Final answer:
Credit card transactions are essentially short-term loans from the company to the cardholder, not immediate deposits into a firm's account. Funds from credit card sales are settled after processing, while debit card transactions are immediate transfers from the user's account.
Step-by-step explanation:
When a customer makes a purchase with a credit card, it does not immediately deposit funds into a firm's bank account. Instead, the credit card company transfers money from its own checking account to the seller. This transaction is, in essence, a short-term loan provided by the credit card company to the cardholder. The actual process can involve a delay before the seller receives the funds due to the processing times of the banks and the payment networks. At the end of the billing cycle, the card user receives a bill and must repay the borrowed amount. In contrast, a debit card transaction involves the direct and immediate transfer of money from the user's bank account to the seller, similar to how a check works.
Hence, while debit card purchases result in immediate fund transfers, credit card sales are a form of credit extended by the card company, which are settled later when the firm receives the payment following credit card processing procedures.