Table Of Content

CYAN YELLOW MAGENTA BLACK PANTONE 123 CV BOOKS FOR PROFESSIONALS BY PROFESSIONALS® THE EXPERT’S VOICE® IN E-COMMERCE Companion eBook Pro PayPal E-Commerce Available Dear Reader, Pro Pro While the basic PayPal service is simple and convenient for end users, the multitude of options available to web developers can make life complicated. This book pulls everything together so you can quickly make sense of all the P possibilities. If you are considering building a website or application that moves money in any way, come and explore the options discussed in this book, a and find out how to build it with PayPal. PayPal With the knowledge you gain from this book, you will be able to implement y professional e-commerce solutions that harness the power of PayPal’s payment technologies, no matter what language you program in. You will have all the P necessary skills and information to create or renovate online stores so that a users have the best possible experience. The extensive coverage of all PayPal’s options means that you will always be able to pick an appropriate approach for l any situation. If you are a merchant, you can use this book to find out the basics of e-commerce, where PayPal fits in, and how you can take a DIY approach to E filling your e-commerce needs. This book covers the array of payment technologies and checkout options - PayPal offers, including basic checkout options that can be used with a few C lines of HTML; asynchronous postpayment processing with Instant Payment Notification (IPN); the PayPal API, which can be used to implement the powerful o E-Commerce Website Payments Pro or Express Checkout solution; and the Payflow Gateway service. The book also contains information on PayPal’s latest reporting options m and tips on managing fraud risk and handling online disputes, both of which are essential areas of focus for successful online businesses. Damon Williams, m Manager, PayPal Developer Program e THE APRESS ROADMAP Discover the breadth of payment options that PayPal r Companion eBook Beginning ASP.NET 2.0 c offers,from basic HTML solutions to the powerful E-Commerce in C# 2005 Website Payments Pro and Express Checkout options e Beginning Ruby on Pro ASP.NET 2.0 Rails E-Commerce E-Commerce in C# 2005 Beginning PHP and See last page for details PostgreSQL E-Commerce Pro PayPal E-Commerce on $10 eBook version Beginning PHP 5 and MySQL E-Commerce W Damon Williams SOURCECODEONLINE i ISBN-13: 978-1-59059-750-7 ll www.apress.com i ISBN-10: 1-59059-750-8 a m Foreword by Rajiv Dutta, 55999 US $59.99 s President,PayPal Shelve in Programming/E-Commerce User level: Intermediate–Advanced 9 781590 597507 this print for content only—size & color not accurate spine = 0.729" 312 page count 7508fmfinal.qxd 2/10/07 10:22 PM Page i Pro PayPal E-Commerce Damon Williams 7508fmfinal.qxd 2/10/07 10:22 PM Page ii Pro PayPal E-Commerce Copyright © 2007 by Damon Williams All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage or retrieval system, without the prior written permission of the copyright owner and the publisher. ISBN-13 (pbk): 978-1-59059-750-7 ISBN-10 (pbk): 1-59059-750-8 Printed and bound in the United States of America 9 8 7 6 5 4 3 2 1 Trademarked names may appear in this book. Rather than use a trademark symbol with every occurrence of a trademarked name, we use the names only in an editorial fashion and to the benefit of the trademark owner, with no intention of infringement of the trademark. Java™ and all Java-based marks are tradmarks or registered trademarks of Sun Microsystems, Inc., in theUS and other countries. Apress, Inc., is not affiliated with Sun Microsystems, Inc., and this book was written without endorsement from Sun Microsystems, Inc. eBay®, PayPal®, and all eBay and PayPal-related marks are trademarks or registered trademarks of eBay,Inc., in the US and other countries. Apress, Inc., is not affiliated with eBay, Inc., and this book was written without endorsement from eBay, Inc. These materials have been reproduced with the permission of eBay, Inc. ©2007 EBAY INC. ALL RIGHTS RESERVED. Lead Editor: Matthew Moodie Technical Reviewer: Michael Blanton Editorial Board: Steve Anglin, Ewan Buckingham, Gary Cornell, Jason Gilmore, Jonathan Gennick, Jonathan Hassell, James Huddleston, Chris Mills, Matthew Moodie, Dominic Shakeshaft, Jim Sumser, Matt Wade Project Manager: Richard Dal Porto Copy Edit Manager: Nicole Flores Assistant Production Director: Kari Brooks-Copony Production Editor: Laura Esterman Compositor: Linda Weidemann, Wolf Creek Press Proofreader: Lori Bring Indexer: Michael Brinkman Artist: April Milne Cover Designer: Kurt Krames Author Photo: George Lin Manufacturing Director: Tom Debolski Distributed to the book trade worldwide by Springer-Verlag New York, Inc., 233 Spring Street, 6th Floor, New York, NY 10013. Phone 1-800-SPRINGER, fax 201-348-4505, e-mail [email protected], or visit http://www.springeronline.com. For information on translations, please contact Apress directly at 2560 Ninth Street, Suite 219, Berkeley, CA 94710. Phone 510-549-5930, fax 510-549-5939, e-mail [email protected], or visit http://www.apress.com. The information in this book is distributed on an “as is” basis, without warranty. Although every precaution has been taken in the preparation of this work, neither the author(s) nor Apress shall have any liability to any person or entity with respect to any loss or damage caused or alleged to be caused directly or indirectly by the information contained in this work. The source code for this book is available to readers at http://www.apress.comin the Source Code/ Download section. 7508fmfinal.qxd 2/10/07 10:22 PM Page iii To Mom,Dad,and Nana 7508fmfinal.qxd 2/10/07 10:22 PM Page iv 7508fmfinal.qxd 2/10/07 10:22 PM Page v Contents at a Glance Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii About the Technical Reviewer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii nCHAPTER 1 Introduction to PayPal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 nCHAPTER 2 The PayPal Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 nCHAPTER 3 Basic Website Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 nCHAPTER 4 Encrypted Website Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 nCHAPTER 5 Postpayment Processing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 nCHAPTER 6 The PayPal API . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 nCHAPTER 7 Payflow Gateway. