How Fintech Companies Use the Observer Pattern to Build Scalable Payment Systems

#java #designpatterns #webdev #fintec

If you’ve ever worked in Fintech — payments, trading, banking — you know the drill:
a single transaction doesn’t live alone. One payment can trigger:

fraud detection,
accounting records,
user notifications,
reporting dashboards,
regulatory audits

Now, how do we design this?
Do we let the PaymentProcessor directly call each service?
Or do we go with a more scalable approach?

The Naïve Approach: What Juniors Usually Do

If you ask a junior engineer to design and connect a PaymentProcessor with other services like Fraud Detection, Accounting, and Notifications, chances are they’ll write something like this:

@Service
public class FraudDetectionService {
    public void check(PaymentEvent event) {
        if (event.getAmount() > 10000) {
            log.info("🚨 Fraud Alert! " + event);
        }
    }
}

@Service
public class AccountingService {
    public void record(PaymentEvent event) {
        log.info("📘 Accounting recorded: " + event);
    }
}

@Service
public class NotificationService {
    public void send(PaymentEvent event) {
        log.info("📩 Email sent for " + event);
    }
}

And designed PaymentProcessor like that:

@Service
public class PaymentProcessor {

    private final FraudDetectionService fraudDetectionService;
    private final AccountingService accountingService;
    private final NotificationService notificationService;

    PaymentProcessor(FraudDetectionService fraudDetectionService,
                     AccountingService accountingService,
                     NotificationService notificationService){

    this.fraudDetectionService = fraudDetectionService;
    this.accountingService = accountingService;
    this.notificationService = notificationService;
   }

    public void processPayment(PaymentEvent event) {
        log.info("✅ Processing payment: " + event);

        // Hard-coded calls
        fraudDetectionService.check(event);
        accountingService.record(event);
        notificationService.send(event);
    }
}

This looks simple and clear — and for a junior engineer, it feels natural:
👉 “I just call the services I need, job done!”

But here’s the problem:

Every new requirement (e.g., add a ReportingService) means editing PaymentProcessor.
Removing or replacing a service? Same story.
The class becomes a God Object that knows too much. It works in small demos, but in real fintech systems (where requirements change fast and services multiply), this approach quickly becomes a maintenance nightmare.

✅ The Observer Pattern: A Senior-Level Solution

Imagine a senior engineer at a Fintech company.
He’s been around long enough to see how regulations, compliance, and fraud rules change every few months.

One day, a product manager walks up to him:

“Hey, we need to add a new RegulatoryReportingService to capture every payment above $5,000. Can you add that quickly?”

A junior engineer might dive into the PaymentProcessor class, add another direct call, and push the change. Done. ✅

But the senior engineer pauses.
He knows this is just the beginning. Tomorrow, there might be:

A new AML (Anti-Money Laundering) check.
A new Data Analytics Service.
A new AI-based Fraud Detector. If every new requirement forces him to edit PaymentProcessor, the system will soon collapse under its own weight.

So instead, he thinks differently:

👉 “What if I let PaymentProcessor focus only on payments… and let other services subscribe to events as they need?”

That thought leads him to the Observer Pattern.
Now, new services can be plugged in or removed without ever touching the payment logic.

Step 1— The Observer Interface

public interface PaymentObserver {
    void update(PaymentEvent event);
}

Step 2 — The Services (Observers)

@Service
public class FraudDetectionService implements PaymentObserver {
    @Override
    public void update(PaymentEvent event) {
        if (event.getAmount() > 10000) {
            log.info("🚨 Fraud Alert! " + event);
        }
    }
}

@Service
public class AccountingService implements PaymentObserver {
    @Override
    public void update(PaymentEvent event) {
        log.info("📘 Accounting recorded: " + event);
    }
}

@Service
public class NotificationService implements PaymentObserver {
    @Override
    public void update(PaymentEvent event) {
        log.info("📩 Email sent for " + event);
    }
}

Step 3 — The Subject (Observable)

Spring checks the context: “Do I have beans implementing PaymentObserver?”
✅ Yes → It injects all of them into the list.

We don’t need to add each service dependency in constructor because all services implement PaymentObserver interface.

@Service
public class PaymentProcessor {
    private final List<PaymentObserver> observers;

    public PaymentProcessor(Liste<PaymentObserver> observers) {
        this.observers = observers
    }

    public void processPayment(PaymentEvent event) {
        log.info("✅ Processing payment: " + event);
        notifyObservers(event);
    }

    private void notifyObservers(PaymentEvent event) {
        for (PaymentObserver observer : observers) {
            observer.update(event);
        }
    }
}

⚡ Why This Matters in Fintech