PayPal IPN txn_check then process payment - php

Question

Couple of days ago, I asked a question about PayPal IPN txn_id check and I got an informative response. For those that want to find out what the role of txn_id is, its there to check if the transaction has not been previously processed. So now my question is, after checking and seeing that it doesn't exist, you store it (txn_id) in database and then the payment is processed, but how does PayPal know if the payment is ok to process and you found 0 rows with txn_id?
<?php
// PHP 4.1
// read the post from PayPal system and add 'cmd'
$req = 'cmd=_notify-validate';
foreach ($_POST as $key => $value) {
$value = urlencode(stripslashes($value));
$req .= "&$key=$value";
}
// post back to PayPal system to validate
$header .= "POST /cgi-bin/webscr HTTP/1.0\r\n";
$header .= "Content-Type: application/x-www-form-urlencoded\r\n";
$header .= "Content-Length: " . strlen($req) . "\r\n\r\n";
$fp = fsockopen ('ssl://www.paypal.com', 443, $errno, $errstr, 30);
// assign posted variables to local variables
$item_name = $_POST['item_name'];
$item_number = $_POST['item_number'];
$payment_status = $_POST['payment_status'];
$payment_amount = $_POST['mc_gross'];
$payment_currency = $_POST['mc_currency'];
$txn_id = $_POST['txn_id'];
$receiver_email = $_POST['receiver_email'];
$payer_email = $_POST['payer_email'];
if (!$fp) {
// HTTP ERROR
} else {
fputs ($fp, $header . $req);
while (!feof($fp)) {
$res = fgets ($fp, 1024);
if (strcmp ($res, "VERIFIED") == 0) {
// check the payment_status is Completed
// check that txn_id has not been previously processed
// check that receiver_email is your Primary PayPal email
// check that payment_amount/payment_currency are correct
// process payment
}
else if (strcmp ($res, "INVALID") == 0) {
// log for manual investigation
}
}
fclose ($fp);
}
?>

Answer 1

Um, not sure what you mean, but PayPal is kind of the one sending you this information to begin with? They are the ones telling you if a payment has gone through or not, and therefore knows this, obviously. They are just letting you know so you can do whatever you want to do with that information.

Answer 2

They send you this information so that you can transmit back to them and verify that the information is real, and not just someone POSTing crap information to your server. The txn_id is a completely unique ID "number" for that transaction on PayPal, so you should only ever see it once (theoretically). This serves two purposes:
Allows you to verify with PayPal by sending back all the information. Only one transaction exists with this ID, so every single piece of information you send back to them should match what is on file for that transaction. They then send either a Yay or Nay of whether it was valid. If it's Nay, you know it's fake information.
Allows you to determine if the transaction has already been processed by you, and prevents users from POSTing duplicate information to your server over and over. The transaction is valid, yes, but you don't want them to be getting 10 of a product when they only paid for one.

Answer 3

IPN (instant payment notification) has nothing to do with the processing of payments. IPN only comes into play after a transaction has occurred. The transaction ID is the ID of the transaction that has occurred.
If you are trying to prevent duplicate payments, you should utilize PayPal's invoice ID and duplicate payment settings within your PayPal account's profile.