Actually, merchants keep track of what supplies are used or purchased and reorder on a regular basis. There was a restaurant I know of that actually tracked the number of slices of tomatoes and lettuce on burgers. Every single menu item was broken down. It's been a few years, but 8 years ago I had to troubleshoot the process for merchants who ordered from a supplier. For example restaurants tend to have a weekly or bi-weekly delivery schedule and they submit their order electronically to Sysco (or one of the other suppliers). Back then they had to have the order in 48 hours in advance to allow for loading and delivery times. The order could be placed using their software which allowed for dialup or tcp connection or via their website online. Not sure how it's done today. As to the credit card transactions, those required a merchant account with a processing company who processed the charges on behalf of the banks (such as ETS) using their swipes and connection. There were different schedules, but most merchants paid a per transaction fee and for some reason American Express was always the slowest processing until it was all automated. Now the processing company advances the charges and payments on behalf of the merchant more or less and waits on payment from American Express so the merchant doesn't have to. Of course, it's entirely possible that this has changed completely since I worked on it. 8 years is a long time in this industry!


>>>Like I said, there's no system, only individual agreements. So you may just be lucky, dealing with entities that your bank knows. It's not a rule. There's no rule, except one: it depends.
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>>True, there is no single agreement. Most of my check payments go to large institutions like utilities, phone companies, credit card companies (banks), and the like, and they all do rapid electronic processing these days.
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>>I worked with a credit card processing company for a while and was surprised how fixated merchants are with cash flow. To a lot of them it makes a huge difference whether they get their money the next day or the day after. Most of these companies seemed to be doing pretty well, at least racking up a lot of credit card sales, but they acted like they were living hand to mouth.
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>So far I was discussing this as just me, but come to think as a business - what's the business model of a merchant? Buy, store, display, sell, get the money and buy next. Now if you're a really good merchant, you can do your part of the work really fast, and can even shore up suppliers who can do theirs really fast - you can order today, have it the next day, sell by day after, and then... wait a few days to get your money so you can make another turn?
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>Specially if it's true what the retail guys say, that they're operating at 2-3% margin - that may be true, but what also matters is how many times you make that margin, i.e. how fast you get the money for the next cycle. Now if the bank is making that cycle unnecessarily long, or if the credit card processor charges 4% to do it immediately, your 2-3% margin looks miserable. Of course, cash is money the moment you ring it up, and you wait for nobody.