Agentic commerce is a term we have been using a lot lately at VGS. But what does agentic commerce mean? How do payments fit into the agentic commerce space?
We broke it down for you so you can better understand agentic commerce as a whole and where payments fall into the AI commerce landscape.
What is agentic commerce?
Agentic commerce refers to AI agents acting on behalf of an individual (usually a consumer) to make a purchase online. In agentic commerce, agents generally use conversational AI models to help consumers make purchasing decisions and ultimately complete a purchase on their behalf based on a set of consumer-defined parameters.
Essentially, agentic commerce is using AI commerce tools and platforms to enhance and streamline e-commerce operations, enhancing customer service experiences through machine learning, data analytics, and intelligent automation.
Agentic commerce represents a transformative shift in e-commerce, where AI agents can autonomously manage and execute tasks across the shopping journey, including during both human-in-the-loop and non-human-in-the-loop purchases. These agents are not just tools; they are intelligent systems capable of perceiving, reasoning, and acting to fulfill specific goals.
How does agentic commerce work?
Understanding Needs and Preferences: The AI agent on an AI platform (such as ChatGPT or Gemini) learns a user's needs, preferences, budget, past purchase history, and even anticipates future needs based on various data points.
Intelligent Product Discovery: Instead of a user manually searching on an internet browser (such as Google), the agent autonomously searches across various online marketplaces, evaluates products based on the learned preferences, reads reviews, compares specifications, and identifies the best options.
Automated Price Negotiation: The agent can monitor prices, identify deals, and even negotiate with sellers to secure the best possible price.
Autonomous Purchasing: Once the agent identifies the ideal product at the right price, it can complete the transaction autonomously, using the user's preferred payment methods.
Post-Purchase Management: Some agents can even handle tasks like tracking shipments, managing returns, and seeking refunds if necessary.
Intelligent Automation: AI agents can automate various backend processes, improving efficiency and reducing manual effort.
Personalized Recommendations: Agents can analyze customer data to provide highly personalized product recommendations, enhancing the shopping experience and driving sales for the merchant.
Inventory Management: AI agents can monitor stock levels, predict demand, and automatically manage inventory replenishment for a merchant.
Customer Interaction: AI-powered chatbots and virtual assistants can handle customer inquiries, provide support, and even guide customers through the purchasing and payment process.
Dynamic Pricing: Agents can analyze market trends and competitor pricing to dynamically adjust prices for optimal profitability.
Vendor Onboarding and Management: For marketplaces, AI agents can automate the process of onboarding new vendors, validating product data, and ensuring compliance.
Order Routing and Fulfillment: Agents can optimize order routing based on factors like inventory, delivery times, and costs, ensuring efficient fulfillment.
Exception Handling: AI agents can detect and resolve issues like pricing mismatches or delivery delays, escalating complex cases when necessary.
What is an AI agent?
An AI agent is an autonomous software entity that proactively manages and executes various aspects of the e-commerce experience, such as researching and purchasing. Unlike traditional AI tools that require specific prompts or human oversight, these agents can operate with a high degree of independence, making decisions and taking actions to fulfill user needs and business objectives.
An AI agent is what you interact with in an agentic commerce interaction. Both consumers and merchants will interact with agents in an agentic commerce environment in order to shop and make a purchase. For example, a consumer might want a pair of shoes and go to an agentic commerce platform to research what pair to buy. The consumer can set specific parameters like pricing or colors, and the agent can pull data from merchants to provide suggestions. Once a customer chooses a pair of shoes to buy, they can confirm with the agent, and the agent can interact with the merchant to send payment information, which would then be passed off to the merchant's payment service providers or PSPs. Once approved, the consumer would get a confirmation from the agent (and via email) when the purchase is made and when the order ships.
What does an AI agent do in agentic commerce?
In agentic commerce, AI agents are autonomous software entities that proactively manage and execute various aspects of the e-commerce experience, such as researching and making a purchase. Unlike traditional AI tools that require specific prompts or human oversight, these agents can operate with a high degree of independence, making decisions and taking actions to fulfill user needs and business objectives.
