Design Digital Wallet Service
Last Updated: December 30, 2025
What is a Digital Wallet?
A digital wallet is a service that allows users to store, send, and receive money electronically without the need for physical cash or cards.
At its core, a digital wallet maintains a balance for each user and enables instant transfers between users, top-ups from external sources (bank accounts, credit cards), and withdrawals to external accounts.
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The system must ensure that every transaction is accurate, every balance is correct, and no money is ever created or lost.
Popular Examples: PayPal, Venmo, Apple Pay, Google Pay, Cash App, Paytm, Alipay
What makes digital wallets fascinating from an engineering perspective is the zero tolerance for errors. In most systems, a bug might cause a bad user experience or data inconsistency that can be fixed later. In a wallet system, a bug could mean money appearing out of thin air or vanishing without a trace.
Every transaction must be exact. If Alice sends Bob $100, exactly $100 must leave Alice's account and exactly $100 must arrive in Bob's account. Not $99.99, not $100.01. Exactly $100.
This system design problem tests your understanding of distributed transactions, consistency guarantees, concurrent access handling, and financial system constraints. Unlike simple CRUD applications, digital wallets have zero tolerance for balance errors.
In this article, we will explore the high-level design of a digital wallet service.
Let's start by clarifying the requirements.