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What Is Instant Payment Notification?

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  • Written By: Mary McMahon
  • Edited By: Nancy Fann-Im
  • Last Modified Date: 18 August 2016
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Instant payment notification (IPN) is a service that notifies parties to a transaction when it takes place, and provides them with any necessary information they need to take the next step. This service is available for Internet sales, where buyers and sellers may expect instant notice and use this information in their accounting procedures. Many major payment processing sites use a form of instant payment notification, and it is also possible to customize one for a specific application.

In a simple example of how this process works, a web user could place a winning bid in an auction and proceed to a payment processor to submit the payment. As soon as she transfers the funds, the program notifies her that she sent money, and sends a notice to the party running the auction. It tells him that a payment was received and provides her contact information so he can send out the item. Likewise, when users run transactions in their own accounts like transferring an online balance to a personal bank account, instant payment notification kicks in to generate a record of the transaction.

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One case where instant payment notification can be very useful is in downloads of digital material. The user can submit a payment and receive an email with a link to the download, or a username and password to access a restricted site. This allows for nearly instant access to sites where users must pay to access services. The automated nature can also be convenient for the site owner, as she only has to deal with access when there's a problem, like a link to a download that does not appear to work.

Buyers and sellers alike can benefit from instant payment notification. Buyers of online products often appreciate instant notifications that pertain to their order, as they assure the buyer that the order is in progress. For sellers, automating some aspects of the process can save time and money, and may lead to increased customer satisfaction. The instant notifications can also interface with accounting software and allow the software to automatically record changes in account balances.

Implementation of an instant payment notification system can be as simple as selecting a payment processor and activating this option. For sellers who need custom payment processing systems, it may be necessary to manually code a notification system. Some companies sell modules for this purpose to make it easier to set up and customize a payment and order handling system.

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