The x402 protocol, launched in 2025 by Coinbase and Cloudflare, has enabled AI agents to autonomously conduct payments, marking a significant milestone in digital transactions. By the end of 2025, the protocol processed over 100 million transactions, with an additional 15 million in the first month of 2026. This system allows AI to make payments without traditional banking requirements, using stablecoins like USDC for transactions. The x402 protocol leverages the long-unused HTTP status code 402, "Payment Required," to facilitate machine-to-machine payments. It supports multi-chain operations and integrates traditional payment systems, bridging Web2 and Web3. The protocol's success is evident in its rapid adoption, with over 400,000 buyers and 80,000 sellers participating in recent transactions. Despite its success, the x402 protocol faces challenges, including technical risks and regulatory uncertainties. The emergence of competing protocols like Google's AP2 and a16z's ACP, along with potential security vulnerabilities, pose ongoing challenges. Additionally, the regulatory landscape for AI-initiated payments remains unclear, particularly concerning KYC and AML obligations.