Efficient payment processing is a top priority for any company selling online, regardless of what you’re selling. When your customer goes to check out, their payment must be error free, friction free, and a pleasant experience. 

Any unnecessary barriers between your customer and a complete payment subtracts from their experience with your brand and reduces the likelihood they’ll either complete the transaction or return again next time. 

Optimizing this payment experience on the front end (customers) and back end (you) can be challenging for business owners simply for all the variables involved. There are out-of-the-box payment systems and custom solutions alike to help you accommodate the sheer number of payment transaction types and determine how they affect your business. 

Before you make a decision on what payment solution is right for you, it’s well worth getting familiar with the seven core payment transaction types that may affect your decision. Let’s explore. 

The Charge/Sale

Once a customer lands on your e-commerce site (for example), browses your products or services, makes their selection, and adds it to their cart, it’s time to check out. In contrast to a cash payment, an all digital transaction process like this requires a few more pieces of information from your customer to initiate and validate the sale: 

  • billing information
  • card number
  • expiration date
  • security code (CVV)

With all their information provided, the charge/sale transaction has been initiated. In most cases, your payment gateway validates and captures your customer’s funds and payments in a single call. 

It’s worth noting there are payment processors, gateways, and solutions that do both. In this case, your gateway “calls” the processor to transfer various payment data and confirm the validity of the payment with your customer’s card issuer. 

payment transaction types charge and sale blog image

Assuming a successful call, the card issuer will transfer the secured funds once the settlement process occurs. In a charge/sale, authorization and capture occurs in one call, however the settlement tends to occur later behind the scenes. As the merchant, you will receive a transaction ID from the gateway or processor for potential future requirements, like issuing a refund.

Pre-Authorization and Authorization (“Pre-auth/Auth”)

In certain situations, credit and debit card transactions have to pass through authorization (auth) or pre-authorization (pre-auth) to validate the information attached to a card and place a hold on your customer’s funds. Auth involves more steps than your standard charge/sale transaction above and requires two calls to the processor, which increases the complexity of the transaction as the auth must then be captured or voided. 

Let’s say your customer wants to buy an item for $30, with $3 in tax, and $10 in shipping, the auth amount would be $43. When they run their card, the gateway/processor puts a hold on those funds to reserve them for this purchase, while making them unavailable for other uses. Depending on the processing system, this hold can last up to three days. 

In some cases, the processor/gateway may authorize a higher amount than the transaction total as a safeguard against undercharging. This is common with gas stations where the final sale amount won’t be known until the fuel has been dispensed. 

payment transaction types authorization and capture blog image

Another pre-auth or auth use case is for recurring transactions, like if you sell a subscription service. As the merchant, you might process $1.00 to validate your customer’s card is good for future payments and store it. The upside is you get to confirm the payment method, but the downside is the $1.00 will linger until the hold period expires or you issue a reversal (see Payment Reversal below). 

Another factor to consider is that the auth transaction may show up as an unexpected alert on the customer’s account, making them wary of what’s going on with their funds that they may not have intentionally approved.

Required: An auth typically just requires your customer’s full card number, CVV, and cardholder information, as well as the purchase amount.

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Payment Capture

“Capturing” is a payment transaction type referring to securing funds previously authorized for transfer. Once the capture is final, your payment processor can transfer the funds during the standard settlement process. In nearly all circumstances, the capture will be for the amount previously authorized, although certain types of transactions (such as buying gas above) will often capture less than the authorized amount. There is also a risk that the capture will fail, but the previous authorization and validation of cardholder information make this very rare.

Required: A capture call only requires the original auth ID or transaction ID, as well as the purchase amount. 

Payment Reversal

A reversal is precisely what it sounds like – a reversal of a successful auth or pre-auth transaction where your customer’s funds have been put on hold but not deposited into your account yet. This is different than a refund, which we’ll cover further down. 

A reversal typically removes the hold placed on your customer’s funds, but can also be used in cases where there’s a smaller charge for validation purposes only. 

payment transaction types payment reversal process blog image

Required: In most instances, reversals only require the original authorization ID or transaction ID and will not require the customer’s personal information, card number, or CVV.

Void Payments

Customers can often change their minds, and sometimes you’re in the middle of processing a customer’s purchase when this happens. Thankfully, a void transaction can help prevent funds from being transferred instead of issuing a refund later – which comes at additional cost to you. A “void” is simply a canceled transaction before funds are moved or settled, and if done at the right time, you can avoid transaction fees that come with refunds. 

payment transaction types void payments blog image

Required: To void a sale, merchants only need the original transaction ID.

