How does a merchant know if the client has paid through the "Make a button" PayPal provides?

Question

The scenario is like this: Your selling small single items, not very many sales. But your selling digital products. If I used a PayPal button made from their website, how does the merchant know if the client has paid for what he wanted to buy. I haven't been able to mock a sale myself because I cannot pay for something if I created the pay button on my account. What happens after the client goes through with the payment? Can there be a confirmation to send back to my website confirming the payment?

Answer 1

The merchant knows from both the email that he receives from PayPal, and progammatically through a mechanism call IPN (Instant Payment Notification). The IPN calls a script on the merchant site that expects a certain payload, acknowledges that the IPN was received, then does "internal" processes related to the sale (like deduct inventory, create a picklist, add value to the buyers account on the merchant site, etc.)

You can test the whole logic by signing up for the PayPal Sandbox, which lets you be a seller and a buyer in a separate PayPal universe. After the scripts work properly, you switch your site to the real seller account, and the processing target to "real PayPal".

http://www.tipsandtricks-hq.com/playing-in-paypals-sandbox-2880 gives you a high speed overview.

and https://cms.paypal.com/cms_content/TR/tr_TR/files/developer/PP_Sandbox_UserGuide.pdf is the official documentation.