ShopKeep was co-founded in January 2010 by Jason Richelson, co-owner of the Greene Grape, a wine and gourmet food retailer in the New York area. The software runs on a PC and connects with a cash drawer, credit card swiper and printer, allowing a merchant take and record transactions, keep inventory, and print receipts. It even works when an Internet connection is down, said Mr. Richelson, storing transactions on the local computer. In August of 2010, ShopKeep released a version of its software that runs on the iPad.

The company has 15 employees and about 1,000 customers. It aims to reach 5,000 customers by yearend and plans to hire a few more employees in sales and customer support. The software isn’t sophisticated enough to run a bar or restaurant, so ShopKeep plans to focus on small retailers and quick-serve food establishments.

Mr. Richelson got the idea for the business when he became frustrated with the Greene Grape’s point of sale software, supplied by Microsoft. “The servers kept breaking down,” he recalled. A Microsoft representative didn’t respond to a request for comment.

In 2008, he looked for an alternative but he said he couldn’t find one. So using about $800,000 from the Greene Grape, the tech-savvy co-owner decided to build his own system from scratch that merchants could use over the Web.

In January of 2010, he founded ShopKeep with Greene Grape co-owner Amy Bennett. In May of that year, they launched a version of ShopKeep that worked with PCs.

“We squeezed the Greene Grape,” said Mr. Richelson.

He aims to undercut existing leaders in the market. ShopKeep costs $50 a month, including customer support. Existing point of sale systems can cost anywhere from $3,000 to $12,000, said Mr. Richelson.

The U.S. cash register and point-of-sale software market will reach about $8.4 billion in sales in 2011, estimates research firm IBISWorld.

“I think this is a billion dollar opportunity,” said Brian Hirsch, managing partner of Tribeca Venture Partners, who is also joining the ShopKeep board. “We think the whole point of sale market will turn over due to the lower cost and greater flexibility.”

Janet Johnson, cofounder of the Savory Spice Shop, a chain of 17 spice stores, said her company replaced its existing point-of-sale system from Radiant Systems Inc. with ShopKeep software in 10 of the company’s 17 franchises. In the next three months, she said she plans to convert the rest of the franchises to the new system.

“It means less down time and fewer crashes,” she said. “We’ve been able to save the franchises money.” A spokeswoman from Radiant didn’t respond to a request for comment.

Ms. Johnson said ShopKeep’s software is saving “at least $5,000 to $7,000 per store.”

Ike Escava, co-owner of The Bean, which has two coffee stores in New York City, said he replaced his PC-based touchscreen register using PixelPoint software with ShopKeep software and an iPad, primarily because it lets him easily access his sales data remotely over the Web.

“It wasn’t easy to get the info with the old one,” he said.

PixelPoint owner Par Technology Corp. A spokesman from Par Technology said “utilizing a consumer grade solution does not offer the same reliability” as its offerings and that while the acquisition cost may be lower, a tablet will carry a higher total cost “based on more frequent replacements and down time by the restaurant.”

Mr. Escava said the ShopKeep system is more stable, cheaper and easier to teach his counter clerks. Mr. Escava’s previous setup cost $5,000 while the two ShopKeep registers cost him $100 a month.

“We always get answers from support,” he added. “I called one after midnight and I heard right back.”