Fed’s Waller Says AI Shopping Changes What Banks Need to Authenticate
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The first rule of online payments is to prove that the person trying to pay is allowed to do so. Artificial intelligence is forcing banks and payments networks to add another layer. Federal Reserve Gov. Christopher Waller said Tuesday (Sept. 29) that agentic commerce changes the authentication problem because an AI system may be acting […] The post Fed’s Waller Says AI Shopping Changes What Banks Need to Authenticate appeared first on PYMNTS.com .
The first rule of online payments is to prove that the person trying to pay is allowed to do so. Artificial intelligence is forcing banks and payments networks to add another layer.
Federal Reserve Gov. Christopher Waller said Tuesday (Sept. 29) that agentic commerce changes the authentication problem because an AI system may be acting for a consumer or business rather than merely assisting one. In his Sibos speech, “ Payments in the Age of AI Agents ,” Waller said the challenge shifts to proving “that an agent has the authority to pay on the buyer’s behalf.”
That distinction could become one of the core infrastructure challenges behind agentic commerce. Visa , Mastercard and PayPal are already building technology that lets software agents participate in shopping and payments. But an issuer deciding whether to approve the resulting transaction may need more than a valid payment credential. It may also need evidence that the consumer or company authorized that particular agent to act within defined limits.
That points toward what could become a new payment object: a machine-readable record of delegated authority. Think of it as a digital power of attorney attached to the transaction. It could identify who authorized the agent, what it can buy, how much it can spend, which payment method it can use and when that authority expires.
Some of the industry is already moving in that direction. Visa said its Intelligent Commerce technology can bind payment credentials to a specific agent and apply controls designed to keep purchases aligned with the user’s authenticated instructions. Mastercard’s Agent Pay infrastructure includes registered agents and what it called “verifiable intent,” designed to confirm user consent before an agent acts.
Waller stopped short of prescribing a specific standard. Instead, he identified authentication, liability and fraud as three major barriers to scaling delegated agentic commerce. Existing fraud systems are calibrated around human behavior and may need to be adjusted as software agents develop transaction patterns of their own. He also pointed to technical standards that could capture what a buyer intended and how an agent carried out those instructions.
The stakes may be even higher in B2B payments.
B2B purchasing may be particularly well suited to agents because corporate purchases often already operate within rules such as approved suppliers and budget limits, Waller said. Agents could eventually negotiate terms and select payment strategies to improve working capital. Higher transaction values, however, increase the financial exposure when an agent makes a mistake or acts outside its authority.
B2B also widens the payments problem. Businesses use ACH, wires, instant payments and cards. An autonomous purchasing agent may eventually have to select among them based on cost, speed, liquidity or supplier preference, Waller said. Agents could make micropayments for AI model queries, price feeds and API calls before completing a purchase.
Mastercard is already developing Agent Pay for Machines around that type of high-speed machine-to-machine transaction.
That turns payment orchestration into an AI decision problem.
The unresolved issue is who defines the authority that travels with the payment. Banks could anchor it to customer identity and account permissions. Networks could incorporate it into tokens and authorization standards. AI platforms or merchants could develop their own versions.
Market participants are already developing both platform-specific and interoperable standards for registering agents, recording approvals and moving credentials across commerce systems, Waller said.
For banks and payment companies, the next authentication problem may therefore extend beyond identifying the customer. They may also need a reliable way to prove exactly what the customer told the machine it was allowed to do.
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The post Fed’s Waller Says AI Shopping Changes What Banks Need to Authenticate appeared first on PYMNTS.com .