A credit card machine is a computer-based device used to process financial transactions made with credit cards quickly and efficiently. The transaction information is then forwarded to the bank using a series of computer systems.

The Sale

When a business makes a sale the credit card of the customer is swiped through the credit card machine. The card number, amount and identification number of the business (merchant) are sent over the computer network of the credit card processor, which could be a bank or a third party credit card-processing company.

Credit Card Network

Once the credit card information is stored by the processor's network, the information is then forwarded to a computer-based credit card network. The network it is sent to is dependent on which company issued the card. For example, the credit card information from a Visa card will be forwarded to the Visa network.

Authorization

After the credit card information is obtained and verified by the credit card network, the details of the transaction are forwarded electronically to the bank that issued the card. The bank verifies that the card has enough funds to process the transaction. Once this is complete, the bank sends the authorization over to the business (merchant) through the network. The payment has been authorized, but no money has been exchanged yet.

Debiting

At the conclusion of a business day, the business then sends all credit card transactions made during the day to its credit card network for processing. The individual transactions are separated and sent back to the respective banks. The bank then debit the cardholders' accounts for payment.

Final Processing

Once the customer's account has been debited, the funds are then transferred to the bank account of the business, less the processing fees charged by the credit card-processing company. Funds may take as long as two business days to appear in the bank account of the business.

Source:

AllBusiness: The Nuts and Bolts of Credit Card Processing

Business Credit Card Processing: Credit Card Machines: Know the Facts

Practical eCommerce: Credit Card Processing: How It All Works | Practical eCommerce

Resource:

CreditorWeb: How Credit Card Processing Works