I had this happen last month at a place run by a couple of older English guys in the South of France--way out in the the country. The very nice French woman couldn't get the machine to process any of my credit cards and we were trying to figure out what the right exchange rate for Amex travelers checks in $ would be for Euros when one of the bosses came in and noticed the terminal had come loose from the phone line.

He also told me that local phone service in the area was not very reliable and they had a lot of problems getting authorization for charges. But they could call in on a cell line if they had to.

That's why I usually carry traveler's checks for emergencies.