diff --git a/payments/api.go b/payments/api.go
new file mode 100644
index 000000000..660c3423e
--- /dev/null
+++ b/payments/api.go
@@ -0,0 +1,62 @@
+package payments
+
+import (
+	"math/big"
+
+	"github.com/ethereum/go-ethereum/common"
+	"github.com/statechannels/go-nitro/channel/state"
+	"github.com/statechannels/go-nitro/types"
+)
+
+type (
+	// A Voucher signed by Alice can be used by Bob to redeem payments in case of
+	// a misbehaving Alice.
+	//
+	// During normal operation, Alice & Bob would terminate the channel with an
+	// outcome reflecting the largest amount signed by Alice. For instance,
+	// - if the channel started with balances {alice: 100, bob: 0}
+	// - and the biggest voucher signed by alice had amount = 20
+	// - then Alice and Bob would cooperatively conclude the channel with outcome
+	//   {alice: 80, bob: 20}
+	Voucher struct {
+		channelId types.Destination
+		amount    *big.Int
+		signature state.Signature
+	}
+
+	// Balance stores the remaining and paid funds in a channel.
+	Balance struct {
+		Remaining *big.Int
+		Paid      *big.Int
+	}
+
+	// PaymentManager can be used to make a payment for a given channel, issuing a new, signed voucher to be sent to the receiver
+	PaymentManager interface {
+		// Register registers a channel with a starting balance
+		Register(channelId types.Destination, startingBalance *big.Int) error
+
+		// Remove deletes the channel from the manager
+		Remove(channelId types.Destination)
+
+		// Pay will deduct amount from balance and add it to paid, returning a signed voucher for the
+		// total amount paid.
+		Pay(channelId types.Destination, amount *big.Int, pk []byte) (Voucher, error)
+
+		// Balance returns the balance of the channel
+		Balance(channelId types.Destination) (Balance, error)
+	}
+
+	ReceiptManager interface {
+		// Register registers a channel with a starting balance
+		Register(channelId types.Destination, sender common.Address, startingBalance *big.Int) error
+
+		// Remove deletes the channel from the manager
+		Remove(channelId types.Destination)
+
+		// Receive validates the incoming voucher, and returns the total amount received so far
+		Receive(voucher Voucher) (amountReceived *big.Int, err error)
+
+		// Balance returns the balance of the channel
+		Balance(channelId types.Destination) (Balance, error)
+	}
+)
diff --git a/payments/payment_manager.go b/payments/payment_manager.go
new file mode 100644
index 000000000..b487c5222
--- /dev/null
+++ b/payments/payment_manager.go
@@ -0,0 +1,88 @@
+package payments
+
+import (
+	"fmt"
+	"math/big"
+
+	"github.com/ethereum/go-ethereum/common"
+	"github.com/statechannels/go-nitro/types"
+)
+
+// paymentManager implements the PaymentManager interface
+type paymentManager struct {
+	signer   common.Address
+	channels map[types.Destination]*Balance
+}
+
+func NewPaymentManager(signer common.Address) PaymentManager {
+	channels := make(map[types.Destination]*Balance)
+	return &paymentManager{signer, channels}
+}
+
+// Register registers a channel with a starting balance
+func (pm paymentManager) Register(channelId types.Destination, startingBalance *big.Int) error {
+	balance := &Balance{&big.Int{}, &big.Int{}}
+	if _, ok := pm.channels[channelId]; ok {
+		return fmt.Errorf("channel already registered")
+	}
+
+	balance.Remaining.Set(startingBalance)
+	pm.channels[channelId] = balance
+
+	return nil
+}
+
+// Remove deletes the channel from the manager
+func (pm *paymentManager) Remove(channelId types.Destination) {
+	delete(pm.channels, channelId)
+}
+
+// Pay will deduct amount from balance and add it to paid, returning a signed voucher for the
+// total amount paid.
