Design Splitwise

Shared expense tracker inspired by Splitwise: a ledger where expenses and net balances commit in one transaction, cached balances, debt simplification into the fewest payments, notifications, receipts and search. A teaching design.

Functional requirements

  • Users can create groups and add members via email/phone.
  • Users can log expenses within a group, specifying amount, description, payer, and split method (equal, percentage, exact).
  • System automatically computes and displays each user's net balance with every other member.
  • Users can settle up (record a payment) to reduce outstanding balances.
  • Users receive push/email notifications when an expense is added or a payment is received.
  • Users can attach receipt photos to expenses.
  • Users can view full expense history for any group.

Non-functional requirements

  • Balance read latency: p99 < 100ms (served from cache).
  • Expense creation latency: p99 < 200ms (write to DB + async notification).
  • Notification delivery: within 10 seconds of expense creation.
  • Availability: 99.9%+; expense creation and balance reads must stay up even if notifications fail.
  • Scale: 50M registered users, 10M DAU, 5M expenses/day.
  • Receipt image serving: p99 < 50ms via CDN.
  • Data durability: expenses and balances must never be lost — ACID transactions on settlement.

How the design evolves

Stage 1: Single Server, Balances Summed on Request

See why recomputing balances from all history doesn't last.

What was missing: Nothing yet.

Why that's risky: Balance views (the most common request) get slower as history grows, and one server and database carry everything.

What gets added: One server that stores expenses and computes each balance by summing every expense the user ever shared.

Trade-offs: No stored balances means they can't drift, but every read does the full computation.

Stage 2: A Ledger with Balances Updated in the Same Transaction

Keep a running balance per member that can never disagree with the expenses.

What was missing: Balances were recomputed from all history on every view.

Why that's risky: Every balance view still reads the ledger, and a group's debts can form long chains (A owes B owes C) that take many payments to settle.

What gets added: An expense service that records each expense with its split lines and updates every member's net balance (per group and currency) in the same transaction, a sharded ledger database, a balance service reading net balances, and a groups service.

Trade-offs: Each write updates several balance rows, so a busy group has some write contention; sharding by group keeps it local.

Stage 3: Cached Balances and Debt Simplification

Serve balance views from memory and settle groups with the fewest payments.

What was missing: Balance views hit the ledger, and settling a group took many payments.

Why that's risky: Nobody is told when a friend adds an expense, and there's no history of who changed what.

What gets added: A balance cache invalidated by every change in a group, and debt simplification in the balance service: net balances are matched largest creditor to largest debtor until everyone is settled, giving at most n−1 payments for n people.

Trade-offs: Simplified payments may send money between people who never shared an expense directly; users can turn simplification off.

Stage 4: Notifications and Activity Feed

Tell group members about changes and keep a history of who did what.

What was missing: No notifications and no record of changes.

Why that's risky: Receipt photos have nowhere to go, finding an old entry means scrolling, and nothing limits abuse.

What gets added: An activity event queue fed by every change, and a notification worker that sends push and email notifications and writes each member's activity feed.

Trade-offs: Notifications arrive seconds after the change.

Stage 5: Receipts, Search and Protection

Attach receipts, find old entries, and protect and watch the service.

What was missing: No receipts, no search, no rate limits and no monitoring.

Why that's risky: Remaining risk is low at this scale; backups and a second region cover disasters.

What gets added: Receipt uploads to object storage served through a CDN, a search index of descriptions, amounts, dates and people kept current from the activity events, a rate limiter, and monitoring of latency, transaction conflicts and notification delivery.

Trade-offs: Search lags new entries by a few seconds.

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