AI: Google's new AI 'Agent Payments Protocol (AP2). RTZ #848

...a baby step to addressing original Internet Payment 'Error 402'

I’ve often remarked that one of the core set of AI innovations needed in this AI Tech Wave are industry wide software protocols that need to be improved. The ones that makes AI innovations from today and in the future work better with the internet we have. And are trying to improve.

Examples here that I’ve applauded recently include the MCP (Model Control Protocol) and other initiative around making AI Agents more interoperable across LLM AI companies and the internet at large.

One of the fundamental shortcomings of the internet we have is no built in protocols from the ‘HTTP’ internet of over three dedades ago. Tech geeks know it as ‘Error 402 Payment Required’, which is explained as following:

“The HTTP 402 Payment Required client error response status code is a nonstandard response status code reserved for future use.”

“This status code was created to enable digital cash or (micro) payment systems and would indicate that requested content is not available until the client makes a payment. No standard use convention exists and different systems use it in different contexts.”

Now tech and LLM AI companies are taking some steps to begin to address this shortcoming in the AI internet to come.

The Information summarizes it well in “Google Unveils New Protocol for Agents to Make Purchases on Behalf of Users”:

“Google announced the launch of Agent Payment Protocol Tuesday, a new open-source protocol it says will enable agents to handle payments and transact on behalf of users across the web. Google says the protocol was developed in partnership with payments companies like Adyen, Mastercard, American Express, PayPal and Coinbase that will allow financial institutions to handle agentic transactions in a more uniform way.”

“Google says the protocol will allow agents to shop on behalf of users in many different scenarios, including getting a users’ permission ahead of time to make a purchase as soon as a specific item is restocked or get personalized deals and offers from merchants.”

“The protocol will collect what it calls mandates from users that serve as proof that they’ve authorized agents to take actions and make purchases on their behalf. These mandates detail what items and price users have agreed to and allow agents to securely handle users’ payment information to complete the transaction, key issues that merchants, AI companies and payments firms have been trying to sort out in order to allow agents to handle more transactions.”

Google itself expains additional elements in “Powering AI commerce with the new Agent Payments Protocol (AP2)”:

“Today, Google announced the Agent Payments Protocol (AP2), an open protocol developed with leading payments and technology companies to securely initiate and transact agent-led payments across platforms. The protocol can be used as an extension of the Agent2Agent (A2A) protocol and Model Context Protocol (MCP). In concert with industry rules and standards, it establishes a payment-agnostic framework for users, merchants, and payments providers to transact with confidence across all types of payment methods.”

“We’re collaborating with a diverse group of more than 60 organizations to help shape the future of agentic payments, including Adyen, American Express, Ant International, Coinbase, Etsy, Forter, Intuit, JCB, Mastercard, Mysten Labs, Paypal, Revolut, Salesforce, ServiceNow, UnionPay International, Worldpay, and more.”

It remains to be seen where Stripe stands on this Agent Payments Protocol initiative, given its DNA in internet payments over the last decade plus of the global desktop and mobile internet. But these are early days for AP2, as Venturebeat makes it clear here:

“A standard would provide the necessary guarantee that requests to pay for something are legitimate and offer guidelines if something does go wrong.”

“Even with this concerted effort from the search-turned-AI giant, it will likely take some time before consumers and enterprises are comfortable with humans being barely involved in transactions.”

“As of today, consumers cannot use AP2-based payments today in any publicly known, real-world product or service. The protocol is ready for developers to explore and build with, and partners are supporting its development, but actual consumer-facing implementations have yet to launch.”

Those more technically inclined can read the full announcement via the links above, as well as watch the accompanying video from Google on AP2.

But the broader takeaway for those generally interested in where we are in this AI Tech Wave, is that we may be inching towards addressing the fundamental ‘Error 402 Payment Required’ issue from the internet since the beginning. With a little help from AI Agent proliferation. Stay tuneed.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)