Visa, Mastercard, and Ripple Collaborate on New Payment Standard

Visa, Mastercard, and Ripple Collaborate on New Payment Standard

The x402 Foundation, recently launched by the Linux Foundation, aims to standardize internet-native payments between software agents. Major technology companies, including Visa, Mastercard, and Ripple, have backed this initiative to facilitate machine-to-machine transactions without human involvement.

Overview of x402 Foundation

The x402 Foundation is now officially governed by 40 companies, including leading firms like American Express, Stripe, and Shopify, alongside blockchain entities such as Circle and MoonPay. Coinbase’s original contribution to the protocol has been finalized, marking a significant step towards automating online payments.

The Functionality of x402

Designed to address a longstanding gap, the x402 protocol allows servers to request payments via a 402 Payment Required response code. In this process, a client can initiate a payment by signing a stablecoin transfer, typically in USDC, and subsequently resending the request with the payment included. This streamlined communication eliminates the need for bank accounts, credit checks, or prior relationships, making it especially relevant in the evolving AI industry.

Transaction Volume and Impact

In a recent report, it was noted that x402 completed approximately 75 million transactions last month, amounting to roughly $24 million in total payments. The average transaction value was about 32 cents, demonstrating the protocol’s potential for low-cost exchanges that traditional card networks cannot efficiently process.

Future Implications

The x402 standard is integrated into platforms from giants like Google and Cloudflare, signaling its potential to reshape transactions in a data-driven world. Although the current volume is modest compared to the daily transactions of its supporting companies, the implications for future payments and the autonomous capabilities of AI agents are profound.