10.13. DD 13: Wallet-to-Wallet Payments#

10.13.1. Summary#

This design document proposes an extension of the Taler protocol that allows payments from wallet-to-wallet without a merchant.

10.13.2. Motivation#

To be usable as an electronic payment system with cash-like properties, customers should be able to transfer money between themselves without needing to setup anything beyond their wallet(s).

This will be used for payments via e-mail and other messaging apps, as well as possibly for transfers via NFC/QR code between mobile phones.

10.13.2.1. Invoice Flow User Experience#

10.13.2.2. Donation Flow User Experience#

10.13.3. Requirements#

The protocol must permit transacting arbitrary amounts in any currency, as long as both parties trust the exchange involved.
The control data for wallet-to-wallet payments should be small enough to fit into a QR code or short message (so ideally less than 64 bytes).
No other direct communication channel between payer and payee should be required.
The wallet-to-wallet payment must be possible without trusting the other party beyond the point where the money has been received by the payee. Thus, sharing of coin private keys is not sufficient, we need transactional semantics resulting in exclusive control over the funds by the recipient.
The wallet-to-wallet payment protocol must not allow users to circumvent income transparency. That is, each wallet-to-wallet transaction must be visible on a KYCed transaction ledger (such as a bank account).
The money received via a wallet-to-wallet payment must be usable for further Taler payments with minimal delay (after KYC).
It must still be possible to associate payments with a contract that is effectively (alas not necessarily directly) signed by both parties: the payer with the coin private keys, and the payee with their KYC’ed account private key.
The contract must be able to satisfy laws like the German TSE law, which implies that the payer must be able to obtain a payment receipt.
Two payment scenarios must be possible: (1) one where the payee first transmits a proposal to the payer (request-to-pay) that the payer accepts by making the payment, and (2) completely uni-directional payments where the payer includes a proposal with the payment and the payee accepts the proposal by taking the offered payment.
If the payment fails (i.e. the receiver refuses to accept the money or the message is lost), the payer must automatically recover the funds (minus applicable fees) without the need for further communication.
If funds flow back to the payer due to an aborted payment, it must be provable for the payer that these funds were not income but merely an aborted transaction. Furthermore, in this case, no KYC should be required from the payer.
If a payment would partially succeed, i.e. because the payer inadvertedly used some double-spent coins and some valid coins, this must fail before the uni-directional communication and be correctable payer-side. In other words, the actual payment must be atomic.
The usual properties of Taler (everything auditable, unlinkability, high-performance in terms of CPU, bandwidth, latency, storage requirements, and the ability to levy fees on every operation that is costly for the exchange) need to be preserved.
The system must handle the case where a customer no longer intends to use the KYCed account (due to disuse, death, or key compromise).

10.13.4. New Terminology#

An account is a non-expiring reserve for which entity knowing the reserve private key has completed a KYC procedure sufficient to enable receiving income under that address.
A purse is a public-private key pair where the public key is an exchange address from which any owners of an account can merge the amount left at a purse into their account balance assuming they know the purse private key.
A wad is an exchange-to-exchange wire transfer that wires money into a group of accounts at the target exchange.

10.13.5. Proposed Solution#

10.13.5.1. Principles#

Purses are ephemeral and only serve for one transaction.
The purse’s transaction amount is fixed when the purse is created, and specified together with the maximum deposit fee acceptable to the payee. Deposit fees exceeding this limit must be paid by the payer.
Each purse is associated with a contract terms hash and an expiration date.
The contract is optionally stored encrypted at the exchange. The contract must be encrypted to the purse private key. An additional ephemeral public key (for DH encryption) should be part of the POSTed payload.
The exchange deletes the encrypted contract at this expiration date.
The exchange may limit the encrypted contract size and storage duration.
Either payer or payee can create the purse and associate it with the contract.
By merging the purse into the account, the payee accepts the contract.
By paying the purse to the designated amount, the payer accepts the contract.
Until the purse is fully paid, the payer can abort the payment.
The exchange may charge a purse fee for managing the purse, but we want most scenarios to not require it to be effectively charged.
By associating a purse with an account upon creation, the purse fee can be made optional for account holders as long as the number of purses created per account is below a configurable threshold.
By charging the purse fee only in case the payee did not merge the purse into their account, the purse fee can be limited for payers to the case where they are receiving a refund — and here it could be then entirely avoided if the refund fee is non-zero.

10.13.5.2. W2W Payment Metadata#

The standard Taler Customer-to-Merchant payments always use a contract terms JSON object to record the modalities of the payment and the resulting obligations of a successful payment.

The contract terms concept does not directly carry over to W2W payments, because:

Either party may initiate the payment.
The payee does not have a merchant public key, and at the time of payment initiation, the payee account might not yet be known.
There is no nonce that the customer generates and uses to prove that they uniquely “own” the contract terms.
There is no negotiation of trusted auditors / exchanges possible.

As a result, some of the existing fields of the contract terms no longer apply to wallet-to-wallet payments.

Contract metadata for W2W payments can be exchanged in three ways:

Inline, as part of the payment request / payment offer. In this case, both parties are already aware of the contract’s contents and the exchange’s contract exchange facility is simply not used.
The payee can create a purse and immediately associate it with an account by sending a signed merge request together with the (encrypted) contract.
1. The purse creation request created by the payee must include a signature with the account private key of the payee signing the purse public key and the hash of the contract, thereby affirming that the contract was pre-approved by the account owner.
2. The exchange may wave the purse fee for a certain number of active purses per account. Additional purses can be purchased by paying the purse fee.
The payer can store a contract with the exchange by POSTing an encrypted contract to the exchange as part of creating a purse.
1. The exchange charges the purse fee to payers for purses that are refunded after not being merged.
2. When paying into a purse, the coin signature includes the purse public key, the contract hash and the desired expiration date (how long a merge is allowed).
3. Payment offers are not allowed if the amount transacted is below the purse fee.
4. The exchange auto-refunds coins in purses with deposits matching expired contracts.
  
