Coinbase’s Strategy To Manage AI Payment Standards Worldwide

Coinbase and Cloudflare have established the x402 Foundation to activate the often-neglected HTTP 402 “Payment Required” code as an authentic standard for digital transactions. 

This update was made on Tuesday, September 23, via a company blog post and a Cloudflare statement.

We @Cloudflare are joining forces with @coinbase to establish the x402 Foundation. @programmer & others at Coinbase have developed a robust platform to facilitate payments on an Internet scale, and I am thrilled to collaborate with them on mainstreaming this protocol.

Every day, sites…

— William Allen (@williamallen) September 23, 2025

The foundation’s goal is clear: provide bots, APIs, and AI systems a mechanism to pay for data, content, or tools whenever needed. Cloudflare states that its servers currently send over a billion “402” responses each day, but lack a unified method for processing payments.

The new protocol addresses this in three steps: a server issues a payment request, the client signs and sends it back, and a facilitator confirms the transaction. This method enables pay-per-use access without the need for subscriptions or manual invoices.

Coinbase has shared reference code on GitHub, while Cloudflare has incorporated the system into its developer toolkit with a public demonstration. 

Both firms assert that the foundation will act as a neutral organization to foster adoption. If successful, HTTP 402 could evolve from an unused error message to a fundamental element of how machines transact for online services.

What Is the x402 Foundation Created by Coinbase and Cloudflare for AI Payments?

Cloudflare is introducing a deferred-settlement feature to x402, enabling providers to batch transactions via cards, banks, or stablecoins when immediate distributed database settlement isn’t necessary.

Coinbase presents the new foundation as a pathway to establish x402 as a universal standard for AI-driven payments, founded on open governance, ecosystem funding, and cross-platform compatibility. 

Cloudflare’s statement credits Coinbase with the creation of the platform but presents the foundation as impartial, encouraging additional members to avert fragmentation.

The procedure is straightforward: a server sends an HTTP 402 including payment instructions, the client replies with a signed header, a facilitator verifies and executes the settlement, and the server provides the resource along with a payment confirmation.

Cloudflare has implemented this into its Agents SDK and MCP servers, and it has launched a public testing environment that funds a test wallet on Base testnet, allowing developers to experience it firsthand.

Should adoption grow, x402 could provide AI agents and web services a common method to pay as needed, whether through crypto asset or traditional payment methods.

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Is x402 in Competition with Google’s AP2 for Open Payment Standards?

Coinbase’s GitHub repository now contains the x402 specifications, sample code, and a simple middleware example.

The protocol is promoted as nearly fee-free with instant settlement, targeting micro-transactions that traditional card networks struggle to process efficiently.

Shortly after the launch, the Cardano Foundation announced plans to collaborate with Masumi to implement x402 for agent-to-agent payments, incorporating it into its roadmap alongside token standard efforts on CIP-0113 and CIP-0143.

Recently, we had the opportunity to showcase the Masumi Protocol at the Cardano Seminar hosted by the Cardano Foundation.

Check out the recording pic.twitter.com/0IKdlz6tJD

— Masumi (@MasumiNetwork) September 18, 2025

This initiative reflects Coinbase and Cloudflare’s objective to integrate payments into the fundamental architecture of the internet, rather than limiting them to applications. 

If successful, AI agents might pay on-the-fly for data, computation, or premium services without the need for accounts or subscriptions, thereby opening new revenue opportunities for API providers and content creators.

Cloudflare’s design for deferred settlement caters to enterprise requirements for card or bank transactions with windows for disputes, while stablecoins facilitate immediate transfers.

However, x402 does not stand alone. It competes with Google’s AP2, where the ability to interoperate and credible governance may determine which standard succeeds — a venture that also includes… You guessed it, Coinbase.

Partnering with @Google to facilitate stablecoin payments for AI agents. https://t.co/B9p3KUkD8p

— Coinbase (@coinbase) September 16, 2025

“Coinbase deserves significant acknowledgment for initiating the work on the x402 platform … we’re eager to partner with them in our common vision for a neutral foundation,” stated Cloudflare CEO Matthew Prince in the press release. 

Coinbase’s Erik Reppel described agentic commerce as a “once-in-a-generation opportunity,” asserting that the foundation will “establish the groundwork” to realize it.

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