I am sure there are holes in the picture I present, since it has been cobbled together from the bits and pieces I was able to find during my research. I discuss how authorization of a retail sale through a point of sale unit proceeds. Many variations exist on this process. Not every merchant processes their credit card sales electronically. For example, if you look at the First Union merchant services , you will see that they offer both paper and electronic processing of credit card transactions.
Merchant runs credit card through the point of sale unit.
The amount of the sale is either hand-entered or transmitted by the cash register. Merchant transmits the credit card data and sales amount with a request for authorization of the sale to their acquiring bank. Point of sale units are usually set to request authorization at the time of sale, and then actually capture the sales draft at a later time. The acquiring bank that processes the transaction, routes the authorization request to the card-issuing bank. The credit card number identifies type of card, issuing bank, and the cardholder's account.