- Coinbase introduced the new x402 protocol to enable direct stablecoin payments between users and merchants, removing the need for traditional intermediaries.
- The protocol is designed for automated, instant payments and is especially suited for transactions by AI agents for digital goods and microtransactions.
- x402 initially supports USDC stablecoin, operates as an open protocol, and is launching with support from partners like Circle, Amazon AWS, and Anthropic.
Coinbase announced the launch of the x402 protocol, a tool designed to let holders pay merchants directly with stablecoins, according to a statement from Erik Reppel, Head of Engineering at Coinbase Developer Platform. This system removes intermediaries from the payment process, aiming to simplify and automate online payments for services like digital content, APIs, and computing resources.
The x402 protocol can automate payments, particularly for AI agents paying for digital items, and supports any scenario requiring quick micropayments. The company’s announcement explained that when an AI requests data and receives a payment request, the payment can be completed instantly by sending a digital signature from the buyer’s wallet. Coinbase confirmed the protocol is compatible with any stablecoin but will start with support for USDC, the U.S. dollar-backed digital currency co-founded by Coinbase and Circle.
According to the official announcement, “We built x402 because the internet has always needed a native way to send and receive payments—and stablecoins finally make that possible,” said Reppel. “Just like HTTPS secured the web, x402 could define the next era of the internet; one where value moves as freely and instantly as information.” To encourage adoption, the company has released the x402 source code under the open Apache 2.0 license, making it available for broad developer use.
The protocol allows merchants to request payments through a digital message whenever a customer attempts to access a paid online resource—similar to receiving a “402 Payment Required” error code. The buyer fulfills the payment by responding with wallet details and a digital signature, completing the transaction without card providers or banks. While intermediaries are not necessary, Coinbase noted that new service providers might emerge to make the process easier for merchants.
Questions remain around regulatory compliance and foreign exchange conversion. Currently, banks and card networks handle identity checks and currency conversions, which help merchants receive payments in their preferred currencies. For x402, these responsibilities may shift to digital wallet providers, and users might face new or different conversion fees as a result.
Despite these considerations, Coinbase says the x402 protocol is positioned to support growing interest in stablecoins for routine, real-world transactions. Partners at launch include Circle, Amazon AWS, and Anthropic, which created the agentic AI protocol MCP. Coinbase’s launch guide shows how developers can connect x402 with MCP servers for seamless integration of payments by AI agents.
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