Introduction to the Payment System

A payment service coordinates a purchase across systems it does not control: a merchant, a payment provider, card networks, and banks. The difficult cases are often uncertain outcomes, such as a request timing out after the provider has accepted it. Start by distinguishing authorization, capture, settlement, and the merchant’s internal balance.

What is a digital payment system?

A payment system handles the transfer of funds for purchases. It supports multiple methods, including credit cards, bank transfers, digital wallets, and cryptocurrencies. Each method has its own authorization, processing, and settlement rules. This design focuses on payments made through credit and debit cards. Before defining the architecture, it is important to understand the payment flow.

The payment process

The payment process involves multiple entities. When a customer pays with a card, the system must verify the cardholder, process the payment, and validate the transaction.

The figure below illustrates the payment processing flow: