Payment System Scalability

In 2023, UPI processed over 100 billion+ transactions, that’s a level of scalability and efficiency that many just wish to achieve. India’s UPI system is a giant example of how a great distributed system should work at scale with efficiency. I read a 30+ page PDF by the Govt. Of Indian  and spent 4 hours researching the architecture behind UPI, here are my learnings: 1. Modular and Centralized Architecture   UPI uses a hub-and-spoke model, with NPCI at the center handling clearing and settlement. Banks, fintechs, and payment service providers (PSPs) integrate via APIs, creating a plug-and-play ecosystem.  - Centralized Hub: Manages routing, fraud checks, and settlements.   - Decentralized Nodes: Banks and PSPs handle user interactions.  This design scales horizontally, enabling quick feature rollouts like UPI Lite for small transactions and UPI AutoPay for recurring payments. 2. API-Driven Scalability  UPI’s RESTful APIs support stateless communication, ensuring requests don’t depend on prior sessions, perfect for horizontal scaling.  - 10,000+ Transactions Per Second (TPS): Built for concurrency, even during high loads.   - Asynchronous Processing: Keeps transactions fast without blocking resources.   - Microservices Architecture: Enables modular updates without downtime.  3. Proxy-Based Identity Management  UPI eliminates the need for exposing sensitive bank details by using Virtual Payment Addresses (VPAs) and QR codes.  - Aliases Over Accounts: Payments rely on VPAs, maintaining privacy.   - Interoperable QR Codes: Scan-and-pay functionality ensures merchant adoption with minimal hardware.   - Device Binding: Prevents unauthorized access by linking devices securely.  4. Security-First Approach  Security is baked into UPI with multi-layered encryption and real-time fraud detection.  - Two-Factor Authentication (2FA): Ensures secure transactions with PINs and device binding.   - AI-Driven Fraud Detection: Uses machine learning to block suspicious activities in real-time.   - Tokenization: Protects sensitive data, reducing exposure to breaches.  5. Open Standards and Interoperability  UPI supports open APIs and ISO 20022 standards, making integration seamless.  - Legacy System Support: Connects old banking systems via modular adapters.   - Cross-Border Payments: Integrated with Singapore’s PayNow and expanding globally.   - Batch and Real-Time Processing: Supports both micro and bulk transactions.  UPI is a case study in scalable distributed systems. It demonstrates how to:  1. Design stateless APIs for high-concurrency systems.   2. Build modular architectures for seamless feature updates.   3. Optimize real-time data processing while maintaining security.   4. Ensure interoperability for future-proofing systems.

How Airbnb re-architected its payments platform is one very good read Having worked in a fintech company, I know how complex payment systems can get as companies scale. Payments involve countless layers of data, integrations and security. When I read about Airbnb’s Unified Payments Data Read Layer, it was clear that they had solved a tough problem in an incredibly effective way.  Here’s a breakdown of how Airbnb achieved it:  Problem:  When Airbnb migrated from a monolithic architecture to a service-orientated architecture (SOA), payment data became fragmented across multiple services. It also introduced major challenges:  1️⃣ Fragmented data access    Payments data was scattered across many services and tables, making it hard for client teams to retrieve everything they needed in one go.  2️⃣ Complex integrations  Teams consuming payment data had to query multiple APIs, slowing down feature development and creating unnecessary dependencies.  3️⃣ Performance issues  For high-volume users like hosts managing thousands of bookings, the existing system couldn’t keep up. The solution:    Airbnb introduced the Unified Payments Data Read Layer to address these challenges.  Here’s how they approached it:  1️⃣ Unified APIs    Instead of having client teams interact with individual payment services, Airbnb created a single entry point for querying all payment data. 2️⃣ High-level entities    Payments data, previously spread across 100+ models, was consolidated into fewer than 10 high-level entities. 3️⃣ Denormalized data    To solve performance bottlenecks, Airbnb shifted heavy operations like joins and aggregations from query time to ingestion time. Using their internal Read-Optimized Store Framework, they:  •⁠ ⁠Pre-processed payments data into Elasticsearch indices.   •⁠ ⁠Ensured real-time data updates with minimal replication lag.   •⁠ ⁠Enabled efficient query performance without sacrificing scalability.  The results:  •⁠ ⁠Latency improved by 150x. •⁠ ⁠Reliability increased to 99.9+%. •⁠ ⁠Hosts managing thousands of bookings experienced seamless performance. •⁠ ⁠Queries that once relied on 10+ tables were reduced to a single Elasticsearch index. •⁠ ⁠The feature reduced customer support tickets significantly, saving Airbnb $1.5M in 2021. •⁠ ⁠Payments data from legacy systems and SOA services was consolidated into a single index. •⁠ ⁠Complex aggregations were offloaded to the storage layer, making queries faster and scalable. Airbnb’s approach simplifies complexity for both engineering teams and end users. By centralizing access, abstracting data models, and optimizing performance at the ingestion level, they’ve built a payments system that can handle the demands of a global platform.  What’s your approach to solving complexity in payment systems? Read more here: https://lnkd.in/gQXBJRV5 #airbnb #payments #engineering

It doesn’t make headlines, but it has been reshaping how payments are accepted, routed, and settled. Here’s what you need to know about payments orchestration. 𝗧𝗵𝗲 𝗽𝗿𝗼𝗯𝗹𝗲𝗺 — Payments are more fragmented than ever. Cards, wallets, bank transfers, BNPL, local schemes - the list keeps growing, and so does the complexity. — A single PSP may work for small merchants. But as businesses expand across borders, channels, and customer preferences, limitations become obvious. No single provider can cover every method, every market, or guarantee resilience. — For large merchants, layering PSPs and acquirers brings redundancy and coverage, but also adds complexity: extra integrations, siloed data, reconciliation headaches, and slower rollouts of new methods. 𝗣𝗮𝘆𝗺𝗲𝗻𝘁𝘀 𝗢𝗿𝗰𝗵𝗲𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 Payments orchestration is the evolutionary answer to this problem. It connects merchants to multiple providers and services through a single layer. Instead of juggling separate integrations with PSPs, acquirers, gateways, processors, banks, or fraud tools, everything is managed through one interface. 𝗧𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁 Some merchants have tried to build this layer themselves - connecting to multiple PSPs, creating routing rules, and stitching together reporting in-house. It works, but it’s expensive, complex to maintain, and pulls engineering away from the core business. At the same time, a new breed of players has emerged to solve this problem out of the box. Platforms like Tranzzo offer ready-made connections to hundreds of providers, smart routing, unified analytics, fraud prevention, and even white-label options - giving merchants the benefits of orchestration without the heavy lifting. 𝗕𝗲𝗻𝗲𝗳𝗶𝘁𝘀 I will use Tranzzo as an example: — Higher approval rates through 330+ integrations and intelligent routing rules — Resilience with automatic failover across multiple PSPs and acquirers — Faster market entry thanks to coverage in 190+ countries and local schemes — Unified reporting that consolidates provider data into one view. — Fraud protection built into the orchestration layer, reducing friction for customers — Scalability to support complex use cases from marketplaces to white-label solutions 𝗨𝘀𝗲 𝗰𝗮𝘀𝗲𝘀 — Expanding merchants: cross-border businesses, multi-currency operators, diverse customer bases with different payment preferences — Complex operations: enterprises with multiple acquirers, omnichannel players, marketplaces with sophisticated payment flows — Growth-driven businesses: merchants rolling out new payment methods quickly without heavy dev lift As the market becomes increasingly complex - from open banking and real‑time payments to global wallets and BNPL - orchestration turns fragmentation into an advantage: higher conversion, lower overhead, and faster adoption of payments innovation. Opinions: my own, Graphic source: Tranzzo

In 2011, Wise started with just 2 employees.   Today, it’s a 1000+ employee company across 9 cities and 4 continents.  How did they scale their technical infrastructure to support this massive growth? Let’s dive into the technical strategies that powered their journey.  1️⃣ Autonomous, Agile Teams for Scalable Development      - Independent teams focused on specific domains (e.g., payments, user accounts).   - Teams owned the lifecycle of their services: design, development, testing, and operations.  ► Impact:   - Enabled parallel development and reduced bottlenecks.   - Faster iterations through decentralized decision-making.   - Specialized teams delivered depth and innovation.  2️⃣ Building Microservices for Modular Scalability      - Adopted microservices to decouple functionalities like currency exchange and payment processing.   - Leveraged RESTful APIs and asynchronous communication.  ► Impact:   - Independent deployment and scaling of services.   - Fault isolation ensured one service’s failure didn’t disrupt the system.   - Simplified adding new features without core system disruption.  3️⃣ Leveraging Data-Driven Insights for Optimization    - Built data pipelines to analyze real-time customer transactions and behavior.   - Used tools like Apache Kafka for event streaming and ElasticSearch for log analysis.  ► Impact:   - Optimized currency routing and reduced transfer times.   - Enhanced fraud detection using predictive analytics.   - Continuous feedback loops improved user experience.  4️⃣ Prioritizing Global Infrastructure for Real-Time Operations    - Deployed globally distributed servers and data centers for low latency.   - Tailored infrastructure for handling multiple currencies and jurisdictions.  ► Impact:   - Real-time money transfers across 750+ currency routes.   - Reduced downtime with redundancy and failover systems.   - Complied with local financial regulations globally.  5️⃣ Scaling the Payments System for Volume and Reliability    - Built a resilient system to handle millions of transactions daily.   - Introduced retries, idempotency keys, and eventual consistency.  ► Impact:   - Seamlessly handled growing transaction volumes.   - Ensured data integrity and prevented transaction failures.   - Delivered a high-availability service customers could trust.  6️⃣ Borderless Account: User-Centric Engineering    - Developed a multi-currency account platform for holding, converting, and transferring 28 currencies.   - Integrated local bank systems for seamless transactions.  ► Impact:   - Minimized conversion fees using real-time rates.   - Enabled global payments with virtual account numbers.   - Simplified currency management for individuals and businesses.  7️⃣ Culture of Experimentation and Ownership - Empowered engineers with end-to-end service ownership.   - Encouraged experimentation and innovative ideas.    - Built custom tools like internal monitoring systems and deployment pipelines.

Coinflow went from $5M to $150M yearly processing in 18 months because we built differently from day one. When you're growing fast, your payment system becomes your biggest liability. Most payment systems buckle under rapid growth. We've seen it happen. A company launches and gains traction; suddenly, they're doing millions in monthly volume, but their banks, acquirers, and processors weren’t built to handle that kind of jump. We understood that risk early on and prepared for it by load-testing for 100,000 transactions per minute when we were only doing a few hundred. Overkill? Maybe, but we only wanted to build once and scale forever. Most payment systems can’t keep up with the speed of Web3 because they were built for predictable growth. We designed our architecture knowing we'd face 100X volume jumps. When a customer's payment volume spikes 5X in a week, the last thing they need is their payment stack collapsing. We're now targeting $1B in annual processing, and the infrastructure is already in place to support that scale.

💳 𝗦𝗶𝗺𝗽𝗹𝗶𝗳𝘆𝗶𝗻𝗴 𝗣𝗮𝘆𝗺𝗲𝗻𝘁𝘀 𝗖𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝘆 𝗮𝘁 𝗦𝗰𝗮𝗹𝗲 💳 For global enterprises, payments aren't simply a function, they’re a lever for customer experience and bolstering revenue. Managing payments at scale involves balancing innovation with efficiency, especially across regions, currencies, and regulatory frameworks like PSD2 or APAC’s real-time payment systems. 🛑 𝗧𝗵𝗲 𝗣𝗿𝗼𝗯𝗹𝗲𝗺: 𝗙𝗿𝗮𝗴𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻 Large caps process millions of daily transactions across many regions each with unique compliance requirements. This leads to fragmented payment infrastructures, hindering a seamless checkout experience. 🟢 𝗧𝗵𝗲 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻: 𝗣𝗮𝘆𝗺𝗲𝗻𝘁 𝗢𝗿𝗰𝗵𝗲𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 Orchestration platforms are game-changers, offering a unified system to simplify the payments tech stack. Here's how they address complexity: 1️⃣ 𝗦𝘁𝗿𝗲𝗮𝗺𝗹𝗶𝗻𝗲𝗱 𝗜𝗻𝘁𝗲𝗴𝗿𝗮𝘁𝗶𝗼𝗻: • Single APIs connect to multiple PSPs (e.g., Stripe, Adyen), reducing integration bottlenecks and enabling flexibility. 2️⃣ 𝗢𝗽𝘁𝗶𝗺𝗶𝘇𝗲𝗱 𝗥𝗼𝘂𝘁𝗶𝗻𝗴: • Transactions are dynamically routed to the best PSP, boosting approval rates and minimizing costs based on location or card type. 3️⃣ 𝗥𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝘆 𝗮𝗻𝗱 𝗨𝗽𝘁𝗶𝗺𝗲: • Failover capabilities allow seamless switching between PSPs if one is experiencing downtime, ensuring uninterrupted service during outages. 4️⃣ 𝗦𝘂𝗽𝗽𝗼𝗿𝘁 𝗳𝗼𝗿 𝗗𝗶𝘃𝗲𝗿𝘀𝗲 𝗣𝗮𝘆𝗺𝗲𝗻𝘁𝘀: • From digital wallets to BNPL, orchestration platforms support localized payment preferences globally, enhancing customer satisfaction. 5️⃣ 𝗖𝗲𝗻𝘁𝗿𝗮𝗹𝗶𝘇𝗲𝗱 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀: • A unified dashboard consolidates transaction data, providing actionable insights into fraud patterns, auth rates, and performance metrics. 6️⃣ 𝗦𝗰𝗮𝗹𝗮𝗯𝗹𝗲 𝗙𝗿𝗮𝘂𝗱 𝗣𝗿𝗲𝘃𝗲𝗻𝘁𝗶𝗼𝗻: • Uniform application of fraud tools across all transactions ensures consistent protection without adding complexity. 👇 𝗪𝗵𝘆 𝗜𝘁 𝗠𝗮𝘁𝘁𝗲𝗿𝘀 Payments are at the heart of customer experience and therefore revenue. For Fortune 100 companies, leveraging orchestration isn’t just operational, it’s strategic. By utilizing orchestration, they can deliver frictionless experiences and turn payments from an achilles heel into a competitive advantage. 💡 Payments at scale aren’t a problem—they’re an opportunity to differentiate. Innovative Companies --> Spreedly, Gr4vy Sources: E Payments Int'l, International Monetary Fund, trimplement GmbH