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 nCHAPTER 8 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 nCHAPTER 9 Managing Online Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 nAPPENDIX PayPal Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 nINDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 v 7508fmfinal.qxd 2/10/07 10:22 PM Page vi 7508fmfinal.qxd 2/10/07 10:22 PM Page vii Contents Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii About the Technical Reviewer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii nCHAPTER 1 Introduction to PayPal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The PayPal Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Increased Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Credibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Checkout Experience. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Digital Money Platform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 PayPal and eBay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Choosing the Right Solution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Website Payments Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Instant Payment Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Payment Data Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 PayPal API. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Payflow Gateway. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Virtual Terminal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Pre-Integrated Solutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Shopping Carts and Storefronts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Digital Goods Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Accounting and Invoicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Developer Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Developer Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Integration Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PayPal Developer Community. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Solutions Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PayPalTech. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PayPalDev.org . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 vii 7508fmfinal.qxd 2/10/07 10:22 PM Page viii viii nCONTENTS nCHAPTER 2 The PayPal Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Account Types. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Personal Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Premier Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Business Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Sandbox Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 PayPal Transaction Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Account Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Verified. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Confirmed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Closed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Currencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Account Settings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Account Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Selling Preferences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 nCHAPTER 3 Basic Website Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Website Payments Standard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 The Buy Now Button. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Donations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Subscriptions and Recurring Payments. . . . . . . . . . . . . . . . . . . . . . . . 45 Using the PayPal Shopping Cart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Cart Upload. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Passing the Shopping Cart Total to PayPal. . . . . . . . . . . . . . . . . . . . . 51 Passing Individual Item Details to PayPal . . . . . . . . . . . . . . . . . . . . . . 52 Specifying the Tax for the Shopping Cart . . . . . . . . . . . . . . . . . . . . . . 52 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 nCHAPTER 4 Encrypted Website Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Overview of EWP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Public Key Cryptography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Encrypted Code vs.Unencrypted Code . . . . . . . . . . . . . . . . . . . . . . . . 58 How PayPal Reads Encrypted Code . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Blocking Unencrypted Website Payments. . . . . . . . . . . . . . . . . . . . . . 59 Creating Encrypted Buttons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 7508fmfinal.qxd 2/10/07 10:22 PM Page ix nCONTENTS ix EWP with the Button Factory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Creating Certificates and Keys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Creating a Private Key and Public Certificate. . . . . . . . . . . . . . . . . . . 61 Uploading a Public Certificate to PayPal . . . . . . . . . . . . . . . . . . . . . . . 62 Downloading the PayPal Public Certificate. . . . . . . . . . . . . . . . . . . . . 63 Encrypting Buttons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 The Encrypted “Blob”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Java Developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Windows Developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 PHP Developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Perl Developers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 nCHAPTER 5 Postpayment Processing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Auto Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Auto Return Account Settings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 The rm Variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Payment Data Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 How PDT Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 PDT Account Settings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Sample PDT Script. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 PDT Shortcomings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Instant Payment Notification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 How IPN Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 IPN Account Settings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 IPN Sample Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Dynamically Setting the Notification URL . . . . . . . . . . . . . . . . . . . . . 101 Dispute Resolution with IPN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Using IPN and PDT Together. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 IPN Troubleshooting Tips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 nCHAPTER 6 The PayPal API. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Overview of the PayPal API . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 API Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Life Cycle of an API Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

