How do fintech startups find new opportunities among so many payment companies? What do PayPal, Stripe, and Square do exactly?

Steps 0-1: The cardholder opens an account in the issuing bank and gets the debit/credit card. The merchant registers with ISO (Independent Sales Organization) or MSP (Member Service Provider) for in-store sales. ISO/MSP partners with payment processors to open merchant accounts.

Steps 2-5: The acquiring process. The payment gateway accepts the purchase transaction and collects payment information. It is then sent to a payment processor, which uses customer information to collect payments. The acquiring processor sends the transaction to the card network. It also owns and operates the merchant’s account during settlement, which doesn’t happen in real-time.

Steps 6-8: The issuing process. The issuing processor talks to the card network on the issuing bank’s behalf. It validates and operates the customer’s account.

#payments #ecommerce

How to scale a website to support millions of users? We will explain this step-by-step.

The diagram below illustrates the evolution of a simplified eCommerce website. It goes from a monolithic design on one single server, to a service-oriented/microservice architecture.

Suppose we have two services: inventory service (handles product descriptions and inventory management) and user service (handles user information, registration, login, etc.).

Step 1 – With the growth of the user base, one single application server cannot handle the traffic anymore. We put the application server and the database server into two separate servers.

Step 2 – The business continues to grow, and a single application server is no longer enough. So we deploy a cluster of application servers.

Step 3 – Now the incoming requests have to be routed to multiple application servers, how can we ensure each application server gets an even load? The load balancer handles this nicely.

Step 4 – With the business continuing to grow, the database might become the bottleneck. To mitigate this, we separate reads and writes in a way that frequent read queries go to read replicas. With this setup, the throughput for the database writes can be greatly increased.

Step 5 – Suppose the business continues to grow. One single database cannot handle the load on both the inventory table and user table. We have a few options:

1. Vertical partition. Adding more power (CPU, RAM, etc.) to the database server. It has a hard limit.

2. Horizontal partition by adding more database servers.

3. Adding a caching layer to offload read requests.

Step 6 – Now we can modularize the functions into different services. The architecture becomes service-oriented / microservice.

#scaling #scale #eCommerce

#ecommerce #paypal