How Global Payment Processors like Stripe and PayPal Use Data Streaming to Scale The $22.7B acquisition of #Worldpay by #GlobalPayments shows once again how much is at stake in the #PaymentProcessing space. These companies don’t just move money; they operate critical real-time #DataStreaming infrastructures. Leaders like #Stripe (99.9999% Kafka availability), #PayPal (streaming >1 trillion events/day), and #Payoneer (migrating from their message broker #RabbitMQ) prove that #ApacheKafka and #ApacheFlink are now the backbone of global #FinancialServices. Payment processors must authorize, route, verify, and settle transactions in milliseconds. Every fraud check, currency conversion, and ledger update depends on streaming architectures that deliver low latency, high throughput, exactly-once semantics, and global reliability. Modern payments are no longer just about money movement. They are about data movement. The companies that master real-time event-driven architectures will define the next generation of financial services from #EmbeddedFinance to #AgenticAI systems. More details in my latest blog post: https://lnkd.in/e3vbQ3bM

Growth isn’t the hard part—keeping every cent traceable is. My colleague Stephen Ford’s latest piece breaks down why Ledger‑as‑a‑Service solutions are the nervous system of modern payments and embedded finance companies. 🔍 There are so many examples how why scalable, immutable, auditable double-entry ledgers are mission-critical for companies dealing with payments at scale: 🚗 Uber migrated 1+ trillion ledger entries into its purpose‑built, append‑only LedgerStore, slashing storage costs ($6M per year!) and giving them secure, immutable records of the value exchange for every ride, meal, and package. 🏠 When nightly accounting runs were starting to take too long (like, more than 24 hours) Airbnb rebuilt its payments platform and financial data pipeline to reduce processing time to 4-5 hours, enhance its IPO readiness, and support $140B of payments in 70+ currencies across 190+ countries. 🧘♀️ ClassPass uses Modern Treasury’s Ledgers API to automatically track bookings and attendance to calculate payout amounts for each fitness studio. They were able to stand up a ledger supporting tens of thousands of studios in just 8 weeks. 🌪️ Meanwhile, the collapse of the BaaS platform Synapse in 2024 left banks and regulators trying to reconcile up to $96 M in missing funds—a painful reminder of what happens when scaled fintech companies rely on manual processes with poor controls. Payments and fintech are getting more complicated: real‑time rails, stablecoins and DeFi, embedded finance, and platform models all create complexity that will test and break solutions not designed for this. 📖 Dive into Stephen’s article here 👉 https://lnkd.in/eRxDEVaP And reach out to our team at Flagship Advisory Partners if you’re a bank, fintech, or SaaS company building innovative payments experiences and want to trade notes. #Fintech #Payments #LedgerAsAService #FlagshipAdvisoryPartners #Infrastructure