  Note
  
  While the refund fee amount can be reused, these types of refunds are not approved by a merchant’s signature. Thus, we will need a new message type in the coin history to represent these events.

10.13.5.3. Account creation#

An account is simply a reserve that has been subjected to KYC. A reserve that has seen a purse merged into it must be upgraded to an account before further withdraw (or close) operations are allowed. The usual closure deadline for a reserve is extended to the KYC deadline.

The payee generates a reserve key, which also yields a payto://taler/$EXCHANGE_BASE_URL/$RESERVE_PUB target address (for which the payee knows the corresponding reserve private key).
When withdrawing from a reserve that has experienced merge operations and thus must be an account, the exchange first checks if the customer has satisfied the KYC requirements. If not, the customer is redirected to a Web page where they can perform the necessary KYC operation.
For this, the exchange wire gateway is extended with a request to check the KYC status of a customer based on an RESERVE_PUB. Possible replies are in-progress and succeeded. An in-progress status should be accompanied with information how the customer may complete the KYC check.
A new exchange endpoint /reserves/$RESERVE_PUB/kyc allows wallets to request a KYC for a $RESERVE_PUB. Such a request may include the requirement to pay a KYC fee. The KYC fee may be charged to the reserve (a sufficient balance can be provided by the wallet by creating a purse and merging the purse with the reserve, if needed), or could be waved if the reserve was established via a wire transfer from a partner bank where KYC is free. For this, the Wire gateway API is extended with a flag that informs the exchange that the incoming wire transfer implies a free KYC check.
If the account owner fails to perform the KYC check, all funds in an reserve remain inaccessible. After a configurable duration, the funds may be considered forfeit and become the property of the exchange where the reserve is located.
The exchange may charge an annual account fee, and can close accounts where the account balance is insufficient to cover the account fee.

10.13.5.4. Withdrawing from accounts#

When requesting an account’s history (which can get quite long), the exchange only returns the last 3 months of data. Requesting the full history requires paying an account history fee (which is not done via a 402, but simply charged to the account when requested; full account histories for accounts with an insufficient balance cannot be requested – except of course the wallet could simply top up the account balance first, see below).
If the exchange has merged a purse into an account, or received an inbound wire transfer from a wad matching the account (see below), it adds the respective amount(s) to the account’s balance, allowing the KYC’ed customer to withdraw the funds, similar to withdrawals from a reserve.
The account history endpoint should also allow long-polling. Note that long-polling should be limited to short durations, as inbound transfers via taler-exchange-wirewatch cannot cause the long polling to be resumed, only transfers within the same exchange can benefit from long-polling acceleration.

10.13.5.5. Account deletion#

A reserve owner can delete a reserve by signing a deletion message with the reserve private key.
This basically resets the KYC data at the exchange, preventing further use of the account. This is helpful in case a user is concerned about having accidentally disclosed the reserve private key to a third party.
If funds remain in the reserve, the exchange will close the reserve and wire the funds to the associated bank account. If no bank account is associated with the reserve, an error message is generated instead. The user can pass an extra override parameter to delete reserves even if they still contain funds.
A related endpoint should exist for the exchange operator, possibly using messages signed with a new exchange management key. This could be useful in case customers die or are otherwise in need for manual intervention that requires an account to be deleted. In this case, remaining funds in the account should be wired to a bank account designated in the message with the management signature. The audit report should contain a special note for all of these types of account deletions.

10.13.5.6. Payment offers#

In this protocol variant, the payer is initiating the process.

The payer creates a purse by computing a public-private key pair.
The payer POSTs to the /purse/$PURSE_PUB/depost endpoint to deposit coins into the purse and optionally upload the encrypted contract terms. The deposit signatures should use payto://taler/$PURSE_PUB as the target address and signing over the $CONTRACT_HASH as usual in deposit operations. Note that the lack of a hostname indicates that the target address is a local purse.
The payer shares the purse’s private key and the base URL of the exchange where the purse was created with the payee. This can be done using a taler://purse/$BASE_URL/$PURSE_PRIV URL. The chapter on Refinements below clarifies why this step is not quite OK and was modified when implementing the design.
The payee uses the new /purse/$PURSE_PUB endpoint to retrieve the encrypted contract (if available) and purse balance, which includes all (coin) deposits and merges involving the purse.
The payee’s wallet must ensure that either:
1. The purse has an attached encrypted contract terms, the contract terms can be decrypted and are valid, and their hash matches the contract terms hash of the purse.
2. The wallet received detached contract terms, and their hash matches contract terms of the purse.
If neither case applies, the payee’s wallet must reject the payment.
The payee can then POST to /purse/$PURSE_PUB/merge a request signed by the purse’s private key to merge the funds into an account. A second signature must be provided by the account private key, signing the $CONTRACT_HASH thereby affirming that the payee accepted the contract. The account is of the form payto://taler/$EXCHANGE_BASE_URL/$ACCOUNT_PUB.
Processing continues depending on the location of the account:
1. If the $EXCHANGE_BASE_URL matches the local exchange, then the exchange processes the merge request akin to the logic for payments into known accounts, as detailed above.
2. If the $EXCHANGE_BASE_URL does not match the local exchange, a wad fee is charged, and the remaining amount are placed into a wad to inform the target exchange, as detailed below. Wad fees may be covered by the merchant, just like deposit fees, depending on the contract.
The exchange confirms the merge (per response to the merge request). This allows the payee software to instantly affirm to the users that the transaction is final (even if it may not be instantly available to the payee if the payee did not complete the KYC process for the account).
The payer uses the GET /purse/$PURSE_PUB endpoint to obtain the receipt from the payee (in the form of the merge signature). Query parameters are used to avoid downloading the (already known) encrypted contract and the deposit operations. Long-polling must also be possible for this request.

