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System Requirements Specification: Payment Processing System

This document outlines the Functional Requirements (FRs) and Non-Functional Requirements (NFRs) for the core Payment Processing System.

1. Functional Requirements (FR)

Functional requirements define what the system must do—the core features, actions, and workflows of the payment system.

1.1 User & Account Management

  • Onboarding & KYC: The system must allow merchants and customers to register and complete Know Your Customer (KYC) verification.
  • Wallet Management: The system must maintain user balances, support multi-currency accounts, and allow users to link bank accounts or credit/debit cards.

1.2 Transaction Processing

  • Payment Initialization: The system must accept payment requests via API, web checkout, or mobile SDKs.
  • Payment Methods: The system must support credit/debit cards, bank transfers (ACH/SEPA), digital wallets (Apple Pay, Google Pay), and regional payment methods (e.g., UPI, Pix).
  • Authorization & Capture: The system must support two-stage processing:
  1. Authorization: Holding the funds on the customer's account.
  2. Capture: Transferring the authorized funds to the merchant.
  • Refunds & Chargebacks: The system must support full and partial refunds, as well as workflows for handling customer chargebacks/disputes.

1.3 Settlement & Reconciliation

  • Merchant Settlement: The system must calculate, batch, and initiate payouts to merchants based on their agreed settlement schedule (e.g., $T+1$, $T+2$).
  • Ledger Accounting: The system must maintain a double-entry ledger to track every cent moving through the platform, ensuring total financial consistency.
  • Reconciliation: The system must automatically reconcile internal transaction logs against external bank/network statements daily to detect anomalies.

1.4 Notifications & Reporting

  • Real-time Notifications: The system must trigger instant webhooks and email/SMS receipts to merchants and customers upon payment success, failure, or refund.
  • Reporting Dashboard: Merchants must be able to generate and export transaction statements, fee breakdowns, and tax reports (CSV, PDF).

2. Non-Functional Requirements (NFR)

Non-Functional requirements define how the system should perform its duties, focusing on quality attributes, security, and operational constraints.

2.1 Security & Compliance

⚠️ Critical Constraint: Security is the highest priority for this system. Any compromise can lead to severe legal and financial liabilities.

  • PCI-DSS Compliance: The system must fully comply with PCI-DSS Level 1 standards. Cardholder data must be tokenized; raw PANs (Primary Account Numbers) must never be stored in plain text.
  • Data Encryption: All data in transit must use TLS 1.3. All data at rest (databases, backups) must be encrypted using AES-256.
  • Fraud Detection: The system must evaluate transactions against risk scoring models (velocity checks, geolocation mismatches, IP analysis) in less than 50ms before routing to gateways.

2.2 Performance & Scalability

  • Latency: * The core payment authorization API must respond within $200\text{ ms}$ (excluding external bank gateway latency).

  • Internal database queries for transaction lookups must take less than $20\text{ ms}$.

  • Throughput: The system must handle a baseline of 2,000 Transactions Per Second (TPS) and scale seamlessly to support a peak load of 10,000 TPS during high-traffic events (e.g., Black Friday).

  • Concurrency: The system must utilize optimistic and pessimistic locking mechanisms appropriately to handle thousands of concurrent balance updates without race conditions.

2.3 Availability & Reliability

  • Uptime: The system must achieve 99.999% availability ("five nines"), translating to no more than 5.26 minutes of downtime per year.
  • Idempotency: All payment API endpoints must strictly enforce idempotency using unique keys (Idempotency-Key) to prevent accidental double-charging due to network retries.
  • Disaster Recovery (DR): * RPO (Recovery Point Objective): 0 (No data loss; transaction logs must be synchronously replicated across regions).