How to make an area in figma transparent? Cutting out parts of a shape

So it seems so simple but I can’t figure it out.

When I try to make transparent it looks like this

How do i cut it out and make it look like this!
image

I want the background of that to be transparent and I can’t figure it out. Is this something I need to do in photoshop or illustrator? I can’t figure out how to do it simple at all. Any help would be very appreciated! Thanks so much,
Austin

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You need to use boolean operations.

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Thank you. I had the exact same question and I wasn’t sure how to phrase it in a google search box. I was in the process of duplicating my background images, cutting them into little pieces, and then overlaying those onto my shapes to create the appearance of transparency. You spared me hours of wasted work. Thank you.

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