# Starkware payments

By [kriptoloca](https://paragraph.com/@kriptoloca) · 2022-11-17

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**System:**

For every merchant offered the Instant Payments system, the payment processor locks up a security deposit in a merchant-specific on-chain smart contract. As mentioned above, the deposit is roughly equal to the volume of payments to the merchant during a proof cycle.

1.  Customer provides merchant with a signed payment.
    
2.  Merchant verifies there are sufficient funds in the security deposit contract.
    
3.  Merchant forwards payment to payment processor.
    
4.  Payment processor checks customer has sufficient funds.
    
5.  Payment processor counter-signs payment and returns it to merchant.
    
6.  Merchant can serve customer instantly once it receives the counter-signature from payment processor.
    

Instead of trust, the payment processor offers the merchant a dedicated on-chain security deposit (roughly equal in value to the sum total of the merchant’s receivables during a proof cycle), and counter-signs customer payments. For counter-signed payments, the merchant is assured to receive the funds — either via the payment’s inclusion in a subsequent proof or by redeeming the payments directly from the security deposit. Much like a standard security deposit, in the normal course of affairs, it is left untouched.There are no trust assumptions between any of the parties involved in a payment’s life cycle: customer, merchant, payment processor, and StarkWare which runs the StarkPay on behalf of the payment processor.

With this functionality, a merchant such as Starbucks could offer a customer a cup of coffee instantly, knowing they are guaranteed to be paid in short order.

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*Originally published on [kriptoloca](https://paragraph.com/@kriptoloca/starkware-payments)*