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CYAN YELLOW MAGENTA BLACK PANTONE 123 CV BOOKS FOR PROFESSIONALS BY PROFESSIONALS® THE EXPERT’S VOICE® IN E-COMMERCE Companion eBook Pro PayPal E-Commerce Available Dear Reader, Pro Pro While the basic PayPal service is simple and convenient for end users, the multitude of options available to web developers can make life complicated. This book pulls everything together so you can quickly make sense of all the P possibilities. If you are considering building a website or application that moves money in any way, come and explore the options discussed in this book, a and find out how to build it with PayPal. PayPal With the knowledge you gain from this book, you will be able to implement y professional e-commerce solutions that harness the power of PayPal’s payment technologies, no matter what language you program in. You will have all the P necessary skills and information to create or renovate online stores so that a users have the best possible experience. The extensive coverage of all PayPal’s options means that you will always be able to pick an appropriate approach for l any situation. If you are a merchant, you can use this book to find out the basics of e-commerce, where PayPal fits in, and how you can take a DIY approach to E filling your e-commerce needs. This book covers the array of payment technologies and checkout options - PayPal offers, including basic checkout options that can be used with a few C lines of HTML; asynchronous postpayment processing with Instant Payment Notification (IPN); the PayPal API, which can be used to implement the powerful o E-Commerce Website Payments Pro or Express Checkout solution; and the Payflow Gateway service. The book also contains information on PayPal’s latest reporting options m and tips on managing fraud risk and handling online disputes, both of which are essential areas of focus for successful online businesses. Damon Williams, m Manager, PayPal Developer Program e THE APRESS ROADMAP Discover the breadth of payment options that PayPal r Companion eBook Beginning ASP.NET 2.0 c offers,from basic HTML solutions to the powerful E-Commerce in C# 2005 Website Payments Pro and Express Checkout options e Beginning Ruby on Pro ASP.NET 2.0 Rails E-Commerce E-Commerce in C# 2005 Beginning PHP and See last page for details PostgreSQL E-Commerce Pro PayPal E-Commerce on $10 eBook version Beginning PHP 5 and MySQL E-Commerce W Damon Williams SOURCECODEONLINE i ISBN-13: 978-1-59059-750-7 ll www.apress.com i ISBN-10: 1-59059-750-8 a m Foreword by Rajiv Dutta, 55999 US $59.99 s President,PayPal Shelve in Programming/E-Commerce User level: Intermediate–Advanced 9 781590 597507 this print for content only—size & color not accurate spine = 0.729" 312 page count 7508fmfinal.qxd 2/10/07 10:22 PM Page i Pro PayPal E-Commerce Damon Williams 7508fmfinal.qxd 2/10/07 10:22 PM Page ii Pro PayPal E-Commerce Copyright © 2007 by Damon Williams All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage or retrieval system, without the prior written permission of the copyright owner and the publisher. ISBN-13 (pbk): 978-1-59059-750-7 ISBN-10 (pbk): 1-59059-750-8 Printed and bound in the United States of America 9 8 7 6 5 4 3 2 1 Trademarked names may appear in this book. Rather than use a trademark symbol with every occurrence of a trademarked name, we use the names only in an editorial fashion and to the benefit of the trademark owner, with no intention of infringement of the trademark. Java™ and all Java-based marks are tradmarks or registered trademarks of Sun Microsystems, Inc., in theUS and other countries. Apress, Inc., is not affiliated with Sun Microsystems, Inc., and this book was written without endorsement from Sun Microsystems, Inc. eBay®, PayPal®, and all eBay and PayPal-related marks are trademarks or registered trademarks of eBay,Inc., in the US and other countries. Apress, Inc., is not affiliated with eBay, Inc., and this book was written without endorsement from eBay, Inc. These materials have been reproduced with the permission of eBay, Inc. ©2007 EBAY INC. ALL RIGHTS RESERVED. Lead Editor: Matthew Moodie Technical Reviewer: Michael Blanton Editorial Board: Steve Anglin, Ewan Buckingham, Gary Cornell, Jason Gilmore, Jonathan Gennick, Jonathan Hassell, James Huddleston, Chris Mills, Matthew Moodie, Dominic Shakeshaft, Jim Sumser, Matt Wade Project Manager: Richard Dal Porto Copy Edit Manager: Nicole Flores Assistant Production Director: Kari Brooks-Copony Production Editor: Laura Esterman Compositor: Linda Weidemann, Wolf Creek Press Proofreader: Lori Bring Indexer: Michael Brinkman Artist: April Milne Cover Designer: Kurt Krames Author Photo: George Lin Manufacturing Director: Tom Debolski Distributed to the book trade worldwide by Springer-Verlag New York, Inc., 233 Spring Street, 6th Floor, New York, NY 10013. Phone 1-800-SPRINGER, fax 201-348-4505, e-mail [email protected], or visit http://www.springeronline.com. For information on translations, please contact Apress directly at 2560 Ninth Street, Suite 219, Berkeley, CA 94710. Phone 510-549-5930, fax 510-549-5939, e-mail [email protected], or visit http://www.apress.com. The information in this book is distributed on an “as is” basis, without warranty. Although every precaution has been taken in the preparation of this work, neither the author(s) nor Apress shall have any liability to any person or entity with respect to any loss or damage caused or alleged to be caused directly or indirectly by the information contained in this work. The source code for this book is available to readers at http://www.apress.comin the Source Code/ Download section. 7508fmfinal.qxd 2/10/07 10:22 PM Page iii To Mom,Dad,and Nana 7508fmfinal.qxd 2/10/07 10:22 PM Page iv 7508fmfinal.qxd 2/10/07 10:22 PM Page v Contents at a Glance Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii About the Technical Reviewer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii nCHAPTER 1 Introduction to PayPal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 nCHAPTER 2 The PayPal Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 nCHAPTER 3 Basic Website Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 nCHAPTER 4 Encrypted Website Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 nCHAPTER 5 Postpayment Processing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 nCHAPTER 6 The PayPal API . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 nCHAPTER 7 Payflow Gateway. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 nCHAPTER 8 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 nCHAPTER 9 Managing Online Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 nAPPENDIX PayPal Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 nINDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 v 7508fmfinal.qxd 2/10/07 10:22 PM Page vi 7508fmfinal.qxd 2/10/07 10:22 PM Page vii Contents Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii About the Technical Reviewer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii nCHAPTER 1 Introduction to PayPal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The PayPal Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Increased Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Credibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Checkout Experience. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Digital Money Platform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 PayPal and eBay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Choosing the Right Solution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Website Payments Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Instant Payment Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Payment Data Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 PayPal API. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Payflow Gateway. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Virtual Terminal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Pre-Integrated Solutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Shopping Carts and Storefronts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Digital Goods Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Accounting and Invoicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Developer Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Developer Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Integration Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PayPal Developer Community. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Solutions Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PayPalTech. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PayPalDev.org . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 vii 7508fmfinal.qxd 2/10/07 10:22 PM Page viii viii nCONTENTS nCHAPTER 2 The PayPal Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Account Types. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Personal Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Premier Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Business Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Sandbox Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 PayPal Transaction Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Account Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Verified. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Confirmed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Closed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Currencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Account Settings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Account Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Selling Preferences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 nCHAPTER 3 Basic Website Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Website Payments Standard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 The Buy Now Button. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Donations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Subscriptions and Recurring Payments. . . . . . . . . . . . . . . . . . . . . . . . 45 Using the PayPal Shopping Cart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Cart Upload. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Passing the Shopping Cart Total to PayPal. . . . . . . . . . . . . . . . . . . . . 51 Passing Individual Item Details to PayPal . . . . . . . . . . . . . . . . . . . . . . 52 Specifying the Tax for the Shopping Cart . . . . . . . . . . . . . . . . . . . . . . 52 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 nCHAPTER 4 Encrypted Website Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Overview of EWP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Public Key Cryptography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Encrypted Code vs.Unencrypted Code . . . . . . . . . . . . . . . . . . . . . . . . 58 How PayPal Reads Encrypted Code . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Blocking Unencrypted Website Payments. . . . . . . . . . . . . . . . . . . . . . 59 Creating Encrypted Buttons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 7508fmfinal.qxd 2/10/07 10:22 PM Page ix nCONTENTS ix EWP with the Button Factory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Creating Certificates and Keys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Creating a Private Key and Public Certificate. . . . . . . . . . . . . . . . . . . 61 Uploading a Public Certificate to PayPal . . . . . . . . . . . . . . . . . . . . . . . 62 Downloading the PayPal Public Certificate. . . . . . . . . . . . . . . . . . . . . 63 Encrypting Buttons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 The Encrypted “Blob”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Java Developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Windows Developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 PHP Developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Perl Developers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 nCHAPTER 5 Postpayment Processing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Auto Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Auto Return Account Settings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 The rm Variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Payment Data Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 How PDT Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 PDT Account Settings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Sample PDT Script. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 PDT Shortcomings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Instant Payment Notification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 How IPN Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 IPN Account Settings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 IPN Sample Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Dynamically Setting the Notification URL . . . . . . . . . . . . . . . . . . . . . 101 Dispute Resolution with IPN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Using IPN and PDT Together. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 IPN Troubleshooting Tips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 nCHAPTER 6 The PayPal API. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Overview of the PayPal API . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 API Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Life Cycle of an API Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

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