Payment Refunds

No merchant likes issuing refunds, but they happen for a wide range of reasons and are to be expected in the world of online payment processing. It’s standard practice to take the item back and credit the customer’s card within your refund policy. 

In a refund, your customer’s money has already been authorized, captured and settled – meaning you have to completely undo the payment you just processed and return the full funds. A few things to note about payment refunds:

  • Refunds always return the money to the original card, so your customers cannot move money from one card to another. 
  • Refunds come at a cost to you, the merchant. 
  • You may also be at the mercy of the payment processor or gateway in terms of how long you can issue refunds, such as 14 days from the date of purchase.
payment transaction types refund process blog image

In addition to a full refund, merchants can also issue a partial refund. For instance, maybe a customer ordered five items, loves three, and wants to return the other two. This is where a partial refund would be useful as it allows merchants to refund money up to the full amount of the original purchase. 

Required: To issue a refund, you’ll need the original charge transaction ID from the processor.


Last on our list of payment types is the credit. Credits are useful if your customer is outside the time limit specified by the processor/gateway for a refund, or if there’s another reason a refund cannot be issued – like if their original card is no longer available. This process works just like a charge/sale, except that the funds are transferred from the merchant to the customer’s payment method. 

payment transaction types credit process blog image

Required: Merchants need the card number, CVV, and the customer’s information to issue a credit.

Why Payment Types Matter in Payment Processing

Cash transactions will always be so much simpler than processing credit and debit cards, but the benefits of an airtight payment process makes your business sales infinitely scalable, automated, measurable, and far more relevant in the world of online purchasing. 

Understanding the various transaction types can help you make sense of services and fees offered by payment processors and gateways so you can spend more time offering unique value to your clients and customers – and build a bigger brand market share. 

As always, Clear Function is here if you ever need a hand figuring it all out. Schedule a discovery call with us and let’s dig in.

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Get to know modern payment processing and the key components that affect how you do business. 

Payment processing hasn’t changed much since the world upgraded from bartering to currency. You want to sell something and your customers want to buy it – transaction complete. 

But what makes payment processing different today is the ability to do it well at scale, which includes technology, compliance, information security, accounting, tax, shipping, global reach, and other key elements that are integral to selling digitally. 

  • Good news for buyers: getting your next t-shirt online is much faster, greener, and more convenient. 
  • Good news for sellers: facilitating the transaction is trickier than with cash, but infinitely scalable with the right payment system in place. 

Payment Processing in the Internet Age

The marketplace has become increasingly comfortable with digital payments as security, regulations, and compliance have caught up with the internet wave. Today, you could even say we’re dependent on it. As a result, you can now choose between building a custom payments platform or a slew of ready-out-of-the-box payment processing solutions with varying capabilities.  

Both have their perks and downsides, but the most important consideration is functionality and your return on your investment. Whether you’re new to the subject or a seasoned veteran, it’s well worth the time to look before you leap on a solution to ensure it meets your business goals five or ten years from now. 

To lend a hand in this evaluation process, we’ll be diving into these topics the next few months:

Payment Processing Overview blog image

Payments in a Global Economy

Globalization enables businesses to operate across vast distances, nations, cultures, and currencies. According to the Federal Reserve Bank of San Francisco, online or remote purchases doubled in the last 6 years. Even physical money has become rare as people favor debit/credit cards and online payment platforms like Venmo, PayPal, or Zelle – or now even your smartphone. 

As a merchant, you may sell three products to someone in Maine today, seven to a buyer in Portugal tomorrow, and 15 in your Minneapolis brick-and-mortar store this week. Ultimately, this means that any tech-enabled organization needs tech-empowered payment solutions to make the purchasing experience as quick and convenient as your customers expect.

Let’s explore.

Key Features in Modern Payment Processing Systems

1. Basic Payment Flow

When a customer comes to your physical store or online store, they do their shopping and we hope they initiate payment. It tends to look a something like this:

Online Payment Process blog image

You are the merchant, they are the customer, and if they’re using a digital payment method, a payment gateway is a key part of the process.

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2. Payment Gateways: Gathering the Details

In short, payment gateways request certain information about a transaction and a customer to help confirm the validity of the card or direct payment. For example:

  • Brick-and-mortar stores generally use POS (Point-of-Sale) systems to collect payment information, such as credit and debit card numbers. In this case, the information you need about the customer is stored on the card, plus some sort of security like a PIN. 
  • Online merchants use payment gateways to collect the necessary customer information to make a payment. This info is key for facilitating transactions, but it’s just the start.