10.13.5.7. Payment requests#

The payee creates a purse by computing a public-private key pair.
The payee POSTs to the /purse/$PURSE_PUB/merge endpoint to both upload the encrypted contract, associate it with the payee’s account and signal its agreement to the contract. The merge request must be signed by the purse’s private key. A second signature must be provided by the account private key, signing the $CONTRACT_HASH thereby affirming that the payee accepted the contract.
The payee provides the $PURSE_PRIV to the payer.
The payer computes the corresponding public key and uses the new /purse/$PURSE_PUB endpoint to retrieve the encrypted contract and the merge request, which signifies that the payee would agree to the contract.
The payer software decrypts the encrypted contract using the purse private key and the payer accepts the contract in the user interface.
Processing continues depending on the source of the coins:
1. If the payer’s coins originate from the same exchange, the payer software POSTs to the /purse/$PURSE_PUB/depost endpoint to deposit coins into the purse. The deposit signatures should use payto://taler/$PURSE_PUB as the target address and signing over the $CONTRACT_HASH as usual in deposit operations. Note that the lack of a hostname indicates that the target address is a local purse.
2. If the payer’s coins originate from another exchange, the payer software deposits the coins at the originating exchange using the traditional /deposit endpoint and a target account of the form payto://taler/$EXCHANGE_BASE_URL/$ACCOUNT_PUB. In this case, the remote exchange charges a wad fee and places the remaining amount into a wad to inform the target exchange, as detailed below.
The exchange confirms the deposit. This allows the payer software to instantly affirm to the users that the transaction is final, or to abort or try again in case of errors.
The payee uses the GET /purse/$PURSE_PUB endpoint (possibly with long-polling) to be notified about the successful deposit and subsequent completion of the merge request.

10.13.5.8. Payment into accounts at remote exchanges#

In case the coins and the accounts in the transaction flows above are at different exchanges, an aggregated exchange-to-exchange payment (short wad) is used.

Exchanges specify a new wad fee that they charge for exchange-to-exchange payments. They also specify their wad policy, that is how often they perform exchange-to-exchange transfers.

Note

We may want to consider allowing for different wad-speed levels, where express payments (without aggregation) are allowed in return for higher wad fees.
The payer’s exchange creates a wad by grouping all wad requests to the same target exchange. It executes the transaction when either the wad threshold (maximum number of transactons aggregated per wad) or the wad delay (maximum delay for transfers) has been reached.
If the (aggregated) wire transfer fails (say the /wire endpoint of the payee exchange does not resolve to a valid bank account), the originating exchange automatically creates a full refund for all involved coins (refund fees apply).

Note

While the refund fee amount can be reused, these types of refunds are not approved by a merchant’s signature. Thus, we will need a new message type in the coin history to represent these events.
The payee’s exchange observes the wire transfer with a wire transfer subject with the originating exchange base URL and a $WATID, and uses a GET /wad/$WATID request to obtain details about the target accounts.
When the payer’s exchange is requested to provide information about aggregated transfers under the $WATID, it provides a signed list of account public keys and associated amounts that must add up to an amount below the total amount transferred. If they do not, the payee’s exchange does not credit any of the accounts and instead preserves the bogus reply (to justify its inaction with its own auditor) and reports the issue to the auditor of the payer’s exchange (keeping the received funds for future manual resolution).
taler-exchange-wirewatch and the Taler wire gateway API will need to be extended to allow passing inbound wire transfers with $WATID and exchange base URL to the exchange. Furthermore, another tool is needed to lookup the wad data at remote exchanges.
If the payee trusts the originating exchange, it may consider the transaction final once the originating exchange has affirmed the deposit (assuming the payer has a way to submit the evidence of that payment, which may not apply in uni-directional scenarios). Otherwise, the payee may simply only trust its own exchange, resulting in the transfer only being considered final after the receiving exchange has confirmed that the wad has arrived.

10.13.5.9. Examples#

Cross-exchange W2W payment request:

Bob borrowed 15 EUR from Alice to buy a train ticket. A few days later, Alice wants her money back. She creates a request for payment in her wallet. The wallet creates a purse for 15 EUR at the only exchange that Alice is currently using. The wallet shows her a taler://purse/{EXCHANGE_URL}/{PURSE_PRIV} link that she can share with Bob. Bob receives the link and opens it with his Taler wallet. Bob is using a different EUR exchange than Alice. Bob’s wallet makes a /deposit request to his own exchange. Shortly after, Alice’s exchange receives the wad from Bob’s exchange, and credits the money into Alice’s purse.
- Q: How does Bob find out if Alice’s exchange supports a wad transfer from Bob’s exchange? A: This needs to be part of the wad policy.
- Q: How does Bob get a “receipt” to prove that he paid Alice? A: He has Alice’s account public key and the associated signature chain leading to her payment request. If he paid someone else by accident, the KYC of Alice’s exchange could be used to find out who received the funds.

Cross-exchange W2W payment offer:

Carol wants to send some money to Dave as a birthday gift. Carol knows that Dave is using Taler, but she does not know which exchange he is using. She opens her Taler wallet and initiates a P2P payment. She sends the resulting taler://purse/{EXCHANGE_URL}/{PURSE_PRIV} in an e-mail to Dave. Dave opens they link in the e-mail with his Taler wallet. Since Dave is using a different exchange than Carol, Dave’s wallet issues a merge request to Carol’s exchange pointing Carol’s exchange to Dave’s account at his exchange. Shortly after, Dave’s exchange receives a wad from Carol’s exchange, and credits Dave’s account with the money.

