What you need to know about x402

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The HTTP status code 402 has existed since the early internet. Accompanied by a message reading, “payment required,” it was created for micro-payments to gate content or data behind a paywall, but in the absence of ways to make small digital payments, it served only as a placeholder for a future that hadn't arrived yet. 

Erik Reppel, head of engineering at Coinbase Developer Platform and the creator of the x402 protocol, thinks that future has arrived. An open payments protocol, x402 is designed to let computers exchange money over HTTP, the same avenue computers already use to exchange data, and with the advent of AI agents, it’s seeing rapid adoption as people begin building AI agents to make payments on their behalf. 

"Computers talk to each other all the time,” Reppel said. “We call this the internet. But as computers talk to each other, they can tell each other, hey, show data this way, or hey, here's an image or here's a piece of audio. But they have no way of saying, hey, here's money."

This gap can be traced back to the 1980s when engineers were trying to build payments into internet infrastructure. What's changed since then is that blockchains have finally caught up to internet speeds, Reppel noted. 

Reppel explained x402 was created to fill that gap by giving computer systems a platform-agnostic avenue to share information about money and payments, similar to how websites use the HTTP protocol to share data with your browser on any device.

"If your client speaks x402 and the server speaks x402, you can [make] payments regardless of what the product is," he said.

And as AI agents enter the mainstream, Reppel views them as an emerging “economic actor.” 

“They're going to need to do payments. They're going to need to be able to exchange value," he said. And that realization led him straight back to the problem he'd been tinkering on for years: the open internet’s business model.

"There's kind of this existential question in the age of AI: what is the business model of the future for publishers, for websites that people go to?" he asked. "Agents are quickly becoming the dominant way people view content. And that disintermediates publishers and API providers from their audience in a big way."

His solution is for service providers and publishers to charge AI agents. "If a human comes to you, you show them ads or you get them to subscribe. If an AI comes to you, you charge them $0.05 or $0.10 or $1. And that means that AI is not something to defend against; it's something you can actually monetize as a publisher."

The protocol has seen rapid interest, with finance giants like Visa, American Express, Stripe, Fiserv and Mastercard expressing support for the x402 Foundation, anticipating that consumers will want to use avenues other than digital assets for making transactions. 

"If you're paying for an article or you're paying for data, maybe stablecoins are the best option. But if you're paying for a flight or a hotel, a credit card today is probably still the best option," Reppel said.

For the next phase of growth, Reppel joked that agents are good at spending. "When agents have access to a wallet and can speak x402, they're actually way more compelling and more valuable. They get better context, better data, they get more powerful and even more useful than they already are."

Check out the next section for more details and the full episode.

For today’s episode, I interviewed Erik Reppel, head of engineering at Coinbase Developer Platform and creator of x402. They discuss why the internet struggled without a native payment protocol and why AI agents finally made the problem urgent enough to solve. Erik explains how x402 lets computers send movey as easily as they send data and why Visa, Mastercard and others are all founding members of its x402 Foundation.

He walks through why the 402 HTTP status code was reserved for "payment required" but left empty for decades, how publishers can now charge AI agents with micropayments instead of losing traffic to scraping, and why agents with wallets are fundamentally more useful than agents without them. The conversation covers why stablecoins are uniquely suited for low-dollar transactions, how Coinbase uses AI internally to make every engineer 3x more productive, and why the best infrastructure eventually becomes invisible.

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