1. Cardholder presents his credit card to the merchant for purchase of good.
2. The merchant seek authorization from the bank (assuming that the bank is the card issuer and acquirer) on the transaction.
3. The bank processes the authorization request and if approved, release an approval code to the merchant.
4. Upon receipt of the approval code, the merchant release the good to the cardholder.
6. The merchant then claims the transaction money from the bank.
7. The bank pays the merchant the transaction amount less the discount charge.
8. The bank then bill transaction amount to the cardholder
9. The cardholder pays the bank.

By accepting credit cards, the merchant can enjoy many advantages. Here are some of the advantages from the merchant’s view points :

1. Security is improved by accepting card instead of cash.
2. Payment for goods and services is guaranteed provided the merchants follow the necessary procedures laid by the card issuers.
3. Cost saving in sales slips as they are provided by the card issuers at no cost.
4. Credit cards can increase sales turnover of the merchants as cardholders can spend more because of availability of credits.
5. Card prevents merchants losses on dishonoured cheques.

The disadvantage of accepting cards to the merchants is that they have to pay a discount charge on the transactions. By paying a nominal percent the sales value, the merchants can enjoy more sales and better security when accepting the cards instead of cash.