The latter group of merchants may include eCommerce, eBusinesses, online retailers, “bricks and clicks,” and more. Your customer makes their selection and upon checkout must fill out a form gathering payment details such as name, address, shipping information, coupon codes, card information, and more – depending on the scenario. 

Online payment process - payment gateways

Payment gateways like these typically work with a variety of card-issuing banks and card associations

  • Card-issuing bank: financial institution that offers branded payment cards from card associations directly to consumers. This may include credit cards, debit cards, key fobs, and prepaid cards.
  • Card association: a network of issuing banks and acquiring banks that process branded payment cards. For example: Discover, MasterCard, Visa, etc.

Besides ensuring that the payment details are securely transferred, the gateway can also check the customer’s credit card number and billing address to make sure that they match. Otherwise, the transaction may get flagged for potentially being fraudulent. If everything checks out, the information passes to a payment processor.

Note: Some services like PayPal and Stripe provide combined payment gateway and payment processing services. For simplicity, we’ll treat them as separate. Let’s dive into payment processors next. 

3. Payment Processor: Processing the Transaction

Payment gateways work with payment processors to make the transaction process fast and simple. A payment processor connects customers and their card-issuing bank with merchants and their acquiring bank to facilitate transactions.

Once the payment processor receives payment information, they contact your customer’s credit/debit card issuer, often their bank, or other relevant financial institution (say, PayPal). With credit and debit card transactions, like Visa or Mastercard, a card network facilitates communication and transfers.

The customer’s card issuer or other relevant financial institution (sometimes called the merchant acquiring bank) will then check to make sure that the customer has the necessary funds or credit to cover the transaction. If the financial institution notices any red flags, say suspicious purchases, they might pause the transaction and contact the cardholder/client. Otherwise, if the funds are available, they will approve the transaction.

Online payment process - payment processor blog image

From here, the payment processor will pass the info back to the payment gateway, which will update you (the merchant) and your customer.

4. How Funds Get Transferred from Customer to Merchants

The payment gateway will let you and your customer know whether the transaction was approved or declined. Assuming it was approved, your customer’s bank or other relevant financial institution will send money to your (the merchant’s) acquiring bank, which is the financial institution you use to accept payments.

The acquiring bank will deposit the money either into a merchant account specific to your business’ merchant ID (MID), or an aggregated merchant account. Your money stays in this account in case of chargebacks, returns, and/or other issues later on. After the appropriate time frame, it’ll be deposited into your designated business accounts.

Online payment process - payment settlement blog image

5. Fast and Secure Transactions

Don’t worry if this is still a bit confusing. Fact is, modern payment systems are intricate and have many stakeholders. But what you get is the ability to process payments worldwide within a matter of seconds. This way, customers can get the products and services they need, and businesses can reel in the revenues needed to thrive.

Yet when it comes to money, speed isn’t everything. In fact, payment systems sacrifice a fair amount of speed in exchange for security. This is a trade we gladly make to preserve relationships with customers who expect us to handle their sensitive information with respect and care. Fortunately, modern payment systems are typically quite safe.

6. How Are Transactions Secured?

Where there is money, there will be fraudsters trying to get away with the loot. The internet is massive and data constantly bounces around on different pieces of hardware via highways of digital infrastructure. Often, criminals will try to hijack the data while it’s being transmitted. 

Fortunately, there are many steps merchants, cardholders, banks, and other entities can take to reduce the risk of criminal activities.

We’ll dive into this topic in more detail soon if you need to know more about acronyms like TLS, SSL, SIEM, PCI DSS, GLBA, GDPR, FISMA, and more. But for now, it’s worth noting that when shopping for a payment system solution or team of developers to help modify what you have, security is an essential component.

The Wrap Up

We covered a lot here, but we just skimmed the surface. We love this topic because it’s our specialty and it’s important. 

Modern payment systems simplify purchases for customers in a world where money is invisible and everything rides on how you handle the data. You may find yourself in a situation where you’re choosing between a custom payment system or an out-of-the-box payment system, depending on your business needs and goals. 

It’s worth a hard look, because as business models change and relationships with customers evolve alongside the internet, out-of-the-box payment solutions often fall short of meeting many companies’ need for more flexible, custom payment platforms.

Whichever you choose, Clear Function is always here to lend a hand. Book a call with us at a time that works for you and we’d be happy to help.

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To win in marketing you must learn how to become a storyteller.

You might think that stories only have a place in bestselling books or blockbuster movies, but the truth is that stories are an integral part of our lives. They connect people, dreams, businesses, brands, and products. Without the connection stories bring, businesses can not succeed.

People think in stories, and when they are presented with a story that is not well thought out, it can be draining. Why is storytelling essential in the business world and how can you use it to make winning sales? Continue reading to learn the answer to that question!

