Payment Pulse – Ep. 22

Introduction: Noelle and Joe break down what really happens when a customer pays and why understanding payments can improve cash flow, reduce stress, and help small business owners make smarter decisions.

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Episode Transcript

Noelle: Thanks for joining us today. I’m Noelle, and this is Joe. He’s a leader on our inside sales team. And Joe, if I remember correctly, you’ve been on the Xplor Pay team for about nine years now, correct?

Joe: That’s correct, Noelle time. Sure flies.

Noelle: Time does fly when you’re having fun, Joe.

Joe: Yeah.

Noelle: Speaking of fun, today we’re talking payment processing basics. And I wanna start with this: Why is it so important for business owners to fully understand payment processing? 

Joe: It’s because payment processing touches almost every part of a business- even when owners don’t realize it. It affects when you get paid, how predictable your cash flow is, and how easy your reporting is, and even how much time you spend managing the business day-to-day. 

Most business owners don’t need to know every technical detail, but having a basic understanding of how payments works helps everything make more sense. It allows owners to ask better questions, play more confidently and trust what they’re seeing in their numbers.

Noelle: Great. That’s a perfect setup. So let’s break that down. When someone swipes or taps a card or pays online, what’s actually happening behind the scenes?

Joe: A lot more than people realize. It helps to think of it as a relay race with a few key players. First you have the customer, and of course the merchant or business owner. That part’s obvious, but once the card is tapped, a few groups jump in immediately. Transaction starts with your payment terminal, point of sale system, or website.

However, you’re taking those cards, it captures what that payment info is, and sends it out for approval. From there your payment goes to your payment processor. The processor’s job then is basically traffic control. They route the transaction to the right places and make sure everything’s been formatted and secure. 

Next, it hits the card network like Visa, MasterCard, American Express, and Discover. The card network sets the rules. You can almost think of that as speed limits. They’re gonna set the rules for each of those on the journey this transaction’s going. 

And then you have the issuing bank, and that’s gonna be the customer’s bank. They’re the ones asking, “Does this person have enough credit or funds to actually facilitate this transaction?” If the answer is yes, approval comes all the way back down that chain in just a few seconds.

Noelle: So that’s why it feels so instant on the surface.

Joe: That’s exactly it. But here’s the part that trips people up. Approval doesn’t always mean you’re paid, and usually it doesn’t actually approve. It just validates that the funds are accessible instantly. 

You still need a batch out and receive funding, which is often, most cases, two business days. That’s why you might run a sale today but not see the money until tomorrow or even a couple days later. 

It really depends on your setup, too. Some processors offer next-day funding and the market emerging is even faster than that. But when a customer pays, it’s not just a swipe, but it’s a whole chain of systems talking to each other and understanding who’s involved will help business owners comprehend why the system functions the way it does institutionally.

Noelle: Awesome. So why is that so important for SMBs, then?

Joe: Most small business owners aren’t sitting on piles of cash. They’re moving money constantly. 

I was speaking with a martial arts business owner and helping him figure out how much he was actually paying on his processing fees and led to a discussion on when we actually make deposits. He was eligible for our next-day funding program, so he, as a small business owner, can now access his funds one and two days- even faster than he previously had it set up. Funding is sped up, nothing else changed. Same sales, just way less stress, especially when looking at his bank account. 

And I think that’s when owners realize that payments aren’t just backend stuff.

Noelle: That’s a good example of how payments can impact a business. And on a similar note, what do business owners misunderstand most often about payments?

Joe: Two big things. One, all processors are the same. They’re really not. It’s important to find a processor who truly cares about your business goals and objectives. These are the ones that are transparent in your reports and your rates so you can accurately plan and understand the cost associated. No one likes being handed a bill without any explanation. 

Two, chasing the lowest rate without realizing what you’re giving up to a payment processor can present numbers that sound good to you. In practice, there are additional costs, whether it’s equipment costs, padded interchange or a tiered structured plan that’s faulty. It can affect your rate entirely, making it much more than it originally appeared to be. 

This is why transparency and understanding of the payments process is so important. It’s such a common story.

Noelle: Okay, so let’s talk about fees. How should business owners think about them?

Joe: If your statement feels confusing, that’s a problem. 

I’ve spoken with many business owners that say their statements might as well be a foreign language. I’ve even read some myself and I’ve worked in this industry for nine years, like we said earlier, that it gives me a little while or it takes me a little while to gain my bearings. 

But you know, this creates problems of course for the merchants. It’s when they look at their statements ’cause they don’t know why their bill is the way it is. Understanding fees doesn’t mean becoming an expert, it just means you shouldn’t feel lost when looking at your own money and your own merchant account. 

In today’s market, many processors offer programs that let you offset your costs associated with processing, allowing you to keep more of your hard-earned profit and invest it back into your business and grow that much faster.

Noelle: That’s great! So where does software fit into all of this?

Joe: Integration’s very common and it’s expected now. As software continues to become a necessity to stay competitive, it’s important to have a PCI compliant processor that is technologically driven for seamless integrations into business systems and point of sales. 

I worked with a landscaping company that was trying to expand and they were getting bogged down with collection. Once we developed a certified connection between payment processing and their business software, we were able to streamline their operations, freeing up hours of labor. That’s the kind of thing owners don’t realize they’re putting up with until they don’t have to anymore. And actually, we will dive deeper into software integration in the coming months.

Noelle: Awesome. So to wrap this up, if you were sitting with a business owner and they asked, “What’s the most important thing to know about payment processing?”, what would you say?

Joe: You don’t need to become a payment processing expert. That’s our job as a processor. But, it is important to understand what you’re paying, why those costs exist, who’s involved in the process, and understanding of how payments work. Everything clicks into place, and a transparent processor should be the one that actually takes the time to walk you through and understand your process.

Noelle: Great. I love that! Thanks for walking us through this in a way that actually makes sense.

Joe: Absolutely. If it helps even one owner feel more in control, it’s worth it.

Noelle: Great! So thanks everyone for listening. In the months ahead, Joe and I will be diving deeper into payments, what they really mean for SMBs and how they affect everyday operations for businesses.