10.13.5.10. State machine for Purses#

// The "OPEN-ACCOUNT" start state implies that the purse is associated
// with an account and a merge request for that account.
-> OPEN-ACCOUNT

// "Partial" means that it is filled with a fraction of the coins
// indicated in the creation request.
OPEN-ACCOUNT -> PARTIAL

// The purse was filled with as many coins
// as indicated in the creation request, resulting in the transaction to complete.
OPEN-ACCOUNT -> ACCEPTED

// The offer expired before any payment was received.
OPEN-ACCOUNT -> CLOSED

// The purse was filled with as many coins
// as indicated in the creation request, resulting in the transaction to complete.
PARTIAL -> ACCEPTED

// During an abort, already deposited coins are being taken out of the purse.
PARTIAL -> OPEN-ACCOUNT

// All coins put into the purse are refunded because the
// payer never completed the purchase before the timeout.
PARTIAL -> CLOSED

// The "OPEN-DEPOSIT" start state implies that the purse is filled with
// deposited coins.
-> OPEN-DEPOSIT

// Paid and merged with an account (locally or via a wad)
OPEN-DEPOSIT -> ACCEPTED

// The offer expired without a merge request.
OPEN-DEPOSIT -> CLOSED

10.13.5.11. Additional considerations#

Creation of additional accounts per customer can be discouraged by asking for higher fees.
The global transaction volume of one customer can be easily determined by authorities, which can then trigger further audits of the customer
As a technically expensive but more water-tight measure, normal withdrawals from reserves could be disallowed. Instead, a modified refresh protocol could ensure that whoever has knowledge of the account private key can also learn the private keys of coins withdrawn from that account, thereby removing Taler’s “one-hop withdrawal loohole”.

10.13.5.12. Exchange database schema changes#

We need to exchange the existing reserves table to include bits for KYC-needed and KYC-passed. Also, we need to store the payto://-URI of the bank account.

Finally, we may need to keep some link to the KYC data, even though the exchange technically does not need it, but likely there might be regulatory reasons to have that association for legal inquiries. (However, it would also be possible to keep that link only in the external KYC service’s database.)