+func (pm *paymentManager) Pay(channelId types.Destination, amount *big.Int, pk []byte) (Voucher, error) {
+	balance, ok := pm.channels[channelId]
+	voucher := Voucher{amount: &big.Int{}}
+	if !ok {
+		return voucher, fmt.Errorf("channel not found")
+	}
+	if types.Gt(amount, balance.Remaining) {
+		return Voucher{}, fmt.Errorf("unable to pay amount: insufficient funds")
+	}
+
+	balance.Remaining.Sub(balance.Remaining, amount)
+	balance.Paid.Add(balance.Paid, amount)
+
+	voucher.amount.Set(balance.Paid)
+	voucher.channelId = channelId
+
+	if err := voucher.sign(pk); err != nil {
+		return Voucher{}, err
+	}
+
+	// question: is there a more efficient way to validate the signature against the purported signer?
+	// (is this validation even necessary? it's more of a failsafe than an important feature)
+	signer, err := voucher.recoverSigner()
+	if err != nil {
+		return Voucher{}, err
+	}
+
+	if signer != pm.signer {
+		return Voucher{}, fmt.Errorf("only signer may sign vouchers")
+	}
+
+	return voucher, nil
+}
+
+// Balance returns the balance of the channel
+func (pm *paymentManager) Balance(channelId types.Destination) (Balance, error) {
+	stored, ok := pm.channels[channelId]
+	if !ok {
+		return Balance{}, fmt.Errorf("channel not found")
+	}
+
+	balance := Balance{&big.Int{}, &big.Int{}}
+	balance.Paid.Set(stored.Paid)
+	balance.Remaining.Set(stored.Remaining)
+
+	return balance, nil
+}
diff --git a/payments/payments_test.go b/payments/payments_test.go
new file mode 100644
index 000000000..ca596b19c
--- /dev/null
+++ b/payments/payments_test.go
@@ -0,0 +1,130 @@
+package payments
+
+import (
+	"math/big"
+	"testing"
+
+	"github.com/statechannels/go-nitro/internal/testactors"
+	. "github.com/statechannels/go-nitro/internal/testhelpers"
+	"github.com/statechannels/go-nitro/types"
+)
+
+// manager lets us implement a getBalancer helper to make test assertions a little neater
+type manager interface {
+	Balance(chanId types.Destination) (Balance, error)
+}
+
+func TestPaymentManager(t *testing.T) {
+	testVoucher := func(cId types.Destination, amount *big.Int, actor testactors.Actor) Voucher {
+		payment := &big.Int{}
+		payment.Set(amount)
+		voucher := Voucher{channelId: cId, amount: payment}
+		_ = voucher.sign(actor.PrivateKey)
+		return voucher
+	}
+
+	var (
+		channelId      = types.Destination{1}
+		wrongChannelId = types.Destination{2}
+
+		deposit       = big.NewInt(1000)
+		payment       = big.NewInt(20)
+		doublePayment = big.NewInt(40)
+		triplePayment = big.NewInt(60)
+		overPayment   = big.NewInt(2000)
+
+		startingBalance = Balance{big.NewInt(1000), big.NewInt(0)}
+		onePaymentMade  = Balance{big.NewInt(980), big.NewInt(20)}
+		twoPaymentsMade = Balance{big.NewInt(960), big.NewInt(40)}
+	)
+
+	getBalance := func(m manager) Balance {
+		bal, _ := m.Balance(channelId)
+		return bal
+	}
+
+	// Happy path: Payment manager can register channels and make payments
+	paymentMgr := NewPaymentManager(testactors.Alice.Address())
+
+	_, err := paymentMgr.Pay(channelId, payment, testactors.Alice.PrivateKey)
+	Assert(t, err != nil, "channel must be registered to make payments")
+
+	Ok(t, paymentMgr.Register(channelId, deposit))
+	Equals(t, startingBalance, getBalance(paymentMgr))
+
+	firstVoucher, err := paymentMgr.Pay(channelId, payment, testactors.Alice.PrivateKey)
