taler-payment-cycle.rst (1629B)
1 The Taler payment cycle involves six parties: 2 (a) customer, 3 (b) exchange, 4 (c) merchant, 5 (d) customer's bank, 6 (e) exchange's bank, 7 (f) merchant's bank. 8 9 The exchange is the central entity that mediates the wire transfer of real 10 currency between (d), (e), (f) by way of *coins*, cryptographically secure 11 tokens passed between (a), (b), (c). 12 13 There are six steps to a Taler payment cycle. 14 15 In step 1, (a) directs (d) to make real funds available to (b). 16 17 In step 2, (d) does a wire transfer of real funds to (e), fulfilling the 18 request from step 1. (b) generates coins corresponding to those real funds; 19 these are called the *reserve*. 20 21 In step 3, (a) *withdraws* coins, either wholly or partially, from (b). These 22 coins are kept in a *wallet* under control of (a). The coins in the wallet 23 are unlinkable to the identity of (a) that was revealed during the withdraw 24 operation. 25 26 In step 4, (a) authorizes payment of coins from the wallet to (c). This 27 transfers payment coins from the wallet to (c), and change coins from (b) to 28 the wallet (unless the payment amount exactly matches the denomination of the 29 coins in the wallet). 30 31 In step 5, (c) *deposits* coins into (b). At this point, (b) knows the 32 identity of (c), but not of (a). Taler uses cryptography to validate that the 33 coins are unique and were issued by (b), but (b) cannot determine to whom the 34 coins were originally issued. 35 36 In step 6, (b) directs (e) to wire transfer real funds corresponding to the 37 accumulated deposited coins to (f). 38 39 NB: The Taler payment cycle is part of the Taler payment system, which 40 includes also an auditor component, not described here.