Crypto exchange Coinbase has unveiled the x402 protocol to automate online payments with stablecoins, allowing direct transactions from holder to merchant without intermediaries. The protocol will be particularly useful for AI agents to pay for digital items automatically, but can serve any service requiring micropayments – essentially functioning as the online version of automated toll payments. Applications could include API usage, online content, flights, or computer resources. While designed for direct payments, various intermediaries will likely emerge to simplify the process for merchants.
The key is that there is no need for an intermediary. The stablecoin payment goes directly from the holder to the merchant. That said, any number of intermediaries will pop up to make it easier for merchants.
While Visa and Mastercard are often blamed for the high cost of card payments, by far the largest proportion of the typical 3% merchant card fee goes to the card issuer, which is often a bank.
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