diff --git a/app-constants.js b/app-constants.js
index e9747f85..106e77da 100644
--- a/app-constants.js
+++ b/app-constants.js
@@ -36,8 +36,15 @@ const Scopes = {
   READ_TAAS_TEAM: 'read:taas-teams'
 }
 
+const ChallengeStatus = {
+  DRAFT: 'Draft',
+  ACTIVE: 'Active',
+  COMPLETED: 'Completed'
+}
+
 module.exports = {
   UserRoles,
   FullManagePermissionRoles,
-  Scopes
+  Scopes,
+  ChallengeStatus
 }
diff --git a/config/default.js b/config/default.js
index e475a677..14599bef 100644
--- a/config/default.js
+++ b/config/default.js
@@ -124,5 +124,11 @@ module.exports = {
   // SendGrid email template ID for requesting extension
   REQUEST_EXTENSION_SENDGRID_TEMPLATE_ID: process.env.REQUEST_EXTENSION_SENDGRID_TEMPLATE_ID,
   // the URL where TaaS App is hosted
-  TAAS_APP_URL: process.env.TAAS_APP_URL || 'https://platform.topcoder-dev.com/taas/myteams'
+  TAAS_APP_URL: process.env.TAAS_APP_URL || 'https://platform.topcoder-dev.com/taas/myteams',
+  // environment variables for Payment Service
+  ROLE_ID_SUBMITTER: process.env.ROLE_ID_SUBMITTER || '732339e7-8e30-49d7-9198-cccf9451e221',
+  TYPE_ID_TASK: process.env.TYPE_ID_TASK || 'ecd58c69-238f-43a4-a4bb-d172719b9f31',
+  DEFAULT_TIMELINE_TEMPLATE_ID: process.env.DEFAULT_TIMELINE_TEMPLATE_ID || '53a307ce-b4b3-4d6f-b9a1-3741a58f77e6',
+  DEFAULT_TRACK_ID: process.env.DEFAULT_TRACK_ID || '9b6fc876-f4d9-4ccb-9dfd-419247628825'
+
 }
diff --git a/package.json b/package.json
index 23621ca5..2ed4ee77 100644
--- a/package.json
+++ b/package.json
@@ -25,7 +25,8 @@
     "services:logs": "docker-compose -f ./local/docker-compose.yml logs",
     "local:init": "npm run local:reset && npm run data:import -- --force",
     "local:reset": "npm run delete-index -- --force || true && npm run create-index -- --force && npm run init-db force",
-    "cov": "nyc --reporter=html --reporter=text mocha test/unit/*.test.js --timeout 30000 --exit"
+    "cov": "nyc --reporter=html --reporter=text mocha test/unit/*.test.js --timeout 30000 --exit",
+    "demo-payment": "node scripts/demo-payment"
   },
   "keywords": [],
   "author": "",
@@ -84,4 +85,4 @@
       "test/unit/**"
     ]
   }
-}
+}
\ No newline at end of file
diff --git a/scripts/demo-payment/README.md b/scripts/demo-payment/README.md
new file mode 100644
index 00000000..d39e432b
--- /dev/null
+++ b/scripts/demo-payment/README.md
@@ -0,0 +1,22 @@
+### DEMO PAYMENT SCRIPT
+
+This demo script tests the functionality of PaymentService.
+
+Parameters for creating payments are hardcoded in the script. There are severel groups of parameters, each of them tests a certain functionality of the demo service. You can always insert new group of parameters to run in the script.
+
+Before start set the following environment variables:
+AUTH0_URL=
+AUTH0_AUDIENCE=
+AUTH0_AUDIENCE_UBAHN=
+AUTH0_CLIENT_ID=
+AUTH0_CLIENT_SECRET=
+
+To run the script use the following commands:
+
+```
+npm install
+npm run lint
+npm run demo-payment
+```
+
+Read the logger to see results.
