Fintechs are going after the agentic payments market, following a string of landmark partnerships and announcements in recent months, laying the groundwork for the sector to roll out autonomous systems.

In Europe and the US, startups are looking to capitalise on the wider buzz for AI agents, tools that can complete a wide range of tasks without human intervention.

According to Sifted data there have been 335 AI agent deals so far this year in Europe, with close to €5bn invested, compared to 99 deals in €2.5bn in funding the year prior. ****

Agentic payments is a relatively new subsector with energy behind it.

Last month, payments processor Stripe announced a partnership with OpenAI to enable US users to complete purchases inside ChatGPT. It also unveiled an open-source protocol on which to build agentic payments. Card networks Visa and Mastercard have also released developer frameworks in recent months to put the building blocks in place for agentic payments. ****

European fintechs Revolut, Klarna, Checkout and Adyen are also collaborating with Google on the Agent Payments Protocol, an open protocol designed to securely initiate and transact agent-led payments. ****

“If they’re smart, every single neobank is probably looking into the space,” says Dinika Mahtani, a partner at Berlin-based VC firm Cherry Ventures.

The promise of agentic payments

AI payments agents would be trusted to complete transactions typically done by humans. They could search for and purchase a particular clothing item for a consumer, for example. Businesses, on the other hand, could entrust an agent to negotiate, validate and settle supplier payments autonomously.

The B2B play could be particularly attractive to startups building in the space. Proponents say this could smooth the checkout process and increase conversion rates, particularly for e-commerce businesses.

Ghali Bennani Laafiret, founder of London-based AI payments agent startup Ralio, says agents could also help save businesses time and money.

“You already have agents that pay on your behalf,” he says. “It’s just that they’re usually called employees.”

Ralio is creating payments infrastructure for AI agents to conduct payments on behalf of businesses. The startup, which took part in investor Antler’s spring startup residency this year, is in the process of raising a pre-seed round, Laafiret says.

Other companies in the payments agent space include London-based Swap Commerce, a Cherry Ventures portfolio company which raised a $40m Series B in March this year. Its “Swap Wallet” product gives agents the ability to act on behalf of a shopper and securely complete purchases.

The sector isn’t bypassing Europe’s largest companies either, and bigger fintechs without a payments agent product in the works could use acquisitions to muscle into the space.

The region’s most valuable fintech Revolut, for example, last week acquired Swifty, an AI travel agent which can “autonomously handle” travel booking including flights, hotels, payments and invoicing. It follows Sifted reporting last month that it’s building AI agents for sales and customer service.

**Overcoming an ‘existential problem’ **

The question of liability if an AI agent were to go rogue and make payments without consent is still an open question, and regulation protecting consumers and businesses using agents is the big hurdle these companies will have to get over, says Charles Kerrigan, a partner at law firm CMS who specialises in emerging technologies.

Kerrigan argues that companies pushing into the sector in the UK could come up against Consumer Duty rules, a regulation rolled out by the country’s financial regulator, the FCA (Financial Conduct Authority), in 2023. These rules require companies to act in good faith and avoid foreseeable harm to customers. This would specifically affect financial institutions or payment providers at the heart of an agentic payment transaction, he says.

“If your system hallucinates in making payments, that’s a kind of existential problem in financial services,” he says.

“Consumer Duty trumps terms and conditions,” he says. “You can write in the contract you have no responsibility but the regulations are going to say you do.”

Regulation is as nascent as the agentic payments space itself, and is unlikely to evolve until the vertical gathers pace.

London-based Ralio offers authentication and auditing tools such as transaction trails, time-stamped payment records, in order to be as compliant as possible. And while Ralio is not yet live, it’s aiming to be market-ready within three months.

‘Europe’s opportunity to win’

Kaushik Subramanian, a partner at EQT Ventures, says he’s holding off from making an investment in the space. Instead, he’s made investments into startups building in adjacent sectors such as Paid, a startup which last month closed a $21m seed round to build a “results-based billing” mechanism for AI agents.

“I’m very bullish on it but I’d like to see how it actually develops,” he says.

Mahtani says there aren’t enough European startups building in the space yet, but believes entrepreneurs will likely emerge in the coming months.

“This is Europe’s opportunity to win,” she says. “Fintech and e-commerce is where we shine.”