diff --git a/dagger/bitswap/engine/payments.nim b/dagger/bitswap/engine/payments.nim
new file mode 100644
index 00000000..6417d7ac
--- /dev/null
+++ b/dagger/bitswap/engine/payments.nim
@@ -0,0 +1,40 @@
+import std/math
+import pkg/nitro
+import pkg/questionable/results
+import ../peercontext
+
+export nitro
+export results
+export peercontext
+
+push: {.upraises: [].}
+
+const ChainId = 0.u256 # invalid chain id for now
+const AmountPerChannel = (10^18).u256 # 1 asset, ERC20 default is 18 decimals
+
+func openLedgerChannel*(wallet: var Wallet,
+                        hub: EthAddress,
+                        asset: EthAddress): ?!ChannelId =
+  wallet.openLedgerChannel(hub, ChainId, asset, AmountPerChannel)
+
+func getOrOpenChannel(wallet: var Wallet, peer: BitswapPeerCtx): ?!ChannelId =
+  if channel =? peer.paymentChannel:
+    channel.success
+  elif pricing =? peer.pricing:
+    let channel = ?wallet.openLedgerChannel(pricing.address, pricing.asset)
+    peer.paymentChannel = channel.some
+    channel.success
+  else:
+    ChannelId.failure "no pricing set for peer"
+
+func pay*(wallet: var Wallet,
+          peer: BitswapPeerCtx,
+          amountOfBytes: int): ?!SignedState =
+  if pricing =? peer.pricing:
+    let amount = amountOfBytes.u256 * pricing.price
+    let asset = pricing.asset
+    let receiver = pricing.address
+    let channel = ?wallet.getOrOpenChannel(peer)
+    wallet.pay(channel, asset, receiver, amount)
+  else:
+    SignedState.failure "no pricing set for peer"
diff --git a/dagger/bitswap/peercontext.nim b/dagger/bitswap/peercontext.nim
index 5685688d..b57a82e4 100644
--- a/dagger/bitswap/peercontext.nim
+++ b/dagger/bitswap/peercontext.nim
@@ -1,20 +1,25 @@
 import std/sequtils
 import pkg/libp2p
 import pkg/chronos
+import pkg/nitro
 import pkg/questionable
 import ./protobuf/bitswap
 import ./protobuf/payments
 
+export payments
+export nitro
+
 type
   BitswapPeerCtx* = ref object of RootObj
     id*: PeerID
-    peerHave*: seq[Cid]     # remote peers have lists
-    peerWants*: seq[Entry]  # remote peers want lists
-    bytesSent*: int         # bytes sent to remote
-    bytesRecv*: int         # bytes received from remote
-    exchanged*: int         # times peer has exchanged with us
-    lastExchange*: Moment   # last time peer has exchanged with us
-    pricing*: ?Pricing      # optional bandwidth price for this peer
+    peerHave*: seq[Cid]         # remote peers have lists
+    peerWants*: seq[Entry]      # remote peers want lists
+    bytesSent*: int             # bytes sent to remote
+    bytesRecv*: int             # bytes received from remote
+    exchanged*: int             # times peer has exchanged with us
+    lastExchange*: Moment       # last time peer has exchanged with us
+    pricing*: ?Pricing          # optional bandwidth price for this peer
+    paymentChannel*: ?ChannelId # payment channel id
 
 proc contains*(a: openArray[BitswapPeerCtx], b: PeerID): bool =
   ## Convenience method to check for peer prepense
diff --git a/dagger/bitswap/protobuf/payments.nim b/dagger/bitswap/protobuf/payments.nim
index 045dbb1e..5fca5aa2 100644
--- a/dagger/bitswap/protobuf/payments.nim
+++ b/dagger/bitswap/protobuf/payments.nim
@@ -1,5 +1,6 @@
 import pkg/protobuf_serialization
 import pkg/stew/byteutils
+import pkg/stint
 import pkg/nitro
 import pkg/questionable
 import pkg/upraises
@@ -8,6 +9,7 @@ import ./bitswap
 export PricingMessage
 export StateChannelUpdate
 
+export stint
 export nitro
 
 push: {.upraises: [].}
diff --git a/tests/dagger/bitswap/engine/testpayments.nim b/tests/dagger/bitswap/engine/testpayments.nim
new file mode 100644
index 00000000..c66a7e74
--- /dev/null
+++ b/tests/dagger/bitswap/engine/testpayments.nim
@@ -0,0 +1,32 @@
+import std/unittest
+import pkg/dagger/bitswap/engine/payments
+import ../../examples
+
+suite "engine payments":
+
+  let amountOfBytes = 42
+
+  var wallet: Wallet
+  var peer: BitswapPeerCtx
+
+  setup:
+    wallet = Wallet.example
+    peer = BitswapPeerCtx.example
+    peer.pricing = Pricing.example.some
+
+  test "pays for received bytes":
+    let payment = wallet.pay(peer, amountOfBytes).get
+    let pricing = peer.pricing.get
+    let balances = payment.state.outcome.balances(pricing.asset)
+    let destination = pricing.address.toDestination
+    check balances[destination].get == amountOfBytes.u256 * pricing.price
+
+  test "no payment when no price is set":
+    peer.pricing = Pricing.none
+    check wallet.pay(peer, amountOfBytes).isErr
+
+  test "uses same channel for consecutive payments":
+    let payment1, payment2 = wallet.pay(peer, amountOfBytes)
+    let channel1 = payment1.?state.?channel.?getChannelId
+    let channel2 = payment2.?state.?channel.?getChannelId
+    check channel1 == channel2
diff --git a/tests/dagger/examples.nim b/tests/dagger/examples.nim
index b4ae1d99..948a88ee 100644
--- a/tests/dagger/examples.nim
+++ b/tests/dagger/examples.nim
@@ -1,6 +1,11 @@
 import std/random
+import std/sequtils
+import pkg/libp2p
 import pkg/nitro
+import pkg/dagger/p2p/rng
 import pkg/dagger/bitswap/protobuf/payments
+import pkg/dagger/bitswap/peercontext
+import pkg/dagger/blocktype
 
 proc example*(_: type EthAddress): EthAddress =
   EthPrivateKey.random().toPublicKey.toAddress
@@ -30,5 +35,17 @@ proc example*(_: type Pricing): Pricing =
   Pricing(
     address: EthAddress.example,
     asset: EthAddress.example,
-    price: UInt256.example()
+    price: uint32.example.u256
   )
+
+proc example*(_: type Block): Block =
+  let length = rand(4096)
+  let bytes = newSeqWith(length, rand(uint8))
+  Block.new(bytes)
+
+proc example*(_: type PeerId): PeerID =
+  let key = PrivateKey.random(Rng.instance[]).get
+  PeerId.init(key.getKey().get).get
+
+proc example*(_: type BitswapPeerCtx): BitswapPeerCtx =
+  BitswapPeerCtx(id: PeerID.example)
diff --git a/tests/testAll.nim b/tests/testAll.nim
index 4e007243..2b03c4a7 100644
--- a/tests/testAll.nim
+++ b/tests/testAll.nim
@@ -1,7 +1,8 @@
 import ./dagger/bitswap/testbitswap
 import ./dagger/bitswap/testengine
 import ./dagger/bitswap/testnetwork
-import ./dagger/bitswap/protobuf/testpayments
+import ./dagger/bitswap/protobuf/testpayments as testprotobufpayments
+import ./dagger/bitswap/engine/testpayments as testenginepayments
 import ./dagger/testasyncheapqueue
 import ./dagger/testblockstore
 import ./dagger/testchunking