HOW RETAIL CREDIT CARD PROCESSING WORKS:

1. The merchant will slide the customer's card through the credit card terminal and enter the amount. The terminal will then dial a toll free number and connect to the processor for authorization. Once the terminal has connected it will send the credit card information and amount of the purchase.
   
2. The processor will pass that information onto the bank that issued the credit card. The issuing bank will then check to see if the card is valid and if the amount requested is available on the card and set aside the amount of the purchase for the merchant.
   
3. The issuing bank will send back an approval number or a decline message back to the processor.
   
4. That information will then be passed back to the credit card terminal which will print a receipt for the customer to sign if the card is approved. It will take approximately 12-15 seconds to complete steps 1-4.
   
5. At the end of the day the merchant may manually "settle" their terminal which will begin the final process of the transaction. In most cases it can be automatically settle the transactions at a specified time each day. Once the settlement process is initiated the funds will be transferred from the card issuing bank and will electronically deposit them into the merchant's checking account. It typically takes 2 business days from the time of the original transaction for the funds to reach the merchant's checking account.