Machine-to-machine payments

SDK.finance describes the steps: the machine identifies a need, the two sides agree the terms, the payer's system checks that the machine may spend the amount, the payment runs, delivery is confirmed and both sides book the result. The checks on authority matter most. A machine needs its own identity, a budget and a rule for what happens when a payment goes through and the service does not arrive.

Small amounts change the economics. A fixed fee of ten cents on a one-cent API call costs more than the call. M2M systems therefore pay per request only on cheap rails and otherwise collect many small amounts into one charge or work from a prepaid balance, the problem micropayments describes.

Electric vehicle charging has its own EU rules. The regulation on alternative fuels infrastructure, AFIR, requires new fast chargers to accept ad hoc payments by card, so a driver can pay without a contract. Plug & Charge under ISO 15118 goes the other way: the car identifies itself to the charger and the session is billed to a contract without the driver touching anything.

In industry the same pattern bills machine hours or production cycles. SDK.finance gives the example of usage-based equipment whose signed records of machine hours trigger the billing. The payment side decides whether such a model works, because the bank or payment provider has to accept a machine record as the basis for a debit.

An M2M payment can run on cards stored for merchant-initiated transactions, on bank transfers triggered through an API, or on stablecoins. Protocols for software payments sit on top. x402 uses the HTTP status code 402 so that a server can ask for a payment inside a web request, and the card schemes publish their own frameworks for agentic payments.

In the EU the authorization question decides the design. Strong customer authentication under PSD2 assumes a person who can confirm a payment. M2M payments therefore rely on mandates, merchant-initiated transactions and exemptions, which strong customer authentication explains.

Machine-to-machine payments are payments that devices or software start and complete by themselves, inside spending rules their owner set in advance. Examples are cars paying for charging or parking and software paying for API calls.

IoT payments involve a connected physical device, and a person may still confirm the payment, for example in an app. In an M2M payment no person confirms the single transaction. AI agents that buy services are M2M payers without any device.

No. Many run on stored cards or bank transfers with a mandate. Blockchains and stablecoins are used where amounts are very small, where payment and delivery should settle together, or where the parties have no shared bank relationship.