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How Money Flows

Marshall is in Best Buy looking at new cell phones; his current one is on the outs.

He finds the one—the newest iPhone, natch—and charges it on his credit card.

On the surface, it seems like there's only three parties involved: Marshall swipes a credit card, Best Buy takes the money, and Marshall gets a bill from the credit card company.

In reality, there's a lot more to it.

Here's really how that money flows:

  1. Marshall hands the credit card over to the cashier, who swipes the card. (Or he swipes it himself, depending on where he is.)
  2. The cash register at Best Buy quickly communicates with Best Buy's bank to make sure that Marshall's credit card is on the up-and-up.
  3. MasterCard uses a third-party company to handle all their transactions; that's the company that takes money from Marshall's bank and transfers it over to Best Buy's bank.
  4. The bank that Marshall worked with to get his credit card sends him his credit card bill by the end of the month.
  5. Marshall uses his bank to pay that bill.

Or, if you prefer all that in visual form, here's the Shmoop-down:

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