\ No newline at end of file
diff --git a/scripts/demo-payment/index.js b/scripts/demo-payment/index.js
new file mode 100644
index 00000000..f84880b9
--- /dev/null
+++ b/scripts/demo-payment/index.js
@@ -0,0 +1,114 @@
+require('../../src/bootstrap')
+const logger = require('../../src/common/logger')
+const paymentService = require('../../src/services/PaymentService')
+
+const options = [
+  {
+    name: 'Test joi validation for projectId-1',
+    content: {
+      userHandle: 'pshah_manager',
+      amount: 3,
+      billingAccountId: 80000069,
+      name: 'test payment for pshah_manager',
+      description: '## test payment'
+    }
+  },
+  {
+    name: 'Test joi validation for projectId-2',
+    content: {
+      projectId: 'project',
+      userHandle: 'pshah_manager',
+      amount: 3,
+      billingAccountId: 80000069,
+      name: 'test payment for pshah_manager',
+      description: '## test payment'
+    }
+  },
+  {
+    name: 'Test joi validation for userHandle',
+    content: {
+      projectId: 17234,
+      amount: 3,
+      billingAccountId: 80000069,
+      name: 'test payment for pshah_manager',
+      description: '## test payment'
+    }
+  },
+  {
+    name: 'Test joi validation for amount-1',
+    content: {
+      projectId: 17234,
+      userHandle: 'pshah_manager',
+      billingAccountId: 80000069,
+      name: 'test payment for pshah_manager',
+      description: '## test payment'
+    }
+  },
+  {
+    name: 'Test joi validation for amount-2',
+    content: {
+      projectId: 17234,
+      userHandle: 'pshah_manager',
+      amount: -10,
+      billingAccountId: 80000069,
+      name: 'test payment for pshah_manager',
+      description: '## test payment'
+    }
+  },
+  {
+    name: 'Successful payment creation',
+    content: {
+      projectId: 17234,
+      userHandle: 'pshah_manager',
+      amount: 3,
+      billingAccountId: 80000069,
+      name: 'test payment for pshah_manager',
+      description: '## test payment'
+    }
+  },
+  {
+    name: 'Successful payment creation without name and description',
+    content: {
+      projectId: 17234,
+      userHandle: 'pshah_customer',
+      amount: 2,
+      billingAccountId: 80000069
+    }
+  },
+  {
+    name: 'Failing payment creation with no active billing account',
+    content: {
+      projectId: 16839,
+      userHandle: 'pshah_customer',
+      amount: 2,
+      billingAccountId: 80000069,
+      name: 'test payment for pshah_customer',
+      description: '## test payment'
+    }
+  },
+  {
+    name: 'Failing payment creation with non existing user',
+    content: {
+      projectId: 17234,
+      userHandle: 'eisbilir',
+      amount: 2,
+      billingAccountId: 80000069
+    }
+  }
+]
+
+const test = async () => {
+  for (const option of options) {
+    logger.info({ component: 'demo-payment', context: 'test', message: `Starting to create payment for: ${option.name}` })
+    await paymentService.createPayment(option.content)
+      .then(data => {
+        logger.info({ component: 'demo-payment', context: 'test', message: `Payment successfuly created for: ${option.name}` })
+      })
+      // eslint-disable-next-line handle-callback-err
+      .catch(err => {
+        logger.error({ component: 'demo-payment', context: 'test', message: `Payment can't be created for: ${option.name}` })
+      })
+  }
+}
+// wait for bootstrap to complete it's job.
+setTimeout(test, 2000)
diff --git a/src/common/helper.js b/src/common/helper.js
index 0f456215..954cd4ba 100644
--- a/src/common/helper.js
+++ b/src/common/helper.js
@@ -1118,6 +1118,82 @@ async function deleteProjectMember (currentUser, projectId, projectMemberId) {
   }
 }
 
+/**
+ * Create a new challenge
+ *
+ * @param {Object} data challenge data
+ * @param {String} token m2m token
+ * @returns {Object} the challenge created
+ */
+async function createChallenge (data, token) {
+  if (!token) {
+    token = await getM2MToken()
+  }
+  const url = `${config.TC_API}/challenges`
+  localLogger.debug({ context: 'createChallenge', message: `EndPoint: POST ${url}` })
+  localLogger.debug({ context: 'createChallenge', message: `Request Body: ${JSON.stringify(data)}` })
+  const { body: challenge, status: httpStatus } = await request
+    .post(url)
+    .set('Authorization', `Bearer ${token}`)
+    .set('Content-Type', 'application/json')
+    .set('Accept', 'application/json')
+    .send(data)
+  localLogger.debug({ context: 'createChallenge', message: `Status Code: ${httpStatus}` })
+  localLogger.debug({ context: 'createChallenge', message: `Response Body: ${JSON.stringify(challenge)}` })
+  return challenge
+}
+
+/**
+ * Update a challenge
+ *
+ * @param {String} challengeId id of the challenge
+ * @param {Object} data challenge data
+ * @param {String} token m2m token
+ * @returns {Object} the challenge updated