Why You Need to Add Stories to Your Marketing Strategy

One of the main tenants of stories is that they lead you down a pathway to a happy ending. We are wired to see characters in everything we do and to want to see those characters overcome problems and have a happy resolution. Just like in any hit movie, businesses can use stories to connect with customers and take them through a journey.

When it comes to the products and services you sell, you can’t just broadly market them. You need to make an emotional connection with the customer around their problem and solving it. Without stories, your customers won’t feel invested in what you are telling them.

Did you know that if you don’t grab a customer’s attention within 4 seconds of them visiting your website then they’ll leave? That is such a short amount of time compared to the amount of graphics and copy on most websites. If you can’t make people sit on the edge of their seats, engaged in your marketing, eager to learn more, then all of your work is worthless.

Your business needs to stand out, and you want customers who not only will buy your product now but will remain loyal to you. Thankfully stories exist for this reason. Below are the four parts of a good story you need to include to elevate your marketing and create a customer base who is invested in your company.

4 Integral Parts of Creating a Business Story

  1. Character

The most important part of a story is the main character, or even better the hero! They are who you follow on the journey and who you desperately want to see succeed. In the business world, the character is your ideal customer.

When the character visits your website or sees your digital advertisements, they should see themselves. If you have not done sufficient research into who your customers are then your story will lack crucial information. You need to know who buys your product, what they like, where they live – the more you can learn the better!

  1. External Problem

The external problem is the pain point that the character is facing. They are experiencing a problem and trying everything they can to find someone who can solve it. External problems aren’t always huge, like not having a business model. They could be small things that only affect a unique groupof people like needing a freelance graphic designer to create a logo.

When presenting the problem in your marketing collateral, it is important to empathize with the reader (prospect). You know what problem the character is facing and the more you can stress that, the more connected they will feel to you. Express that you feel the pain that they are facing and the fact that they are experiencing that pain is just plain wrong.

  1. Guide

This is where your business comes into the story. When you have a character who is experiencing a problem, you as a business are the guide. You hear the struggles they are facing and decide to walk alongside them to bring them to a solution. Think of the guide as your brand, for example, and the products your brand makes as the next part of the story: the solution.

  1. Solution

The final part of a winning story is the solution. This is where you get to talk about the product or service that you have created to solve your character’s external problem. Even more important, this is what will bring in money for your business!

Make sure that you have validated your solution so that it won’t confuse your customers. As this is the resolution to your story, you want to do everything you can so that they click the ‘buy now’ button!

Benefits of Story in Business Coaching

A guide could also be a business coach who helps the character see their problems more clearly and helps them see their next steps. Coaches take clients through the process of figuring out who they are as the main character, what problem they are facing, and what solutions could help them succeed.

Don’t try to go into the business world alone. You may get to where you want to go, but with a guide, you can see different perspectives and find different solutions that you may never have thought of. Interested in learning more about how coaching can help you? Reach out to us, we would love to talk!

Real-Life Examples of Business Storytelling


If you haven’t seen the Budweiser 2014 Super Bowl “Puppy Love,” then you need to watch it now! It is the perfect example of a brand merging the power of a story with selling a product.

Viewers of the commercial watched a puppy form a friendship with a horse only to have the puppy adopted and leave its new friend. It tore at the viewer’s emotions and presented a problem only to have the two reunited: a beautiful solution. While you might not think that a product was being sold, the brand was being built in your mind and Budweisers profits soared!


Instead of focusing on rental properties, Airbnb chooses to highlight the people who open up their homes for others to stay in. Finding a place to stay on a vacation can be stressful and they know that. When someone visits their website they want to empathize with the problem they are facing, make it easy for them to book a stay, and tell a story through the rental hosts.

By putting experiences, not just the accommodations, front and center for users they can market their services better. You don’t turn to Airbnb because you want the same experiences as a hotel, you want to feel comfortable and at home. Implementing a story is a huge part of making their customers feel connected to this overall mission.

How to Get Started Using Storytelling

Now that you know why storytelling in marketing is important, how do you begin implementing it into your business plan? First, we would recommend meeting with your entire team to talk about who your customers are and where they are coming to you from. Once you have a solid understanding of the struggles that they face, you can craft a story that resonates with them.

Next finalize the character, external problem, guide, and solution. Even if you think you already know these, it can be beneficial to write them down.

Finally, remember to always empathize first, show authority second. You exist to highlight a problem and offer a solution, elevating that narrative by using a story can only add to selling your product or service effectively!

Here is a question to ponder: at the end of your life, what would you want people to say about you?