+	Ok(t, err)
+	Equals(t, testVoucher(channelId, payment, testactors.Alice), firstVoucher)
+	Equals(t, onePaymentMade, getBalance(paymentMgr))
+
+	signer, err := firstVoucher.recoverSigner()
+	Ok(t, err)
+	Equals(t, testactors.Alice.Address(), signer)
+
+	// Happy path: receipt manager can receive vouchers
+	receiptMgr := NewReceiptManager()
+
+	_, err = receiptMgr.Receive(firstVoucher)
+	Assert(t, err != nil, "channel must be registered to receive vouchers")
+
+	_ = receiptMgr.Register(channelId, testactors.Alice.Address(), deposit)
+	Equals(t, startingBalance, getBalance(receiptMgr))
+
+	received, err := receiptMgr.Receive(firstVoucher)
+	Ok(t, err)
+	Equals(t, received, payment)
+
+	// Receiving a voucher is idempotent
+	received, err = receiptMgr.Receive(firstVoucher)
+	Ok(t, err)
+	Equals(t, received, payment)
+	Equals(t, onePaymentMade, getBalance(receiptMgr))
+
+	// paying twice returns a larger voucher
+	secondVoucher, err := paymentMgr.Pay(channelId, payment, testactors.Alice.PrivateKey)
+	Ok(t, err)
+	Equals(t, testVoucher(channelId, doublePayment, testactors.Alice), secondVoucher)
+	Equals(t, twoPaymentsMade, getBalance(paymentMgr))
+
+	// Receiving a new voucher increases amount received
+	received, err = receiptMgr.Receive(secondVoucher)
+	Ok(t, err)
+	Equals(t, doublePayment, received)
+	Equals(t, twoPaymentsMade, getBalance(receiptMgr))
+
+	// re-registering a channel doesn't reset its balance
+	err = paymentMgr.Register(channelId, deposit)
+	Assert(t, err != nil, "expected register to fail")
+	Equals(t, twoPaymentsMade, getBalance(paymentMgr))
+
+	err = receiptMgr.Register(channelId, testactors.Alice.Address(), deposit)
+	Assert(t, err != nil, "expected register to fail")
+	Equals(t, twoPaymentsMade, getBalance(receiptMgr))
+
+	// Receiving old vouchers is ok
+	received, err = receiptMgr.Receive(firstVoucher)
+	Ok(t, err)
+	Equals(t, doublePayment, received)
+	Equals(t, twoPaymentsMade, getBalance(receiptMgr))
+
+	// Only the signer can sign vouchers
+	_, err = paymentMgr.Pay(channelId, triplePayment, testactors.Bob.PrivateKey)
+	Assert(t, err != nil, "only Alice can sign vouchers")
+
+	// Receiving a voucher for an unknown channel fails
+	_, err = receiptMgr.Receive(testVoucher(wrongChannelId, payment, testactors.Alice))
+	Assert(t, err != nil, "expected an error")
+	Equals(t, twoPaymentsMade, getBalance(receiptMgr))
+
+	// Receiving a voucher that's too large fails
+	_, err = receiptMgr.Receive(testVoucher(channelId, overPayment, testactors.Alice))
+	Assert(t, err != nil, "expected an error")
+	Equals(t, twoPaymentsMade, getBalance(receiptMgr))
+
+	// Receiving a voucher with the wrong signature fails
+	voucher := testVoucher(channelId, payment, testactors.Alice)
+	voucher.amount = triplePayment
+	_, err = receiptMgr.Receive(voucher)
+	Assert(t, err != nil, "expected an error")
+	Equals(t, twoPaymentsMade, getBalance(receiptMgr))
+}
diff --git a/payments/receipt_manager.go b/payments/receipt_manager.go
new file mode 100644
index 000000000..d37cd587f
--- /dev/null
+++ b/payments/receipt_manager.go
@@ -0,0 +1,91 @@
+package payments
+
+import (
+	"fmt"
+	"math/big"
+
+	"github.com/ethereum/go-ethereum/common"
+	"github.com/statechannels/go-nitro/types"
+)
+
+type (
+	// paymentStatus stores the status of payments for a given payment channel.
