Most retail businesses these days accept credit cards for payment . Today's technology is much faster then the old days when credit card payments were slow, even requiring phone calls to processors for items over $50 . Today credit card processing is fast, efficient, and is instantly approved or declined. Its about as fast as paying with cash, and in some cases no signature is even required. Debit cards work the same as a credit card where the customer swipes their card and payment is processed. The difference is that a debit card is more like a checking account where the funds need to be there to approve the sale. Both credit cards, and debit cards are processed in the same manner.
In 2007 more then 23 billion credit cards were processed in the United States. This number is expected to grow by 25 percent in the next five years. The use of cash is declining because of technology and security of debit and credit card transactions. Using a credit or debit card has increased a lot because almost every retailer and restaurant accepts them. Even some wholesalers are accepting them as payment for raw goods, or product needed to run a business.
Unless you run a business you probably have no idea how a credit card is processed. The first thing that happens is the purchase is authorized, When a card is read, the machine sends a transaction to the issuing bank. Once the transaction is approved, the information is stored ( batched) in the merchants account. At the end of the day, all the credit card payments are collected form the batch and sent to a clearing house ( a company that processes and releases funds after they are batched) Once the transactions reach the clearing house , the funds are released and sent to the merchants account that is on record. This entire process usually happened within 2 business days, and in some cases only one business day A merchant can decide what time a day he wants his account batched, depending on his hours of operation. The bank and clearing house both receive a percentage of sales for providing this service. Fees for processing credit cards show up on a merchant statement issued by the clearing house, or the bank.