Google and PayPal have inked a multiyear deal to bring “agentic commerce” into the mainstream, pairing Google’s artificial intelligence with PayPal’s global payments stack to enable AI agents to research, decide, and make transactions on behalf of users. The tie-up includes AI-powered shopping journeys, more deeply integrating PayPal into Google’s properties, and a joint innovation center on cloud computing infrastructure.
Why agentic commerce is timely for the market
Agentic commerce takes chat-based recommendations a step further: autonomous agents evaluate choices, obtain approval, and effect purchases from start to finish. Imagine a travel agent that reserves flights, hotels and insurance against a known budget, or a replenishment bot that orders stock when levels are hit – but without manual checkout. It’s a natural outgrowth of the AI shift that is remaking consumer and enterprise software. IDC estimates that worldwide spending on generative AI will top $140 billion by 2027, and retail is an attractive hunting ground because the buying journey remains rife with obstacles.
That friction is costly. Average online cart abandonment hovers near 70%, according to the Baymard Institute, because of clunky checkout processes, repetitive data entry and an unclear sense of total cost. If agents can pre-verify identity, apply stored preferences, and pay with a trusted wallet, they might eat into those losses all while driving up average order value and loyalty.
How the Google–PayPal deal will work in practice
As per the agreement, Google provides leading AI models, tooling, and expertise to design new agent-driven shopping and task flows. PayPal has its global payment rails, risk and fraud systems, and identity capabilities to underwrite purchases made by agents on behalf of users, given consent. The companies say they will also partner on hosting and performance optimization through Google Cloud.
Operationally, PayPal will make one of its key payment methods available in Google Cloud and across Google apps like YouTube; meanwhile, “Google Pay” will be used in PayPal for users who want to use their PayPal account to pay for something online once they have already used it elsewhere. For not only merchants but also creators, that could mean speedier settlement, as well as expanded consumer payment options. PayPal’s scope — more than 400 million active accounts and over $1.5 trillion in total payment volume in 2023, according to company filings — grants Google’s AI agents instant access to millions of checkout endpoints.
The identity piece is pivotal. PayPal’s risk models, tokenization, and device telemetry can approve a transaction when the buyer is essentially an avatar of a human. That cuts false declines and helps maintain a high authorization rate, which is a key KPI for merchants.
Standardizing bot-initiated payments across the web
Both companies are supporting Google’s newly announced Agent Payments Protocol, an open framework for allowing AI agents to make purchases across the web in a consistent and auditable manner. More than 60 merchants and financial companies have already indicated their support for the protocol, suggesting widespread industry appetite for common rules governing consent, authentication, and dispute resolution when nonhumans make a purchase.
Expect the protocol to piggyback off existing rails and standards, like network tokens, as well as lean on 3-D Secure where applicable and employ passkey-based authentication (à la the FIDO Alliance) in order to minimize fraud without escalating friction. Clear consent capture (“buy up to $200 from approved merchants for weekly groceries”) and transparent logs of agent actions will be paramount for regulators and consumers alike.
What this means for merchants and developers
For retailers, it’s a near-term issue of meeting buyers where their agents are. When an agent can search inventory, compare times of delivery and make payment through a common protocol, these merchants now have an alternative conversion channel beyond their branded store. Picture an “invisible checkout” that nonetheless respects loyalty, coupons and tax rules.
Developers should be on the lookout for consolidated APIs, sandboxed agent credentials, and event logs that enable auditable agent behavior. On the payout side, too, Hyperwallet might be able to make disbursements to marketplace sellers, creators and gig economy workers initiated by agent-verified events.
Key specifics that bear studying:
- How liability is split for agents’ mistakes
- Chargeback flows
- Refund automation
- How risk scores adjust when the ‘buyer’ in question is a software agent acting on delegated authority
The competitive context for agent-mediated commerce
Big platforms are in a race toward the future of agent-mediated commerce. Payment networks are promoting tokenization and Click to Pay to cut friction; issuers are testing biometric-first flows; and large marketplaces are deploying AI agents that can help sellers and buyers manage their tasks. The distinction here is the broader effort to make how agents transact across the open web a standard rather than keep purchases within an individual app or marketplace.
Regulatory scrutiny will follow. Consumer watchdogs are going to dig into consent, transparency and redress when agents get stuff wrong. The EU’s AI Act and financial services regulations (along with any guidance provided by U.S. regulators) will determine how and where agentic checkout can promulgate initially.
What to watch next as AI agents make purchases
Three signals will indicate momentum:
- Metrics around the number and quality of merchants adopting the Agent Payments Protocol
- Early indicators around authorization rates, fraud, and abandonment in agent-led flows
- How quickly Google can raise agentic shopping to prominence inside consumer touchpoints such as search, shopping, and Android
If promises are met in practice, agentic commerce would compress the buying funnel to be measured in moments (not minutes) and let AI do the heavy lifting of legwork while PayPal and Google quietly fill identity, risk, and payments behind the scenes.