How do receipts work?

When a payment request is signed it’s not just the addresses. The memo is also signed. By keeping around the signed payment request, and the transactions you created to satisfy it, you obtain a mathematical proof of payment. The merchant cannot dispute what was paid for because the memo field contains a description, nor can they dispute that payment was delivered (unless they claim they lost control of their private keys, of course).

This is great because it fills in a missing piece for low-trust third party dispute mediation using multi-sig transactions. Currently if you tried to implement that, you’d run into the problem of a buyer saying “seller did not deliver!!” and the seller saying “the buyer never paid me!” or more problematically, buyer saying “seller gave me something different to what I asked for” and the seller saying “I gave him exactly what we agreed on”.

With receipts, it suddenly becomes much easier to figure out what happened in a transaction and recompense the right party.

https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_dispute_mediation

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