AI Agents Take the Helm in New Payment Revolution

Agentic payments are a new type of transaction where an AI agent initiates, authorizes, and completes payments on behalf of a person. Unlike traditional autopay or saved cards, agentic payments involve an AI making judgment calls to determine what to buy.

The technology is being developed by major payment networks such as Visa, Mastercard, and Google, with the goal of enabling software to transact on a person's behalf within rules set by that person. Stablecoins are emerging as a preferred settlement currency for agentic payments due to their ability to support instant, low-cost micropayments between machines.

Card networks charge fees and processing time that make sense for larger purchases but not for microtransactions, which is where stablecoins come in. The x402 protocol, developed by Coinbase, uses a tokenized card credential tied to an AI agent's identity to verify transactions. Other companies like Mastercard and Google are working on similar protocols.

Regulators are now discussing a shift from verifying a customer's identity to verifying an agent's identity, known as 'Know Your Agent.' Liability is also an open question, with no clear answer yet to who bears the cost of unauthorized purchases or overspending. The technology and regulation around agentic payments are still maturing.