How do CC transactions work?

Tried to buy a gift card the other day. Was a chip and pin transaction that was approved according to the handheld device, but no receipt printed. Cashier didn't know what to do, called manager, manager said no receipt means no transaction, so swipe again. Didn't want to temp fate so left without swiping again, but also without either the gift card or a receipt saying the transaction failed.

Fast forward a couple weeks and I see the transaction is on my statement. Bastards!

So called the store, and they say they have no record of the transaction. So called the card issuer, and they say they can't do anything because there's I have no receipt saying the transaction should have been cancelled.

So this is where my question comes in. The store says that transactions are a two step process. When the handheld said approved, that just meant it preauthorized for the given amount. There's some process they have to do later to actually submit those transactions and get paid. Since they have no record of the transaction they wouldn't have done that second step, and so they won't be getting paid the amount.

So according to them the card issuer is up $50, not the store. Can any store owners/managers/credit card employees confirm if this is the case?

And follow-up question, how the hell do I get my money back? Neither side seems to think they can do anything to help...