-- Everything in one big transaction
BEGIN;
-- Check patch versioning is in place.
SELECT _v.register_patch('exchange-TBD', NULL, NULL);
--
CREATE TABLE IF NOT EXISTS partners
(partner_serial_id BIGSERIAL UNIQUE
,partner_master_pub BYTEA NOT NULL CHECK(LENGTH(reserve_pub)=32)
,start_date INT8 NOT NULL
,end_date INT8 NOT NULL
,wad_frequency INT8 NOT NULL
,wad_fee_val INT8 NOT NULL
,wad_fee_frac INT4 NOT NULL
,master_sig BYTEA NOT NULL CHECK (LENGTH(master_sig)=64))
,partner_base_url TEXT NOT NULL
);
COMMENT ON TABLE partners
  IS 'exchanges we do wad transfers to';
COMMENT ON COLUMN partners.partner_master_pub
  IS 'offline master public key of the partner';
COMMENT ON COLUMN partners.start_date
  IS 'starting date of the partnership';
COMMENT ON COLUMN partners.end_date
  IS 'end date of the partnership';
COMMENT ON COLUMN partners.wad_frequency
  IS 'how often do we promise to do wad transfers';
COMMENT ON COLUMN partners.wad_fee_val
  IS 'how high is the fee for a wallet to be added to a wad to this partner';
COMMENT ON COLUMN partners.partner_base_url
  IS 'base URL of the REST API for this partner';
COMMENT ON COLUMN partners.master_sig
  IS 'signature of our master public key affirming the partnership, of purpose TALER_SIGNATURE_MASTER_PARTNER_DETAILS';
--
ALTER TABLE reserves
  ADD COLUMN kyc_needed BOOLEAN NOT NULL DEFAULT (false)
  ADD COLUMN kyc_passed BOOLEAN NOT NULL DEFAULT (false)
  ADD COLUMN payto_uri TEXT DEFAULT (NULL)
  ADD COLUMN kyc_link TEXT DEFAULT (NULL);
COMMENT ON COLUMN reserves.kyc_needed
  IS 'set to true once a reserve was merged with a purse';
COMMENT ON COLUMN reserves.kyc_passed
  IS 'set to true once the user performed the KYC check';
COMMENT ON COLUMN reserves.payto_uri
  IS 'bank account details to use in case reserve is closed';
COMMENT ON COLUMN reserves.kyc_link
  IS 'optional link to KYC data';
--
CREATE TABLE IF NOT EXISTS kyc_requests
(kyc_request_serial_id BIGSERIAL UNIQUE
,reserve_uuid INT8 NOT NULL REFERENCES reserves (reserve_uuid) ON DELETE CASCADE
,kyc_date INT8 NOT NULL
,kyc_retry INT8 NOT NULL
,kyc_fee_val INT8 NOT NULL
,kyc_fee_frac INT4 NOT NULL
,reserve_sig BYTEA NOT NULL CHECK (LENGTH(reserve_sig)=64))
,kyc_id TEXT NOT NULL
,PRIMARY KEY (reserve_uuid, kyc_date)
);
COMMENT ON TABLE kyc_requests
  IS 'KYC processes initiated by the owner of a reserve';
COMMENT ON COLUMN kyc_requests.reserve_uuid
  IS 'Reserve for which the KYC request was triggered.';
COMMENT ON COLUMN kyc_requests.reserve_sig
  IS 'Signature affirming the KYC request';
COMMENT ON COLUMN kyc_requests.kyc_fee_val
  IS 'Amount paid by the reserve for the KYC process.';
COMMENT ON COLUMN kyc_requests.kyc_date
  IS 'When was the KYC process originally initiated.';
COMMENT ON COLUMN kyc_requests.kyc_retry
  IS 'Timestamp when we should next query the KYC backend for the KYC status. The maximum possible numeric value indicates that we do not need to ever check the status of this KYC process again.';
COMMENT ON COLUMN kyc_requests.kyc_id
  IS 'ID of the KYC process, used to compute the URL returned to the client as well as for the exchange to check if the KYC has completed. Format depends on the KYC process of the bank.';
--
CREATE TABLE IF NOT EXISTS mergers
(merge_request_serial_id BIGSERIAL UNIQUE
,reserve_uuid BYTEA NOT NULL REFERENCES reserves (reserve_uuid) ON DELETE CASCADE
,partner_serial_id INT8 REFERENCES partners(partner_serial_id) ON DELETE CASCADE,
,reserve_pub BYTEA NOT NULL CHECK (LENGTH(reserve_pub)=32),
,purse_pub BYTEA NOT NULL CHECK (LENGTH(purse_pub)=32),
,reserve_sig BYTEA NOT NULL CHECK (LENGTH(reserve_sig)=64))
,purse_sig BYTEA NOT NULL CHECK (LENGTH(purse_sig)=64))
,merge_timestamp INT8 NOT NULL
,purse_expiration INT8 NOT NULL
,h_contract_terms BYTEA NOT NULL CHECK (LENGTH(h_contract_terms)=64))
,purse_val INT8 NOT NULL
,purse_frac INT4 NOT NULL
,PRIMARY KEY (purse_pub)
);
COMMENT ON TABLE mergers
  IS 'Merge requests where a purse- and account-owner requested merging the purse into the account';
COMMENT ON COLUMN mergers.reserve_uuid
  IS 'identifies the reserve';
COMMENT ON COLUMN mergers.partner_serial_id
  IS 'identifies the partner exchange, NULL in case the target reserve lives at this exchange';
COMMENT ON COLUMN mergers.reserve_pub
  IS 'public key of the target reserve';
COMMENT ON COLUMN mergers.purse_pub
  IS 'public key of the purse';
COMMENT ON COLUMN mergers.reserve_sig
  IS 'signature by the reserve private key affirming the merge';
COMMENT ON COLUMN mergers.purse_sig
  IS 'signature by the purse private key affirming the merge';
COMMENT ON COLUMN mergers.merge_timestamp
  IS 'when was the merge message signed';
COMMENT ON COLUMN mergers.purse_expiration
  IS 'when is the purse set to expire';
COMMENT ON COLUMN mergers.h_contract_terms
  IS 'hash of the contract terms both sides are to agree upon';
COMMENT ON COLUMN mergers.purse_val
  IS 'amount to be transferred from the purse to the reserve (excludes deposit fees)';
CREATE INDEX IF NOT EXISTS mergers_reserve_uuid
  ON mergers (reserve_uuid);
COMMENT ON INDEX mergers_reserve_uuid
  IS 'needed in reserve history computation';
--
CREATE TABLE IF NOT EXISTS contracts
(contract_serial_id BIGSERIAL UNIQUE
,purse_pub BYTEA NOT NULL CHECK (LENGTH(purse_pub)=32),
,pub_ckey BYTEA NOT NULL CHECK (LENGTH(pub_ckey)=32)),
,e_contract BYTEA NOT NULL,
,PRIMARY KEY (purse_pub)
);
COMMENT ON TABLE contracts
  IS 'encrypted contracts associated with purses';
COMMENT ON COLUMN contracts.purse_pub
  IS 'public key of the purse that the contract is associated with';
COMMENT ON COLUMN contracts.pub_ckey
  IS 'Public ECDH key used to encrypt the contract, to be used with the purse private key for decryption';
COMMENT ON COLUMN contracts.e_contract
  IS 'AES-GCM encrypted contract terms (contains gzip compressed JSON after decryption)';
--
CREATE TABLE IF NOT EXISTS history_requests
(reserve_uuid INT8 NOT NULL REFERENCES reserves(reserve_uuid) ON DELETE CASCADE,
,request_timestamp INT8 NOT NULL
,reserve_sig BYTEA NOT NULL CHECK (LENGTH(reserve_sig)=64))
,history_fee_val INT8 NOT NULL
,history_fee_frac INT4 NOT NULL
,PRIMARY KEY (reserve_uuid,request_timestamp)
);
COMMENT ON TABLE history_requests
  IS 'Paid history requests issued by a client against a reserve';
COMMENT ON COLUMN history_requests.request_timestamp
  IS 'When was the history request made';
COMMENT ON COLUMN history_requests.reserve_sig
  IS 'Signature approving payment for the history request';
COMMENT ON COLUMN history_requests.history_fee_val
  IS 'History fee approved by the signature';
--
CREATE TABLE IF NOT EXISTS close_requests
(reserve_uuid INT8 NOT NULL REFERENCES reserves(reserve_uuid) ON DELETE CASCADE,
,close_timestamp INT8 NOT NULL
,reserve_sig BYTEA NOT NULL CHECK (LENGTH(reserve_sig)=64))
,close_val INT8 NOT NULL
,close_frac INT4 NOT NULL
,PRIMARY KEY (reserve_uuid,close_timestamp)
);
COMMENT ON TABLE close_requests
  IS 'Explicit requests by a reserve owner to close a reserve immediately';
COMMENT ON COLUMN close_requests.close_timestamp
  IS 'When the request was created by the client';
COMMENT ON COLUMN close_requests.reserve_sig
  IS 'Signature affirming that the reserve is to be closed';
COMMENT ON COLUMN close_requests.close_val
  IS 'Balance of the reserve at the time of closing, to be wired to the associated bank account (minus the closing fee)';