What Is Payment Orchestration? 💡 Payment orchestration is the process of streamlining and managing all payment flows through a centralized platform. It connects to multiple PSPs, acquirers, and payment methods, enabling businesses to scale, process transactions more efficiently, and increase approval rates. Orchestration acts as the layer above PSPs and acquirers, managing how payments are routed, retried, and reported across the entire stack. At its core, orchestration is about building modular, adaptable, and scalable payment infrastructure. What Payment Orchestration platforms do: 1️⃣ Acceptance: Enables merchants to extend their acceptance by providing payers with the preferred ways to pay, like cards, wallets, and local payment methods, all via a single integration. 2️⃣ Routing & Fallbacks: Automatically sends each transaction through the best provider using real-time logic (country, card type, amount, past performance, or real-time availability). If one provider is down or a transaction fails, the orchestrator reroutes through an alternative, minimizing declines. 3️⃣ Reconciliation: - Pulls all settlements, fees, chargebacks, and refunds into one dashboard. - Data is reconciled in real-time and on an hourly basis to prevent any drift between the provider and orchestrator. 4️⃣ Reporting & Analytics:  - Gives full visibility into payment performance: approval rates, declines, and chargebacks across all markets and providers. - All data is available in a single admin panel. Benefits of Payment Orchestration: ✅ Multi-PSP setup: Easily add or switch providers without touching the code. ✅ Higher approval rate: Smart routing + fallbacks = fewer false declines. ✅ Lower costs: Route to local acquirers; skip unnecessary FX fees; A/B test providers to find the best blend of cost and performance. ✅ Global-ready: Expand to new regions by simply plugging in the right local PSP. ✅ Better checkout UX: Supports payment methods customers expect; fewer errors and drop-offs.  ✅ Monitoring: Provides real-time visibility into performance, errors, and approval rates across all providers. ✅ Resilience: No single point of failure: if one provider goes down, payments don’t. ✅ No-code workflows: One integration, no custom logic, just config. ✅ Adaptive fraud routing: Triggers 3DS only when it makes sense based on issuer, region, or amount. Source: Solidgate - https://shorturl.at/jeBjK #Innovation #Fintech #Banking #OpenBanking #API #FinancialServices #Payments #PaymentOrchestration #Acceptance #Acquiring #Scheme #Settlement #Transaction #Fraud  

Dynamic payment routing is SO important for large merchants. As merchants begin to hit a certain number of transactions and scale internationally, the complexity of payments shoots up. Let's go over some of the ways that dynamic routing improves both the merchant & #consumer experience. --- What is payment routing? Payment routing is a part of the #payment process for #merchants working with multiple PSPs. The idea is that, based on a set of rules decided by the merchant, transactions will take the most efficient path to the right PSP. There are 2 types of routing, static & dynamic. ⚡ Static Routing: Static routing is when a merchant delivers transactions to a PSP through a route they manually configured. The path of the transaction is set in stone & can't "intelligently" make the right decision. 🌠 Dynamic Routing: Dynamic payment routing is able to adjust the path of the transaction in real-time, based on current conditions. It's sometimes called "smart" or "intelligent" routing since it can make decisions based on logical rules, rather than a set path. --- What are the benefits of dynamic routing? Resilience - Transactions can be rerouted if a path or node in the network goes down. Scalability - As payments become more complex, dynamic routing allows merchants to remove the burden of taking on more transactions than normal. Companies that are growing internationally benefit. Cost Effectiveness - Dynamic routing ensures that the lowest costly route is picked, meaning transaction fees are always lower on average. Load Balancing - To prevent congestion, or simply to fulfill volume metrics, dynamic routing can more evenly distribute transaction traffic across its existing network. Some high-risk merchant providers benefit here. User Experience - Faster transaction times, lower fees on average, & reduced likelihood of failed transactions mean that consumers don't experience friction, while merchants optimize revenue. --- Should merchants build a dynamic payment routing system in-house, or use a provider? This question comes up a lot. Long-term, an in-house dynamic routing system makes it hard to remain efficient & scalable. Each new alternative payment method can take 2-4 weeks to integrate, each payment method or rail can have different fees, & issue handling takes longer. By using a provider, like FreedomPay for example, adding new payment methods to routing is like turning on a light switch. --- Despite being only one piece of the 'payment machine', dynamic routing holds an important role in improving merchant bottom-lines, optimizing scalability, & boosting their resilience. Below is a diagram of potential routing logics you might encounter. 👇 #fintech #digitalpayments #ecommerce #digitalwallets