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Design Doc 013: Customer-to-Customer Payments
#############################################
Summary
=======
This design document proposes an extension of the Taler protocol that allows
payments from customer-to-customer without a merchant.
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).
Requirements
============
* The control data for customer-to-customer payments should be small
enough to fit into a QR code or short message. No other
direct communication channel between payer and payee should be required.
* This customer-to-customer 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 P2P payment protocol must not allow users to circumvent income
transparency. That is, each P2P transaction must be visible
on a KYCed transaction ledger (such as a bank account).
* The money received via a P2P payment must be usable for
further Taler payments with minimal delay.
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 ``pouch`` is a public-private key pair where the public key is
an exchange address from which any owners of an account
can pick up an amount left at a ``pouch`` assuming they know the pouches
private key.
* A ``wad`` is an exchange-to-exchange wire transfer that wires money
into a group of accounts at the target exchange.
Proposed Solution
=================
A complete solution for customer-to-customer payments consists of three
possible operational flows.
Account creation and withdrawal
-------------------------------
1. The payee generates an account key, which also yields a
``payto://taler/$EXCHANGE_BASE_URL/$ACCOUNT_PUB``
target address (for which the payee knows the corresponding
account private key).
2. When withdrawing from an account, the exchange first checks if the
customer has satisfied the KYC requirements. If not, the consumer
is redirected to a Web page where they can perform the necessary
KYC operation.
3. For this, the exchange wire gateway is extended with a request to
check the KYC status of a customer based on an ACCOUNT_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.
4. A new exchange endpoint ``/account/$ACCOUNT_PUB/kyc``
allows wallets to request a KYC for an
ACCOUNT_PUB. Such a request may include the requirement to pay
a **KYC fee**. The KYC fee may be charged to that account (if it exists),
or could be waved if the account was established via a wire transfer
from a partner bank.
5. If the account owner fails to perform the KYC check, the funds
in an account remain inaccessible. After a configurable duration,
the funds may be considered forfeit and become the property of
the exchange where the account is located.
6. When requesting an account's history (which can get quite long),
the exchange only returns the last 3 months of data. Requesting
the full history requires paying an **account history fee**
(which is not done via a 402, but simply charged to the account
when requested; full account histories for accounts with an
insufficient balance cannot be requested -- except of course
the wallet could simply top up the account balance first, see below).
7. If the exchange has received a **deposit** or **merge** into an
account, or received an inbound wire transfer from a **wad**
matching the account (see below), it adds the respective amount(s)
to the account's balance, allowing the KYC'ed customer to withdraw
the funds.
8. The account history endpoint should also allow long-polling.
Note that long-polling should be limited to short durations,
as inbound transfers via ``taler-exchange-wirewatch`` cannot cause the long
polling to be resumed, only transfers within the same exchange can benefit
from long polling acceleration.
Payment into an unknown account
-------------------------------
1. If the payer does not know the payee's account, they can create
a **purse** by computing a public-private key pair.
2. The payer then uses the ``/depost`` API to deposit coins into
the purse, using ``payto://taler/$PURSE_PUB`` as the target
address. Note that the lack of a hostname indicates that the
target address is a purse.
3. 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/$PURSE_PRIV`` URL.
4. The payee uses the new ``/purse/$PURSE_PUB`` endpoint to retrieve
the purse history, which includes all deposits and withdrawals
involving the purse.
5. 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. The signature is only over a salted
hash of the account public key, thus avoiding disclosure of
the account public key in the purse history. The exchange
processes the merge request akin to the logic for payments
into known accounts, as detailed below, except that no
**deposit fees** are charged at this time. The exchange
confirms the merge, allowing the payee to instantly affirm
to the user that the amount is inbound (even if it may not
be instantly available).
Payment directly into a known account at the same exchange
----------------------------------------------------------
1. If the payer knows the payee's account and uses the same exchange,
they may perform an ordinary ``/deposit`` operation, paying
the usual **deposit fee**.
2. The exchange detects the use of the ``taler`` wire method, and
directly credits the target account.
Payment into known account at a remote exchange
-----------------------------------------------
1. If the payer knows the payee's account and uses a different exchange,
they POST the coins to a new ``/wad/MASTER_PUB`` endpoint using the master
public key of the target exchange, including a deposit permission,
the base URL of the target exchange, and the target account,
paying a **deposit fee** and a new **wad fee**. The **wad fees** can
be used to cover the cost of the exchange-to-exchange wire transfer.
2. The payer's exchange creates a **wad** grouping all wad requests, executing
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.
3. 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 aggregated deposits and **purses** (**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.
4. The payee's exchange observes the wire transfer and uses a GET
``/wad/{MASTER_PUB}/{WTID}`` request to obtain details about the target
accounts.
5. When the payer's exchange is requested to provide information about
aggregated transfers under the WTID, 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).
6. ``taler-exchange-wirewatch`` and the Taler wire gateway API will
need to be extended to allow passing inbound wire transfers with WTID
and exchange base URL to the exchange. Furthermore, another tool
is needed to lookup the **wad** data at remote exchanges.
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".
Alternatives
============
* The payer could directly give deposit permissions to the payee.
This has two problems:
1. The payer doesn't 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. Thus, it is likely simpler to
declare the funds forfeit.
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 pouches required (for remote p2p payments).
* New exchange logic required to make ``transfers`` requests for pouches
(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 pouch closures
and exchange-to-exchange wire transfers with WTIDs.
Aside from implementation complexity, the solution has the following drawbacks:
* If a p2p payment failed (say the receiver lost the account private key),
the customer's money can be forfeit.
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