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  • Though more customer-facing credit card machines are available, many consumers don't understand how credit card processing machines work. Credit card machines are responsible for charging your card and for getting the merchant paid.

    Machine

    Credit card processing machines can look like a large calculator or a small computer, placed either behind the counter for the clerk to operate or in front of the customer. Some point of sale registers have integrated processing machines.

    Swiping

    Card machines and POS registers have an opening for swiping the card's magnetic strip. The machine reads account information from the strip on the card. Most machines also allow the clerk to type the account number into a keypad.

    Communication

    The card connects to the Internet using either a phone line or a high speed data line to transmit the transaction to the customer's bank account or credit card company.

    Authorization

    The merchant places a hold on the funds in the customer's credit line or bank account balance. The authorization is held for a short time before the funds are released from the customer's account and sent to the retailer.

    Signature

    A receipt prints from the credit card machine and requires the customer's signature as proof of the transaction's validity. Some businesses have opted not to use this function, as it slows down the POS transaction with the customer.

    Source:

    Bank of America: Card Processing Basics

    Merchant Service Group Inc.: Credit Card Machines: Know the Facts

    More Information:

    Authorize.net

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