+ */
+async function updateChallenge (challengeId, data, token) {
+  if (!token) {
+    token = await getM2MToken()
+  }
+  const url = `${config.TC_API}/challenges/${challengeId}`
+  localLogger.debug({ context: 'updateChallenge', message: `EndPoint: PATCH ${url}` })
+  localLogger.debug({ context: 'updateChallenge', message: `Request Body: ${JSON.stringify(data)}` })
+  const { body: challenge, status: httpStatus } = await request
+    .patch(url)
+    .set('Authorization', `Bearer ${token}`)
+    .set('Content-Type', 'application/json')
+    .set('Accept', 'application/json')
+    .send(data)
+  localLogger.debug({ context: 'updateChallenge', message: `Status Code: ${httpStatus}` })
+  localLogger.debug({ context: 'updateChallenge', message: `Response Body: ${JSON.stringify(challenge)}` })
+  return challenge
+}
+
+/**
+ * Create a challenge resource
+ *
+ * @param {Object} data resource
+ * @param {String} token m2m token
+ * @returns {Object} the resource created
+ */
+async function createChallengeResource (data, token) {
+  if (!token) {
+    token = await getM2MToken()
+  }
+  const url = `${config.TC_API}/resources`
+  localLogger.debug({ context: 'createChallengeResource', message: `EndPoint: POST ${url}` })
+  localLogger.debug({ context: 'createChallengeResource', message: `Request Body: ${JSON.stringify(data)}` })
+  const { body: resource, status: httpStatus } = await request
+    .post(url)
+    .set('Authorization', `Bearer ${token}`)
+    .set('Content-Type', 'application/json')
+    .set('Accept', 'application/json')
+    .send(data)
+  localLogger.debug({ context: 'createChallengeResource', message: `Status Code: ${httpStatus}` })
+  localLogger.debug({ context: 'createChallengeResource', message: `Response Body: ${JSON.stringify(resource)}` })
+  return resource
+}
+
 module.exports = {
   getParamFromCliArgs,
   promptUser,
@@ -1159,5 +1235,8 @@ module.exports = {
   createProjectMember,
   listProjectMembers,
   listProjectMemberInvites,
-  deleteProjectMember
+  deleteProjectMember,
+  createChallenge,
+  updateChallenge,
+  createChallengeResource
 }
diff --git a/src/services/PaymentService.js b/src/services/PaymentService.js
new file mode 100644
index 00000000..e7a7d534
--- /dev/null
+++ b/src/services/PaymentService.js
@@ -0,0 +1,164 @@
+/**
+ * This service provides operations of PaymentService.
+ */
+
+const _ = require('lodash')
+const Joi = require('joi')
+const config = require('config')
+const helper = require('../common/helper')
+const logger = require('../common/logger')
+const constants = require('../../app-constants')
+
+const localLogger = {
+  debug: (message) => logger.debug({ component: 'PaymentService', context: message.context, message: message.message }),
+  error: (message) => logger.error({ component: 'PaymentService', context: message.context, message: message.message }),
+  info: (message) => logger.info({ component: 'PaymentService', context: message.context, message: message.message })
+}
+
+/**
+  * Create payment
+  * @param {Object} options the user who perform this operation
+  * @param {Object} options.projectId the user who perform this operation
+  * @param {Object} options.userHandle the user who perform this operation
+  * @param {Object} options.amount the user who perform this operation
+  * @param {Object} options.billingAccountId the user who perform this operation
+  * @param {Object} options.name the user who perform this operation
+  * @param {Object} options.description the user who perform this operation
+  * @returns {Object} the completed challenge
+  */
+async function createPayment (options) {
+  if (_.isUndefined(options.name)) {
+    options.name = `TaaS payment for user ${options.userHandle} in project ${options.projectId}`
+  }
+  if (_.isUndefined(options.description)) {
+    options.description = `TaaS payment for user ${options.userHandle} in project ${options.projectId}`
+  }
+  localLogger.info({ context: 'createPayment', message: 'generating M2MToken' })
+  const token = await helper.getM2MToken()
+  localLogger.info({ context: 'createPayment', message: 'M2MToken is generated' })
+  const challengeId = await createChallenge(options, token)
+  await addResourceToChallenge(challengeId, options.userHandle, token)
+  await activateChallenge(challengeId, token)
+  const completedChallenge = await closeChallenge(challengeId, token)
+  return completedChallenge
+}
+
+createPayment.schema = Joi.object().keys({
+  options: Joi.object().keys({
+    projectId: Joi.number().integer().required(),
+    userHandle: Joi.string().required(),
+    amount: Joi.number().positive().required(),
+    billingAccountId: Joi.number().allow(null),
+    name: Joi.string(),
+    description: Joi.string()
+  }).required()
+}).required()
+
+/**
+  * Create a new challenge.
