Design a payment system with holds and batching

Q: Design a payment system with holds and batching

This question evaluates a candidate's competency in designing reliable, auditable payment workflows, covering authorization holds, batch settlement, immediate charges, idempotency, failure handling, reconciliation, and security within the system design domain.

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Question

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Scenario

Design a payment system that supports:

Hold payment (authorization) : Place a temporary hold on a customer’s payment method for a given amount.
Batch process funds (settlement) : Capture/settle authorized holds in batch (e.g., end-of-day) and move funds to the merchant.
Charge payment (direct charge) : Charge immediately (auth + capture) when batching is not desired.

The system must be reliable, idempotent, and auditable.

What to cover

APIs and core data model
End-to-end flows (hold, capture/batch settlement, direct charge, cancel/release hold, refunds)
Consistency guarantees and failure handling
Idempotency strategy
Handling duplicates, retries, partial failures
Observability and reconciliation
Security/compliance considerations (high level)

Design a payment system with holds and batching

Quick Overview

Scenario

What to cover

Solution

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