That you were kind? That you were successful in business? That you were a great mother or father? The legacy that you leave behind is important. If you want to be known for something you have to start taking the steps to reach that desired state now.

What is a Life Plan

Today we are going to discuss creating a life plan and how it can lead to the decisions you make for the rest of your life. A life plan is a document that helps you clearly lay out your goals, both big and small. It gives you something to revisit regularly and see the progress you are making.

Not only does it help you focus on your goals and energizes you, but it gives you a passion for how to live your life. Many people settle in a career or even decide to live in a certain city out of convenience. A life plan helps you see where you are today (ex: a job that is not in your desired industry) and points you toward the steps you need to take to reach where you want to be.

Your life plan starts at the end of your life by first determining the legacy you want to leave. Thinking about the end lets you reverse engineer a path that can help you get there. You have the ability to make decisions that will lead to the legacy you desire to leave.

How to Create Your Life Plan

Now that you know exactly what a life plan is, it’s time to create your own.

Step 1: Download the Clear Function Life Plan Template

This is an easy way to organize your goals. You can edit it each year as you shift your priorities and major life changes happen. As your family grows or your career changes, your life plan will mimic it. Don’t be afraid to see changes in your life plan; as long as you are consistently working toward completing goals, you will stay on track.

Step 2: Determine Your Life Goals

Simply put, these are things you would like to accomplish in your life. They are big things for you to work towards and accomplish such as getting married, having a family, or starting your own business.

It can be easier to break up your life goals into smaller categories.

  • Career: What is your end goal in your career? Do you want to retire early or work as long as you can? What position do you want to hold?
  • Personal: This includes your physical, mental, and spiritual health. Examine your goals and where you want to be in each of those areas.
  • Family/Social: Where do you want to ultimately end up in your relationships? This could include your desire to get married, have kids, and build solid friend groups.
  • Financial: Pay off all your debt or have enough money to buy a new house? These are financial goals that you can begin to work toward now.
  • Dreams: This is where you record the dreams you have, no matter how crazy they may seem! Travel the world? Own a luxury car? Your dreams may feel unattainable now, but as you work through the life plan they will become easier.

Step 3: Map Out Your 1, 5, and 10 Year Plan

Now that you have your life goals, it is time to determine how you will accomplish them. You should be working towards them each year, making small or big steps. We will use running or owning your own business and creating a 1 million dollar profit as our life goal example.

  • 1 Year: Your yearly goals will change the most. Each time you review your plan you will want to update your yearly goals.
    • Example: Develop an idea for a product or service to sell, work with a business coach to expand on your idea, purchase a website domain.
  • 5 Years: Bigger goals that take more resources and longer time to accomplish.
    • Example: Find investors for your new business, leave your current job, and begin full-time work as an entrepreneur.
  • 10 Years: Complex goals that consist of a lot of different moving parts. These goals require help and are dependent on completing your yearly goals.
    • Example: Having a storefront with 10 plus employees and making a consistent profit each year.

If you want to continue to map out the rest of your life, feel free to do so! You could do a 20 year, or 30 year plan – it is your life plan so it can be customized!

Step 4: Develop Daily Goals

Daily goals are little steps you take each day that help to accomplish your life goals. By accomplishing daily goals you are always keeping your life plan at the front of your mind. Go through each area of your life and determine daily goals that coordinate. It takes 66 days for a new habit to become automatic meaning that your daily goals will play a big part in shaping the rest of your life!

  • Example: reach out to a new contact each day, spend one hour on marketing your business, mentor an employee.

Who Can Help You?

Surrounding yourself with people who can push you to accomplish your goals is essential. When you feel like you are taking on the world on your own it can feel overwhelming. Pick two or three people to be your accountability partners. Share your life plan with them and ask that they encourage you as you work to accomplish your daily and lifelong goals.

Celebrate Your Wins

If you take away anything from this article it should be to celebrate your wins. Accomplishing your goals is nothing to take lightly and when you do complete them they should be celebrated. This could be something simple like treating yourself to a nice meal or for bigger goals it could be planning a weekend getaway. When you celebrate your wins it renews your passions and makes completing your goals seem easier.

The Power of Creating a Life Plan

Creating a life plan gives you the power to decide what goals you work towards and ignites your passion. It takes courage to listen to your heart and to think about all the possibilities your life has. When you remove the fear and limitations that you have placed on yourself and say, “If I didn’t have to be afraid of what people would think, what would I do with my life?” you hold all the power in your hands!

Get started today creating a life plan! We would love to see your finished page! Share them on social media and make sure to tag Clear Function.

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