AI is transforming retail at an unprecedented pace, and one of the most exciting frontiers is agentic commerce, where AI-powered assistants act on behalf of consumers to streamline shopping journeys.

Google’s launch of its new Agent Payments Protocol (AP2) is a fantastic step in moving this vision forward, particularly given Google’s unique influence across payments, from issuer-side wallets and merchant discovery to in-session authentication. 

What’s notable about Google’s approach is its focus on trust and identity rather than the underlying payment rails. By creating a mechanism that establishes a chain of trust between buyer, seller and issuer through digital signatures even when an AI intermediary is involved. This ensures the AI agent is genuinely acting with the buyer’s permission, approving only the goods or services requested, rather than introducing errors or unintended purchases.

The process builds trust on multiple fronts: consumers can be reassured that the merchants and goods presented by their agents are authentic, while merchants can rely on the fact that these agents are backed by real buyers with real intent rather than bots. Crucially, issuers gain a clear trail of evidence, including signed ‘intent’ and ‘cart’ mandates from both consumer and seller that moves well beyond today’s card-based authentication flows.

Keeping the protocol open is also the right approach. Agentic commerce is a dynamic and fast-moving part of the eCommerce world, and an open model will allow retailers, issuers, and technology providers of all sizes to adapt quickly, experiment and innovate. 

But there remain significant questions. In markets such as the EU, UK and Japan, where Strong Customer Authentication is mandated, it’s not yet clear how issuers will be able to meet regulatory requirements to interact with their one billion cardholders when they are in-session. Many issuers already struggle to implement basic authentication services for 3DS, so these ambitious new requirements may prove challenging to roll out at pace. This potentially creates a massive opportunity for neobanks to differentiate themselves with their younger consumers who are most likely to use these agentic flows. There are also gaps in coverage for services like UK Open Banking, which lack an equivalent authorisation process to consume this new information.

Google’s moves with AP2 should be applauded, and point the direction for the rest of the industry. Given the pace that AI is moving, it will be interesting to see how traditional banks and their neobank competitors keep up.”