+	paymentStatus struct {
+		channelSender   common.Address
+		startingBalance *big.Int
+		largestVoucher  Voucher
+	}
+
+	// receiptManager receives vouchers, validates them, and stores the most valuable voucher
+	receiptManager struct {
+		channels map[types.Destination]*paymentStatus
+	}
+)
+
+func NewReceiptManager() ReceiptManager {
+	channels := make(map[types.Destination]*paymentStatus)
+	return &receiptManager{channels}
+}
+
+// Register registers a channel for use, given the sender and starting balance of the channel
+func (pm receiptManager) Register(channelId types.Destination, sender common.Address, startingBalance *big.Int) error {
+	balance := &big.Int{}
+	balance.Set(startingBalance)
+	voucher := Voucher{channelId: channelId, amount: big.NewInt(0)}
+	data := &paymentStatus{sender, balance, voucher}
+	if _, ok := pm.channels[channelId]; ok {
+		return fmt.Errorf("channel already registered")
+	}
+
+	pm.channels[channelId] = data
+
+	return nil
+}
+
+// Remove deletes the channel's status
+func (pm *receiptManager) Remove(channelId types.Destination) {
+	delete(pm.channels, channelId)
+}
+
+// Receive validates the incoming voucher, and returns the total amount received so far
+func (rm *receiptManager) Receive(voucher Voucher) (*big.Int, error) {
+	status, ok := rm.channels[voucher.channelId]
+	if !ok {
+		return &big.Int{}, fmt.Errorf("channel not registered")
+	}
+
+	received := &big.Int{}
+	received.Set(voucher.amount)
+	if types.Gt(received, status.startingBalance) {
+		return &big.Int{}, fmt.Errorf("channel has insufficient funds")
+	}
+
+	receivedSoFar := status.largestVoucher.amount
+	if !types.Gt(received, receivedSoFar) {
+		return receivedSoFar, nil
+	}
+
+	signer, err := voucher.recoverSigner()
+	if err != nil {
+		return &big.Int{}, err
+	}
+	if signer != status.channelSender {
+		return &big.Int{}, fmt.Errorf("wrong signer: %+v, %+v", signer, status.channelSender)
+	}
+
+	status.largestVoucher = voucher
+	return received, nil
+}
+
+// Balance returns the balance of the channel
+func (rm *receiptManager) Balance(channelId types.Destination) (Balance, error) {
+	data, ok := rm.channels[channelId]
+	if !ok {
+		return Balance{}, fmt.Errorf("channel not found")
+	}
+
+	balance := Balance{&big.Int{}, &big.Int{}}
+	balance.Paid.Set(data.largestVoucher.amount)
+	balance.Remaining.Sub(data.startingBalance, data.largestVoucher.amount)
+	return balance, nil
+}
diff --git a/payments/vouchers.go b/payments/vouchers.go
new file mode 100644
index 000000000..23519bcbd
--- /dev/null
+++ b/payments/vouchers.go
@@ -0,0 +1,48 @@
+package payments
+
+import (
+	"fmt"
+
+	"github.com/ethereum/go-ethereum/accounts/abi"
+	"github.com/ethereum/go-ethereum/crypto"
+	nitroAbi "github.com/statechannels/go-nitro/abi"
+	nitroCrypto "github.com/statechannels/go-nitro/crypto"
+	"github.com/statechannels/go-nitro/types"
+)
+
+func (v Voucher) hash() (types.Bytes32, error) {
+	encoded, err := abi.Arguments{
+		{Type: nitroAbi.Destination},
+		{Type: nitroAbi.Uint256},
+	}.Pack(v.channelId, v.amount)
+
+	if err != nil {
+		return types.Bytes32{}, fmt.Errorf("failed to encode voucher: %w", err)
+	}
+	return crypto.Keccak256Hash(encoded), nil
+}
+
+func (v *Voucher) sign(pk []byte) error {
+	hash, err := v.hash()
+	if err != nil {
+		return err
+	}
+
+	sig, err := nitroCrypto.SignEthereumMessage(hash.Bytes(), pk)
+
+	if err != nil {
+		return err
+	}
+
+	v.signature = sig
+
+	return nil
+}
+
+func (v Voucher) recoverSigner() (types.Address, error) {
+	h, error := v.hash()
+	if error != nil {
+		return types.Address{}, error
+	}
+	return nitroCrypto.RecoverEthereumMessageSigner(h[:], v.signature)
+}