Cloud-based POS systems are different from traditional POS largely because user data, including sales and inventory, are not stored locally, but in a remote server. The POS system is also not run locally, so there is no installation required.

Depending on the POS vendor and the terms of contract, compared to traditional on-premises POS installation, the software is more likely to be continually updated by the developer with more useful features and better performance in terms of computer resources at the remote server and in terms of lesser bugs and errors.

Other advantages of a cloud-based POS are instant centralization of data (important especially to chain stores), ability to access data from anywhere there is internet connection, and lower start-up costs.

Cloud based POS requires an internet connection. For this reason it important to use a device which has its own 3G capability in case the device's primary internet goes down. In addition to being significantly less expensive than traditional legacy point of sale systems, the real strength of a cloud based point of sale system is that there are developers all over the world creating software applications and technology to integrate to cloud based POS .