--
CREATE TABLE IF NOT EXISTS purse_requests
(purse_deposit_serial_id BIGSERIAL UNIQUE
,purse_pub BYTEA NOT NULL CHECK (LENGTH(purse_pub)=32),
,purse_expiration INT8 NOT NULL
,h_contract_terms BYTEA NOT NULL CHECK (LENGTH(h_contract_terms)=64)
,amount_with_fee_val INT8 NOT NULL
,amount_with_fee_frac INT4 NOT NULL
,purse_sig BYTEA NOT NULL CHECK(LENGTH(purse_sig)=64)
,PRIMARY KEY (purse_pub,coin_pub)
);
COMMENT ON TABLE purse_requests
  IS 'Requests establishing purses, associating them with a contract but without a target reserve';
COMMENT ON COLUMN purse_requests.purse_pub
  IS 'Public key of the purse';
COMMENT ON COLUMN purse_requests.purse_expiration
  IS 'When the purse is set to expire';
COMMENT ON COLUMN purse_requests.h_contract_terms
  IS 'Hash of the contract the parties are to agree to';
COMMENT ON COLUMN purse_requests.amount_with_fee_val
  IS 'Total amount expected to be in the purse';
COMMENT ON COLUMN purse_requests.purse_sig
  IS 'Signature of the purse affirming the purse parameters, of type TALER_SIGNATURE_PURSE_REQUEST';
--
CREATE TABLE IF NOT EXISTS purse_deposits
(purse_deposit_serial_id BIGSERIAL UNIQUE
,purse_pub BYTEA NOT NULL CHECK (LENGTH(purse_pub)=32),
,coin_pub BYTEA NOT NULL REFERENCES known_coins (coin_pub) ON DELETE CASCADE
,amount_with_fee_val INT8 NOT NULL
,amount_with_fee_frac INT4 NOT NULL
,coin_sig BYTEA NOT NULL CHECK(LENGTH(coin_sig)=64)
,PRIMARY KEY (purse_pub,coin_pub)
);
COMMENT ON TABLE purse_deposits
  IS 'Requests depositing coins into a purse';
COMMENT ON COLUMN purse_deposits.purse_pub
  IS 'Public key of the purse';
COMMENT ON COLUMN purse_deposits.coin_pub
  IS 'Public key of the coin being deposited';
COMMENT ON COLUMN purse_deposits.amount_with_fee_val
  IS 'Total amount being deposited';
COMMENT ON COLUMN purse_deposits.coin_sig
  IS 'Signature of the coin affirming the deposit into the purse, of type TALER_SIGNATURE_PURSE_DEPOSIT';
--
CREATE TABLE IF NOT EXISTS wads_out
(wad_out_serial_id BIGSERIAL UNIQUE
,wad_id BYTEA PRIMARY KEY CHECK (LENGTH(wad_id)=24)
,partner_serial_id INT8 NOT NULL REFERENCES partners(partner_serial_id) ON DELETE CASCADE,
,amount_val INT8 NOT NULL
,amount_frac INT4 NOT NULL
,execution_time INT8 NOT NULL
,UNIQUE (exchange_url, execution_time)
);
COMMENT ON TABLE wads_out
  IS 'Wire transfers made to another exchange to transfer purse funds';
COMMENT ON COLUMN wads_out.wad_id
  IS 'Unique identifier of the wad, part of the wire transfer subject';
COMMENT ON COLUMN wads_out.partner_serial_id
  IS 'target exchange of the wad';
COMMENT ON COLUMN wads_out.amount_val
  IS 'Amount that was wired';
COMMENT ON COLUMN wads_out.execution_time
  IS 'Time when the wire transfer was scheduled';
--
CREATE TABLE IF NOT EXISTS wad_out_entries
(wad_out_entry_serial_id BIGSERIAL UNIQUE
,wad_out_serial_id INT8 REFERENCES wads_out (wad_out_serial_id) ON DELETE CASCADE
,reserve_pub BYTEA NOT NULL CHECK(LENGTH(reserve_pub)=32)
,purse_pub BYTEA PRIMARY KEY CHECK(LENGTH(purse_pub)=32)
,h_contract BYTEA NOT NULL CHECK(LENGTH(h_contract)=64)
,purse_expiration INT8 NOT NULL
,merge_timestamp INT8 NOT NULL
,amount_with_fee_val INT8 NOT NULL
,amount_with_fee_frac INT4 NOT NULL
,wad_fee_val INT8 NOT NULL
,wad_fee_frac INT4 NOT NULL
,deposit_fees_val INT8 NOT NULL
,deposit_fees_frac INT4 NOT NULL
,reserve_sig BYTEA NOT NULL CHECK (LENGTH(reserve_sig)=64))
,purse_sig BYTEA NOT NULL CHECK (LENGTH(purse_sig)=64))
);
CREATE INDEX IF NOT EXISTS wad_out_entries_index_by_wad
  ON wad_out_entries (wad_out_serial_id);
COMMENT ON TABLE wad_out_entries
  IS 'Purses combined into a wad';
COMMENT ON COLUMN wad_out_entries.wad_out_serial_id
  IS 'Wad the purse was part of';
COMMENT ON COLUMN wad_out_entries.reserve_pub
  IS 'Target reserve for the purse';
COMMENT ON COLUMN wad_out_entries.purse_pub
  IS 'Public key of the purse';
COMMENT ON COLUMN wad_out_entries.h_contract
  IS 'Hash of the contract associated with the purse';
COMMENT ON COLUMN wad_out_entries.purse_expiration
  IS 'Time when the purse expires';
COMMENT ON COLUMN wad_out_entries.merge_timestamp
  IS 'Time when the merge was approved';
COMMENT ON COLUMN wad_out_entries.amount_with_fee_val
  IS 'Total amount in the purse';
COMMENT ON COLUMN wad_out_entries.wad_fee_val
  IS 'Wat fee charged to the purse';
COMMENT ON COLUMN wad_out_entries.deposit_fees_val
  IS 'Total deposit fees charged to the purse';
COMMENT ON COLUMN wad_out_entries.reserve_sig
  IS 'Signature by the receiving reserve, of purpose TALER_SIGNATURE_ACCOUNT_MERGE';
COMMENT ON COLUMN wad_out_entries.purse_sig
  IS 'Signature by the purse of purpose TALER_SIGNATURE_PURSE_MERGE';
--
CREATE TABLE IF NOT EXISTS wads_in