+  * @param {Object} challenge the challenge to create
+  * @param {String} token m2m token
+  * @returns {Number} the created challenge id
+  */
+async function createChallenge (challenge, token) {
+  localLogger.info({ context: 'createChallenge', message: 'creating new challenge' })
+  const body = {
+    status: constants.ChallengeStatus.DRAFT,
+    projectId: challenge.projectId,
+    name: challenge.name,
+    description: challenge.description,
+    descriptionFormat: 'markdown',
+    typeId: config.TYPE_ID_TASK,
+    trackId: config.DEFAULT_TRACK_ID,
+    timelineTemplateId: config.DEFAULT_TIMELINE_TEMPLATE_ID,
+    prizeSets: [{
+      type: 'placement',
+      prizes: [{ type: 'USD', value: challenge.amount }]
+    }],
+    legacy: {
+      pureV5Task: true
+    },
+    tags: ['Other'],
+    startDate: new Date(),
+    billing: { billingAccountId: challenge.billingAccountId }
+  }
+  try {
+    const response = await helper.createChallenge(body, token)
+    const challengeId = _.get(response, 'id')
+    localLogger.info({ context: 'createChallenge', message: `Challenge with id ${challengeId} is created` })
+    return challengeId
+  } catch (err) {
+    localLogger.error({ context: 'createChallenge', message: `Status Code: ${err.status}` })
+    localLogger.error({ context: 'createChallenge', message: err.response.text })
+    throw err
+  }
+}
+
+/**
+  * adds the resource to the topcoder challenge
+  * @param {String} id the challenge id
+  * @param {String} handle the user handle to add
+  * @param {String} token m2m token
+  */
+async function addResourceToChallenge (id, handle, token) {
+  localLogger.info({ context: 'addResourceToChallenge', message: `adding resource to challenge ${id}` })
+  try {
+    const body = {
+      challengeId: id,
+      memberHandle: handle,
+      roleId: config.ROLE_ID_SUBMITTER
+    }
+    await helper.createChallengeResource(body, token)
+    localLogger.info({ context: 'addResourceToChallenge', message: `${handle} added to challenge ${id}` })
+  } catch (err) {
+    localLogger.error({ context: 'addResourceToChallenge', message: `Status Code: ${err.status}` })
+    localLogger.error({ context: 'addResourceToChallenge', message: err.response.text })
+    throw err
+  }
+}
+
+/**
+  * activates the topcoder challenge
+  * @param {String} id the challenge id
+  * @param {String} token m2m token
+  */
+async function activateChallenge (id, token) {
+  localLogger.info({ context: 'activateChallenge', message: `Activating challenge ${id}` })
+  try {
+    const body = {
+      status: constants.ChallengeStatus.ACTIVE
+    }
+    await helper.updateChallenge(id, body, token)
+    localLogger.info({ context: 'activateChallenge', message: `Challenge ${id} is activated successfully.` })
+  } catch (err) {
+    localLogger.error({ context: 'activateChallenge', message: `Status Code: ${err.status}` })
+    localLogger.error({ context: 'activateChallenge', message: err.response.text })
+    throw err
+  }
+}
+
+/**
+  * closes the topcoder challenge
+  * @param {String} id the challenge id
+  * @param {String} token m2m token
+  * @returns {Object} the closed challenge
+  */
+async function closeChallenge (id, token) {
+  localLogger.info({ context: 'closeChallenge', message: `Closing challenge ${id}` })
+  try {
+    const body = {
+      status: constants.ChallengeStatus.COMPLETED
+    }
+    const response = await helper.updateChallenge(id, body, token)
+    localLogger.info({ context: 'closeChallenge', message: `Challenge ${id} is closed successfully.` })
+    return response
+  } catch (err) {
+    localLogger.error({ context: 'closeChallenge', message: `Status Code: ${err.status}` })
+    localLogger.error({ context: 'closeChallenge', message: err.response.text })
+    throw err
+  }
+}
+
+module.exports = {
+  createPayment
+}