Personalized Shopping Assistance
AI agents can analyze individual customer preferences, browsing history, and behavior to provide tailored product recommendations. They can anticipate customer needs and suggest products and merchants accordingly, enhancing the shopping experience.Autonomous Purchasing
These agents are capable of completing purchases on behalf of users. They can search for products, compare prices, evaluate reviews, and make buying decisions aligned with user preferences and constraints.Dynamic Pricing and Promotions
AI agents can adjust pricing strategies in real-time based on market demand, competitor pricing, and inventory levels. They can also create and manage personalized promotions to maximize sales and customer engagement.Inventory and Supply Chain Management
By monitoring sales trends and inventory levels, AI agents can forecast demand and manage restocking processes. They ensure optimal stock levels and efficient supply chain operations.Customer Support Automation
AI agents can handle customer inquiries, process returns, and provide support without human intervention. They offer 24/7 assistance, improving response times and customer satisfaction.Fraud Detection and Risk Management
These agents can monitor transactions for unusual patterns, detect potential fraud, and take preventive actions to mitigate risks.
What about agentic payments on an agentic commerce platform? How do agentic payments in agentic commerce take place?
First, let's define agentic payments. An agentic payment refers to a payment initiated and executed autonomously by an AI agent, often without direct human intervention at the point of checkout online. In agentic payments, the agent is authorized to execute the transaction.
Currently, the process of agentic payments is complex, and often, the evidence suggests that consumers are cautiously optimistic about newer technological advancements.
One advancement we are starting to see is that agentic commerce will empower autonomous agents to actively participate in the payment ecosystem — dynamically transacting, negotiating, and making decisions on behalf of individuals, businesses, and even other AI agents.
But actually completing the purchase on behalf of a consumer is far more complex. Many times, agentic platforms can't perform the 'last mile' in checkout. What the 'last mile' means is the platform cannot take payment information to complete a purchase. If an agentic commerce platform wants to go the last mile today, a consumer must have to interact with an agent to purchase what they want, the agent then has to interact with the merchant to purchase, and the merchant has to interact with their payment processor or PSP to actually process the transaction. We see many new companies emerging trying to solve this problem, but any solution is going to require passing sensitive data between parties securely.
In order to bridge the gap between all of these parties securely, agentive commerce platforms need tokenization to make agentic payments.
Why use tokens for agentic commerce?
Tokens are secure, non-sensitive representations of payment card details. They replace actual card numbers (PANs) with a token. These tokens are uniquely generated to be randomized. Merchants use these tokens to process payments safely.
Tokens are great for facilitating, initiating, or managing transactions, especially in sensitive, real-time, or automated contexts. They also let AI platforms handle payments without ever accessing raw card data.
Network tokens are unique digital tokens generated by card networks (Visa, Mastercard, American Express, and Discover) that replace a card's Primary Account Number (PAN), creating a secure alternative to sensitive card data.
With tokenization agentic commerce platforms can:
- Process net-new and recurring transactions on behalf of customers with unique, secure tokens
- Utilize a PCI-compliant vault to collect, protect, and route data securely
- Bridge the gap between agent, merchant, and processor
VGS is a preferred partner for the Visa Intelligent Commerce Program
VGS and Visa are partnering to help Agentic Commerce businesses with their payment challenges.
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What are the benefits of tokenization in agentic commerce payments?
There are several key benefits of tokenization, including:
1
Secure Payment Handling
If an AI system is integrated into e-commerce, subscription billing, or embedded finance flows, tokens:
- Let it handle payments without ever accessing raw card data.
- Reduce PCI compliance burden.
- Enable token lifecycle management (like automatic card updates).
2
Higher Authorization Rates
AI systems that optimize or monitor payment success rates can utilize tokenization to:
- Access enhanced data enrichment from card networks.
- Improve transaction approval rates through more accurate risk scoring and intelligent retry logic.
3
Recurring or Autonomous Payments
For AI agents (e.g. shopping bots, subscription managers, or assistants):
- Tokenization ensures the system can store and reuse payment methods safely.
- Enable subscription churn reduction via automatic card refresh when a card is reissued.
4
Cross-Platform and Omnichannel Consistency
Tokenization help AI unify a customer's payment identity across:
- Web and mobile apps
- In-store or digital wallets
- Loyalty and rewards systems
Why use VGS for tokenization in agentic commerce?
It's apparent that the need for a tokenization platform to unlock payments in agentic commerce is more critical than ever. VGS tokens were built to be transmitted to third parties, solving the unique problem of uniting the multiple parties needed to enable agentic commerce at scale. VGS patented technology to transmit to any third-party (via VGS Proxies) powers payments data to move 40 B+ times a year. VGS can do this across any platform or merchants' existing integrations with payment providers, with no additional integrations or coding needed.
Tokenization is the best programmatic mechanism for trust and security in agentic commerce. VGS is the only platform in the world built to securely transmit data with the required control and flexibility at scale.
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