(wad_in_serial_id BIGSERIAL UNIQUE
,wad_id BYTEA PRIMARY KEY CHECK (LENGTH(wad_id)=24)
,origin_exchange_url TEXT NOT NULL
,amount_val INT8 NOT NULL
,amount_frac INT4 NOT NULL
,arrival_time INT8 NOT NULL
,UNIQUE (wad_id, origin_exchange_url)
);
COMMENT ON TABLE wads_in_entries
  IS 'Incoming exchange-to-exchange wad wire transfers';
COMMENT ON COLUMN wads_in.wad_id
  IS 'Unique identifier of the wad, part of the wire transfer subject';
COMMENT ON COLUMN wads_in.origin_exchange_url
  IS 'Base URL of the originating URL, also part of the wire transfer subject';
COMMENT ON COLUMN wads_in.amount_val
  IS 'Actual amount that was received by our exchange';
COMMENT ON COLUMN wads_in.arrival_time
  IS 'Time when the wad was received';
--
CREATE TABLE IF NOT EXISTS wad_in_entries
(wad_in_entry_serial_id BIGSERIAL UNIQUE
,wad_in_serial_id INT8 REFERENCES wads_in (wad_serial_id) ON DELETE CASCADE
,reserve_pub BYTEA NOT NULL CHECK(LENGTH(reserve_pub)=32)
,purse_pub BYTEA PRIMARY KEY CHECK(LENGTH(purse_pub)=32)
,h_contract BYTEA NOT NULL CHECK(LENGTH(h_contract)=64)
,purse_expiration INT8 NOT NULL
,merge_timestamp INT8 NOT NULL
,amount_with_fee_val INT8 NOT NULL
,amount_with_fee_frac INT4 NOT NULL
,wad_fee_val INT8 NOT NULL
,wad_fee_frac INT4 NOT NULL
,deposit_fees_val INT8 NOT NULL
,deposit_fees_frac INT4 NOT NULL
,reserve_sig BYTEA NOT NULL CHECK (LENGTH(reserve_sig)=64))
,purse_sig BYTEA NOT NULL CHECK (LENGTH(purse_sig)=64))
);
COMMENT ON TABLE wad_in_entries
  IS 'list of purses aggregated in a wad according to the sending exchange';
COMMENT ON COLUMN wad_in_entries.wad_in_serial_id
  IS 'wad for which the given purse was included in the aggregation';
COMMENT ON COLUMN wad_in_entries.reserve_pub
  IS 'target account of the purse (must be at the local exchange)';
COMMENT ON COLUMN wad_in_entries.purse_pub
  IS 'public key of the purse that was merged';
COMMENT ON COLUMN wad_in_entries.h_contract
  IS 'hash of the contract terms of the purse';
COMMENT ON COLUMN wad_in_entries.purse_expiration
  IS 'Time when the purse was set to expire';
COMMENT ON COLUMN wad_in_entries.merge_timestamp
  IS 'Time when the merge was approved';
COMMENT ON COLUMN wad_in_entries.amount_with_fee_val
  IS 'Total amount in the purse';
COMMENT ON COLUMN wad_in_entries.wad_fee_val
  IS 'Total wad fees paid by the purse';
COMMENT ON COLUMN wad_in_entries.deposit_fees_val
  IS 'Total deposit fees paid when depositing coins into the purse';
COMMENT ON COLUMN wad_in_entries.reserve_sig
  IS 'Signature by the receiving reserve, of purpose TALER_SIGNATURE_ACCOUNT_MERGE';
COMMENT ON COLUMN wad_in_entries.purse_sig
  IS 'Signature by the purse of purpose TALER_SIGNATURE_PURSE_MERGE';
CREATE INDEX IF NOT EXISTS wad_in_entries_wad_in_serial
  ON wad_in_entries (wad_in_serial_id);
CREATE INDEX IF NOT EXISTS wad_in_entries_reserve_pub
  ON wad_in_entries (reserve_pub);
COMMENT ON INDEX wad_in_entries_wad_in_serial
  IS 'needed to lookup all transfers associated with a wad';
COMMENT ON INDEX wad_in_entries_reserve_pub
  IS 'needed to compute reserve history';
--
CREATE TABLE IF NOT EXISTS p2pfees
(p2pfees_serial_id BIGSERIAL UNIQUE
,start_date INT8 NOT NULL
,end_date INT8 NOT NULL
,kyc_timeout INT8 NOT NULL
,purse_timeout INT8 NOT NULL
,history_retention INT8 NOT NULL
,purse_account_limit INT NOT NULL
,kyc_fee_val INT8 NOT NULL
,kyc_fee_frac INT4 NOT NULL
,history_fee_val INT8 NOT NULL
,history_fee_frac INT4 NOT NULL
,account_fee_val INT8 NOT NULL
,account_fee_frac INT4 NOT NULL
,purse_fee_val INT8 NOT NULL
,purse_fee_frac INT4 NOT NULL
,master_sig BYTEA NOT NULL CHECK (LENGTH(master_sig)=64))
);
--
CREATE TABLE IF NOT EXISTS partner_accounts
(payto_uri VARCHAR PRIMARY KEY
,partner_serial_id INT8 REFERENCES partners(partner_serial_id) ON DELETE CASCADE,
,partner_master_sig BYTEA CHECK (LENGTH(partner_master_sig)=64)
,last_seen INT8 NOT NULL
);
CREATE INDEX IF NOT EXISTS partner_accounts_index_by_partner_and_time
  ON partner_accounts (partner_serial_id,last_seen);
COMMENT ON TABLE partner_accounts
  IS 'Table with bank accounts of the partner exchange. Entries never expire as we need to remember the signature for the auditor.';
COMMENT ON COLUMN wire_accounts.payto_uri
  IS 'payto URI (RFC 8905) with the bank account of the partner exchange.';
COMMENT ON COLUMN wire_accounts.partner_master_sig
  IS 'Signature of purpose TALER_SIGNATURE_MASTER_WIRE_DETAILS by the partner master public key';
COMMENT ON COLUMN wire_accounts.last_seen
  IS 'Last time we saw this account as being active at the partner exchange. Used to select the most recent entry, and to detect when we should check again.';
-- Complete transaction
COMMIT;

