Instant payment notification (IPN) is a way to allow online retailers to handle real-time purchase confirmation and server-to-server communication. This allows the retailer to store transaction or order information in its own database to track its own sales data internally.

PayPal

PayPal

PayPal is an American-based global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders....

 notifies a specified URL by an HTTP POST

POST (HTTP)

In computing, POST is one of many request methods supported by the HTTP protocol used by the World Wide Web. The POST request method is used when the client needs to send data to the server as part of the request, such as when uploading a file or submitting a completed form.In contrast to the GET...

 method, the URL should point to an IPN script that should process payment notifications. The first thing that must be done in the script is to validate the notification with PayPal.

The following Image should Illustrate how IPN works:

Distributing goods

Whereas the majority of server-side languages such as PHP and ASP are user driven, IPN gives the developer more power over their script by making any events associated with IPN event driven; this is not an allusion to a different sort of programming architecture, but merely due to the simple HTTP POST

POST (HTTP)

In computing, POST is one of many request methods supported by the HTTP protocol used by the World Wide Web. The POST request method is used when the client needs to send data to the server as part of the request, such as when uploading a file or submitting a completed form.In contrast to the GET...

 interaction that occurs whenever the seller receives a payment.

Intangible goods

IPN is typically used for automating processes such as eBook delivery (where as soon as the seller receives an order through PayPal the eBook download link is emailed to the customer). This means that intangible goods such as digital books or files can be sold at little extra effort to the seller once it has been hosted on a site such as EBay

EBay

eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...

or the seller's own website. Since 2008 it has been against Ebay's terms of service to list eBooks on Ebay, so many of the sellers on Ebay have moved to distribute eBooks on CDs or other tangible media. Third party services such as eBuckz EasyIPN, SWPal, PayLoadz, Scrobbld, Cerizmo and E-Junkie can be used for such situations.

Tangible goods

Ironically, PayPal and eBay has little support for multiple label printing, and so it is difficult for sellers distributing large volumes of goods to be able to cope with the demand. In fact, many sellers have resorted to cutting and pasting addresses from emails into their label printing software. As such, IPN gives other services the ability to expand upon this functionality. Services such as Scrobbld have taken up this opportunity for home and small businesses. Other services such as Microsoft Office accounting also have a plugin for their software to support IPN for larger businesses.

External links

• The PayPal IPN Documentation (PDF)