Coinbase and CloudFlare to create Internet payment standard for AI and web services

Coinbase and CloudFlare have joined forces to launch the x402 Foundation, a new initiative designed to create a standard way for machines, websites, and services to pay each other directly across the Internet.

The companies announced that the new x402 protocol will let digital agents, crawlers, and AI systems make real-time payments using a shared format. The protocol uses the old HTTP “402 Payment Required” code and turns it into a working system for automated money transactions.

x402 Foundation aims to make automated Web payments seamless

Coinbase first created the idea of the x402 payment flow and has now teamed up with CloudFlare to build the x402 Foundation. Almost all “402 Payment Required” messages sent daily to bots, crawlers, and automated systems are ignored because no rule guides the machines on how to respond, make payment, or complete the process. The x402 will help machines understand and answer the request with real, verified payments. 

When a digital agent, an AI tool, or a web crawler tries to access a piece of online content or service that is not free, the server will send back a special “402” message. This message shows how much money must be paid, to whom the payment should go, and under what terms the payment will grant access. Once the client receives these instructions, it resends its request to the server with proof of payment inside the authorization header. The server then delivers the requested content or service to the client once a payment facilitator verifies the payment.

Coinbase and CloudFlare believe this system has many uses. For example, an AI assistant that helps users search for information could visit many websites and automatically pay small amounts for single articles, research papers, or images. This way, the user does not have to buy a monthly subscription from each site. 

The system currently works with stablecoins because they’re fast, predictable, and easy to use across borders. However, companies want to add support for credit cards and bank accounts so that people and businesses who do not use digital currencies can still use the x402 protocol.

CloudFlare adds deferred payments to make AI transactions easier

CloudFlare is adding the deferred payment scheme to the x402 system. This method will delay payments because not every payment has to happen when a service is used in real life. It’s also better sometimes to gather many small costs and then pay them all simultaneously. This idea will ensure digital agents keep using the service all day, and instead of paying each time, it promises to pay later. The total amount owed at the end of the day or week will be added and settled in a single payment, just like a credit card.

This method works by asking the client, the agent, or the program using the service to send a cryptographic proof that it has agreed to pay. The provider knows the payment will come even though the money has not yet been transferred, because the server can instantly check this proof. The money can then be moved later using stablecoins or through normal credit cards and bank accounts if that is easier.

CloudFlare has already implemented x402 and deferred payments within its Agents SDK and MCP servers, making it possible for developers to start building agents with the new system immediately. The company built a testing playground, where every new agent is given a test wallet with testnet USDC (a trial version of a stablecoin). With this wallet, developers might pay for queries, tool usage, or access to services in a manner that reflects how the system would function in the real world.

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