10.13.6. Alternatives#

The payer could directly give deposit permissions to the payee. This has two problems:
1. The payer does not know the wire details of the payee. Thus we would need to introduce some “wildcard deposit permission”, where the exchange allows any wire details on /deposit.
2. The payment information would be rather large, making it difficult to transfer via a QR code or short text message.
Account history exceeding a configurable time limit (like 6 years) could be subject to garbage collection. However, doing so may be difficult to square with onboarding new auditors in the presence of existing accounts, as the auditors could then not reconstruct the account balances from cryptographic proofs.
Accounts without KYC check could be eventually closed. However, even if the coins used to fill the account are refunded, it would be difficult to inform the originating wallet that the coins have received a refund. This applies even more strongly in case of accounts filled via wads, where in theory the originating exchange may not even be in business anymore. Thus, it is cleaner and simpler to declare such funds forfeit.

10.13.7. Drawbacks#

The overall changes required are not small:

New KYC fee, wad fee and account history fee required in /keys endpoint (similar to closing and wire fees), requires some work across toolchain (offline signature, etc.)
New taler wire method needs special case to possibly bypass (same exchange scenario, with long-poll trigger) the usual aggregation logic.
New exchange table(s) required to store inbound amounts by account. Likely two tables, one for local exchange p2p and one for remote exchange p2p payments.
New exchange table for purses required (for remote p2p payments).
New exchange logic required to make transfers requests for purses (another separate process).
New /account/$ACCOUNT_PUB/kyc endpoint required.
New /purse/$PURSE_PUB/merge endpoint required.
Additional tables to be verified by the auditor.
taler-exchange-wirewatch needs to support receiving purses closures and exchange-to-exchange wire transfers with WTIDs.

Aside from implementation complexity, the solution has the following drawbacks:

If a W2W payment failed (say the receiver lost the account private key), the customer’s money can be forfeit. Alas, this should be very, very rare as the wallet software can trivially ensure that a backup was made of the account private key before initiating the KYC process.

10.13.9. Q / A#

Q: Why are direct payments into accounts allowed?
- A: Direct payments into accounts may be used by the customer to fund the expenses for using the account. They should not be used for payments between customers, as contract terms for the /deposit of coins cannot be negotiated. Furthermore, the sender of the payment cannot be sure that the account of the sender is still valid.
Q: Who “owns” a purse? The payer of payee?
- Both. Ownership is shared. Either the payer issues a refund on the purse, or the payee claims it by merging it with one of their accounts.
Q: Are purses created with a pre-determined “capacity”?
- A: Yes. Otherwise there would be weird failure modes when the payee merges the purse before the payer fully deposited into it.
Q: Are account public keys considered private or public data?
- A: Public. The payer needs a signature from the payee affirming that they accepted the contract, and this requires a key that is linked to the KYC process to be meaningful. However, the software should NOT permit direct payments into foreign accounts because it would be too easy to accidentally send payments that nobody can receive, because the account public key is wrong/lost.
Q: Why do traditional merchant payments not use purses?
- Refunds are not possible with purses after they are closed.
- The customer cannot prove that they own the contract terms (Contract terms claiming requires interactivity that is not possible in all W2W scenarios.) Thus, while payers can prove that they paid, the payee may claim someone else also bought the same product. A secure channel must thus be used to exchange the purchase offer.
Q: What determines when a wad transfer can happen between two exchanges?
- Exchanges explicitly state which other exchanges they are willing to do wad transfers with (and how often, at what cost). This may involve abstract policies like sharing an auditor, using the same currency and the same (banking) protocol, or other constraints (like a specific list of exchanges).
Q: What happens if the owner of a reserve never drains it?
- Reserves are eventually closed. If the reserve is associated with a bank account, the remaining funds are sent to that bank account. If the reserve was created via a merge, and the owner failed to associate a bank account with it (say because the KYC step never happened), then the reserve balance is forfeit to the exchange upon expiration.

DD 13: Wallet-to-Wallet Payments

Contents

10.13. DD 13: Wallet-to-Wallet Payments#

10.13.1. Summary#

10.13.2. Motivation#

10.13.2.1. Invoice Flow User Experience#

10.13.2.2. Donation Flow User Experience#

10.13.3. Requirements#

10.13.4. New Terminology#

10.13.5. Proposed Solution#

10.13.5.1. Principles#

10.13.5.2. W2W Payment Metadata#

10.13.5.3. Account creation#

10.13.5.4. Withdrawing from accounts#

10.13.5.5. Account deletion#

10.13.5.6. Payment offers#

10.13.5.7. Payment requests#

10.13.5.8. Payment into accounts at remote exchanges#

10.13.5.9. Examples#

10.13.5.10. State machine for Purses#

10.13.5.11. Additional considerations#

10.13.5.12. Exchange database schema changes#

10.13.6. Alternatives#

10.13.7. Drawbacks#

10.13.8. Refinements#

10.13.9. Q / A#