PayPal to Power Payments in Google’s New AI-Driven Commerce Framework

As part of the rollout, PayPal will soon be integrated directly into Google’s new AI-powered checkout experience, giving consumers another familiar payment option as automated shopping tools begin to take shape.

The move was confirmed in a weekend press release and later echoed by PayPal chief executive Alex Chriss, who described the adoption of the protocol as the natural continuation of PayPal’s partnership with Google, first announced last autumn. According to Chriss, the collaboration is now shifting from concept to execution as AI agents start playing a larger role in online purchases.

Google formally introduced the Universal Commerce Protocol, or UCP, during the National Retail Federation’s annual conference in New York. Company executives framed it as an open, “agentic” standard that allows artificial intelligence systems, merchants, and payment providers to communicate using a shared technical language. The idea is to remove friction between platforms as AI tools move beyond product recommendations and into checkout, payments, and customer support.

A common layer for AI-driven shopping

Under Google’s vision, AI agents powered by its ecosystem will be able to search for products, complete transactions, and assist customers after purchase without requiring merchants to build custom integrations for every new system. Google says UCP is designed to be platform-agnostic, meaning it can work with different credential providers and payment rails rather than locking retailers into a single environment.

Vidhya Srinivasan, who oversees Ads and Commerce at Google, explained that the protocol replaces a patchwork of one-off integrations with a single standard that all agents can use. UCP is also not Google’s first attempt at this approach. It follows last year’s Agent Payments Protocol and is intended to operate alongside other internal frameworks such as Agent2Agent and the Model Context Protocol.

Google has already signaled that UCP will expand beyond basic checkout. Planned additions include smarter product recommendations, built-in loyalty and rewards features, and more personalized shopping flows across Google’s platforms.

PayPal is not alone in backing the initiative. Several major retail and e-commerce players were involved in shaping the protocol, including Shopify, Etsy, Wayfair, Target, and Walmart. Shopify executives said their experience building checkout systems for millions of merchants helped ensure the protocol could scale globally.

From PayPal’s perspective, interoperability is the key advantage. Company executives argue that open standards like UCP make it easier for merchants to adopt agentic commerce without losing control over trust, transparency, or payments. PayPal believes its role as a familiar payment layer could help make AI-driven shopping feel less experimental and more secure for consumers.

Still, not everyone is convinced. Some industry analysts warn that pushing checkout into AI assistants could weaken merchants’ direct relationships with customers. Richard Crone, chief executive of Crone Consulting, noted that while companies like Google and Shopify promise higher conversion rates, merchants may lose their final point of contact with shoppers if transactions happen entirely inside AI interfaces such as Gemini.

The UCP announcement comes amid a busy period for PayPal. Its venture arm recently participated in a €12 million Series A funding round for European payments firm Klearly, which plans to expand further across Italy and Belgium. At the same time, PayPal has been increasing its physical footprint in New York, signing one of the city’s largest office leases of the past year in Hudson Square—placing it even closer to Google as both companies bet on the future of AI-powered commerce.

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