In a significant move to redefine online transaction protocols, Coinbase and Cloudflare have launched the x402 Foundation, aimed at repurposing the rarely used HTTP 402 “Payment Required” status code as a viable standard for digital payments. The announcement was made via a blog post from both companies on September 23.
The x402 Foundation aims to provide a much-needed infrastructure for automated systems—such as bots, APIs, and AI agents—to facilitate seamless payments for data, content, or tools on demand. According to Cloudflare, their servers currently generate over a billion HTTP 402 responses each day, but without an efficient method to handle payment settlements. The new protocol addresses this gap through a streamlined three-step process: a server issues a payment offer, the client signs and sends it back, and a facilitator verifies the transaction. This mechanism allows for pay-per-use access without the hassles of subscriptions or manual billing, marking a significant leap toward more efficient online transactions.
To support developers and encourage adoption, Coinbase has made the reference code available on GitHub, while Cloudflare has integrated the system into its developer tools, featuring a public demo that illustrates the new payment process. The foundation is set to act as a neutral entity to guide the standardization and broader acceptance of the x402 protocol, with ambitions to transform the HTTP 402 from a mere error code into a core component of automated online payments.
An intriguing aspect of the project is Cloudflare’s introduction of a deferred-settlement option. This will allow service providers to batch process payments through credit cards, banking systems, or stablecoins when immediate blockchain settlement isn’t necessary. Coinbase envisions the foundation as a pathway to make x402 a universal standard for AI-driven payments, emphasizing principles of open governance, ecosystem grants, and interoperability across platforms.
Following the launch, Coinbase has obtained a position of authority on GitHub by hosting the x402 specification, sample code, and middleware examples. The protocol aims to be nearly fee-free with instant settlement capabilities, specifically targeted at micro-transactions that traditional card networks struggle to facilitate efficiently. Shortly after the announcement, the Cardano Foundation voiced its commitment to work toward adopting the x402 standard for agent-to-agent payments, aligning it with its roadmap for token standards.
The collaboration between Coinbase and Cloudflare represents a pivotal step in integrating payment capabilities directly into the internet’s infrastructure rather than just its applications. If successful, it could empower AI agents and web services to make payments for necessary resources without requiring user accounts or subscriptions. This has the potential to open new revenue streams for API providers and content publishers alike.
Cloudflare’s focus on deferred settlement showcases a recognition of the enterprise’s need for traditional payment channels that include dispute management, while stablecoins offer an avenue for instantaneous transfers. Yet, this initiative does not exist in isolation. It encounters competition from Google’s AP2 project, which also seeks to establish an open payment standard, emphasizing the necessity for superior interoperability and credible governance as determining factors for the prevailing standard.
Cloudflare CEO Matthew Prince highlighted Coinbase’s foundational role in developing the x402 protocol, expressing excitement about the collaboration and its vision for creating a neutral governing body. Meanwhile, Coinbase’s Erik Reppel described agentic commerce as a once-in-a-generation opportunity, asserting that the foundation will lay essential groundwork for its realization.
