diff --git a/transactions/payments_test.go b/transactions/payments_test.go
index 5c56d36c..4e006dbe 100644
--- a/transactions/payments_test.go
+++ b/transactions/payments_test.go
@@ -82,6 +82,31 @@ func TestMarkSettled_Sent(t *testing.T) {
 	assert.Equal(t, &dbTransaction, settledTransaction)
 }
 
+func TestMarkSettled_SentNoPreimage(t *testing.T) {
+	defer tests.RemoveTestService()
+	svc, err := tests.CreateTestService()
+	assert.NoError(t, err)
+
+	dbTransaction := db.Transaction{
+		State:       constants.TRANSACTION_STATE_PENDING,
+		Type:        constants.TRANSACTION_TYPE_OUTGOING,
+		PaymentHash: tests.MockLNClientTransaction.PaymentHash,
+		AmountMsat:  123000,
+	}
+	svc.DB.Create(&dbTransaction)
+
+	mockEventConsumer := tests.NewMockEventConsumer()
+	svc.EventPublisher.RegisterSubscriber(mockEventConsumer)
+	transactionsService := NewTransactionsService(svc.DB, svc.EventPublisher)
+	err = svc.DB.Transaction(func(tx *gorm.DB) error {
+		_, err = transactionsService.markTransactionSettled(tx, &dbTransaction, "", 0, false)
+		return err
+	})
+
+	assert.Error(t, err)
+	assert.ErrorContains(t, err, "no preimage in payment")
+}
+
 func TestMarkSettled_Received(t *testing.T) {
 	defer tests.RemoveTestService()
 	svc, err := tests.CreateTestService()
@@ -111,6 +136,36 @@ func TestMarkSettled_Received(t *testing.T) {
 	assert.Equal(t, &dbTransaction, settledTransaction)
 }
 
+func TestMarkSettled_ReceivedNoPreimage(t *testing.T) {
+	defer tests.RemoveTestService()
+	svc, err := tests.CreateTestService()
+	assert.NoError(t, err)
+
+	dbTransaction := db.Transaction{
+		State:       constants.TRANSACTION_STATE_PENDING,
+		Type:        constants.TRANSACTION_TYPE_INCOMING,
+		PaymentHash: tests.MockLNClientTransaction.PaymentHash,
+		AmountMsat:  123000,
+	}
+	svc.DB.Create(&dbTransaction)
+
+	mockEventConsumer := tests.NewMockEventConsumer()
+	svc.EventPublisher.RegisterSubscriber(mockEventConsumer)
+	transactionsService := NewTransactionsService(svc.DB, svc.EventPublisher)
+	err = svc.DB.Transaction(func(tx *gorm.DB) error {
+		_, err = transactionsService.markTransactionSettled(tx, &dbTransaction, "", 0, false)
+		return err
+	})
+
+	// incoming payment does not necessarily need preimage
+	assert.Nil(t, err)
+	assert.Equal(t, constants.TRANSACTION_STATE_SETTLED, dbTransaction.State)
+	assert.Equal(t, 1, len(mockEventConsumer.GetConsumeEvents()))
+	assert.Equal(t, "nwc_payment_received", mockEventConsumer.GetConsumeEvents()[0].Event)
+	settledTransaction := mockEventConsumer.GetConsumeEvents()[0].Properties.(*db.Transaction)
+	assert.Equal(t, &dbTransaction, settledTransaction)
+}
+
 func TestDoNotMarkSettledTwice(t *testing.T) {
 	defer tests.RemoveTestService()
 	svc, err := tests.CreateTestService()
diff --git a/transactions/transactions_service.go b/transactions/transactions_service.go
index 40f4ca4f..130ab890 100644
--- a/transactions/transactions_service.go
+++ b/transactions/transactions_service.go
@@ -897,7 +897,13 @@ func (svc *transactionsService) markTransactionSettled(tx *gorm.DB, dbTransactio
 	}
 
 	if preimage == "" {
-		return nil, errors.New("no preimage in payment")
+		// outgoing payments MUST have a preimage
+		if dbTransaction.Type == constants.TRANSACTION_TYPE_OUTGOING {
+			return nil, errors.New("no preimage in payment")
+		}
+		// incoming payments SHOULD have a preimage
+		// (currently cashu backend does not)
+		logger.Logger.WithField("payment_hash", dbTransaction.PaymentHash).Warn("no preimage in settled incoming transaction")
 	}
 
 	now := time.Now()