely on a cellular network. Once you’ve established a 4G or 5G cell link to the payment processor, be sure to test it regularly to make sure it will be available when it’s needed. One option is the Pronto 4G/WAN Router PC31, which uses WiFi and Ethernet links to the cell data plan.
Offline functionality is one of the key features that every small retail business needs to include in their POS software. As restaurants and other retailers adapt to business in the COVID-19 era and beyond, they must be prepared for any contingency, including the loss of a network connection. Increased mobility, integrated online and real-world operations, and support for deliveries and contactless pickup all reinforce the importance of a business to be able to operate offline.
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