Building a payment system based on distributed architecture would be impossible without the technology and knowledge we have today. To be fair, it would have also been unnecessary — until recently.
Modern businesses need to process hundreds if not thousands of digital payments daily. The percentage of online, contactless NFC, and QR code payments keeps growing. Statistics show that Europe alone churns out about 46 billion online financial transactions per year.
Developing distributed systems is the right way to achieve the level of performance and stamina required to effectively deal with an ever-increasing number of payments made via the internet. No wonder behemoths like Uber and Airbnb have already adopted this type of architecture for their payment software.
Knowing a thing or two about financial app development, Relevant constantly tracks the latest fintech trends. In this article, we’ll touch on the benefits of distributed payment systems, their architecture, and logic. To give you more context, we’ll also briefly look at some real-life implementation cases and provide a list of guidelines for building a payment solution of your own.
Let’s begin by answering a seemingly simple question.
Table of Contents
The decline of cash payments continues. Customers today want to pay for products and services instantly and in electronic format. If a payment takes too long, fails to go through, or results in a double charge, why stick with this merchant when there are a dozen others ready to replace them?
The use of distributed architecture for payment systems allows businesses to meet the highest requirements for reliability and speed while making the software easily scalable. In the next sections, you’ll find out what makes all these possible. But first—let’s get the terminology clear.
In simple terms, a distributed system consists of independent software components that run on different physical machines, often scattered across several geographic locations. The parts are tightly integrated and communicate via messaging to complete the tasks assigned to them. And if ever there was a perfect environment to accommodate such software, it’s the cloud.
Hosted on cloud servers, distributed systems (also referred to as distributed computing and distributed databases) can offer unparalleled performance and flexibility.
Let’s go over some of the main advantages of this architecture.
As a concept, distributed systems have applications in many domains. The following perks are especially valuable in regard to financial operations:
There are more specific benefits to cover, but you’re probably here to find out how to build a distributed system for payments. The following section should cover all the bases.
When it comes to building distributed payment systems, every project will have unique requirements, so the technical means of meeting them will vary. We’ll provide you with an extensive list of industry-proven practices and concepts that Relevant would use in our future work.
These are some essential concepts that should never be overlooked. We won’t dig so deep as to overwhelm you. If you hire a dedicated software development team, they’ll help you deal with technicalities in practice.
As we mentioned before, distributed payment systems utilize queues to track the order of requests and responses. Important addition is the internal payment processor, which should perform its queries asynchronously, meaning in a strictly defined succession. This is done to prevent an erroneous system response before a request has been processed.
You may be familiar with how Einstein allegedly defined insanity as “doing the same thing over and over while expecting different results.” Well, he would have been thrilled to know that modern distributed payment systems now have idempotency on their side. Because no one wants a financial instrument that behaves unpredictably.
Idempotent logic ensures that no matter how many times you repeat an action, it will return a result exactly as intended by the original design. This means, for instance, that a payment won’t go through multiple times as the customer keeps refreshing a retailer’s webpage.
The system treats its code components as actors that interact with each other via messages. Actors can relay messages that tell other actors to change their state or repair themselves after a crash. The model offers a comprehensive and robust toolkit for describing even the most complex systems.
Reactive architecture provides a solid backbone for large projects that require scalability and resilience. The approach is indispensable when working with large volumes of incoming data and allows the system to reliably handle sudden activity spikes. An increasingly popular trend, the use of microservice databases, is a great example of leveraging reactive architecture to achieve efficient data management.
Healthy data management practices and realistic requirements will ensure a hassle-free workflow and secure database transactions. Here’s what you need to consider when building a distributed payment system.
Customer data is a valuable commodity, and its quality must not degrade over time. You simply can’t afford to lose payment data; so even if a node goes down in flames, a backup should be immediately available.
Sharding is a complicated algorithm for managing distributed databases. Keeping your data split into smaller segments located on multiple machines helps ensure proper load distribution.
All of the principles listed above would not get you far without the proper hardware. Having the right equipment and setting it up correctly is key for building a distributed payment system. However, it’s worth noting that as those systems are mostly based on cloud architecture, your in-house IT team won’t be doing any maintenance on the servers.
Your SLAs (service-level agreements) should reflect the following parameter: don’t expect a round number of 100%, since even top-of-the-line cloud services like Amazon AWS typically offer 99,99% availability. This means that the service will be online and operational all year long, except for perhaps 50 minutes. And that’s unlikely to be 50 minutes in a row.
Your distributed system should be able to recover from crashes with minimum to no downtime. The choice of the cloud provider is just as important here as the quality of code.
This is one of the primary reasons for implementing a distributed payment system in the first place. You want to be able to seamlessly up or downscale your solution on the go. On top of that, it needs to be future-proof. So your IT partner’s knowledge of digital banking infrastructure and their choice of tech stack should be impeccable.
The explanation of distributed payment system development would be incomplete without a case study. We’ve prepared two and kept them brief, focusing only on the most critical details.
Leaders in their respective industries, these names loom large, casting shadows over the competition. Both Uber and Airbnb have adopted distributed payment systems in their workflows. And it’s hardly surprising.
The apps of the world’s largest ride-sharing company are based on a distributed architecture. Strangely, there was a time when their payment systems weren’t. The move to incorporate these systems made all the sense in the world since it addressed major pain points. Here are some key reasons for the transition:
Uber doesn’t share specific financial data. But it would be safe to assume that these improvements had a significant impact on the company’s ROI. The distributed approach also makes horizontal scaling possible, a must-have feature, taking Uber’s aggressive expansion into account.
Airbnb’s migration to a Service Oriented Architecture (SOA) wasn’t painless. But their payment system survived and came out performing better than ever. Here’s how they did it and what challenges they focused on:
By overcoming these and other challenges, the team at Airbnb was able to create a modern distributed payment solution that is fully compatible with SOA.
The days of batch processing and on-premise servers are almost over in banking and fintech. Cloud-based systems are taking over, enabling distributed check processing and other types of digital payments, powering money transfer software, and serving the needs of businesses of every size.
The idea of building a payments system based on distributed architecture might seem overwhelming at first, but it’s worth the trouble in the long haul. You just need a little help taking the first steps.
With our full range of fintech software development services, Relevant is ready to take on projects of any kind. You can hire remote developers and enjoy the benefits of outsourcing to Ukraine as soon as you’d like.
Contact us now, and we’ll answer all your questions.