Remy Blaire: AI agents are no longer just answering questions. Some of them are shopping, comparing prices and even picking products, and in some cases, completing the purchase without a human clicking the buy button. Walmart and Amazon have both announced plans for shopping agents, and Visa and Mastercard are rolling out frameworks to identify them. McKinsey projects that agentic commerce could reach between $3 and $5 trillion globally by 2030.
But the rules haven’t kept pace, and when an agent orders the wrong item or spends more than you meant, the dispute system was built for human buyers. So who pays? Well, joining us this afternoon to weigh in on this is Alaxic Smith, founder and CEO of Frame Payments. Good afternoon, Alaxic. Great to have you on.
So there are question marks regarding agentic commerce. And I understand that [unclear: “frameworks with merchants”] that Stripe-style processors won’t touch. But what does a “no” from a mainstream processor actually look like? And what does Frame do differently?
Alaxic Smith: Yeah, for sure. Well, first of all, thanks for having me, Remy. As far as what a “no” looks like from a mainstream processor, that typically looks like one of two things. Either they can’t support you at all from the start, or secondly, you get started and then you get shut down midway through and you’re left looking for another solution.
So what we do at Frame is we actually look at 200-plus different data points about a merchant, from things like cash flow, their business, their industry, their historical performance from other processors. And we’re able to make a determination of whether or not we can support them, not just today, but over the long term.
Remy Blaire: Today, and of course, when we take a look back at the beginning of this decade, prediction markets and AI platforms weren’t necessarily on anyone’s radar. But what is the fastest-growing, high-risk category that you see right now?
Alaxic Smith: Funny enough, prediction market is certainly fast-growing, but I would say peptides. I mean, it feels like everyone is taking something these days, and especially with all the momentum we’ve seen at the federal level in terms of providing a framework for what peptides are permissible and acceptable and can be prescribed by doctors. It seems like there’s a lot of momentum.
Companies like Hims and Ro and others have now come out in the last couple of days or so with their own premium peptide plans, if you will. So it’s moving out of this gray area, gray market into something that’s more generally acceptable, and that’s a vertical that we see growing very, very quickly for us here at Frame.
Remy Blaire: Yeah. And I do want to zoom back in on agentic commerce. I understand you’ve said that this area is overhyped. So can you walk us through whether you mean overhyped as in too early or as in it won’t work?
Alaxic Smith: I would say it’s just really early. I think a lot of the hype right now is being generated primarily by a small group of people, primarily in tech circles and on the coasts. We don’t see consumers asking for this. We don’t see our merchants asking for this. I mean, we actually see somewhat the contrary.
We’ve heard from several merchants that they actually want to block agentic commerce transactions because it remains to be seen who owns the liability, particularly in the case of chargebacks and disputes. So yeah, it’s definitely overhyped from that point of view, in terms of the small minority of people who are being the loudest here.
Remy Blaire: Yeah. And liability is a big question mark. So when an AI agent buys something it shouldn’t, or perhaps it’s not quite exactly what you wanted, who pays? Who should be paying back? And why can’t the chargeback system just absorb those?
Alaxic Smith: Yeah. Well, for most processors, the chargeback liability actually sits with the merchant. So whenever you or I go facilitate a transaction and, let’s just say, it didn’t go the way that we wanted, the merchant is the one who is on the hook for those funds.
And in a world where agents are acting essentially on our behalf as consumers, obviously they have the potential to get something wrong, whether that is your name on a plane ticket or the wrong size for a T-shirt. And obviously, return policies vary across merchants. So depending on what actually happens, there could be a dispute. And so as a result, the merchant is on the hook for that currently.
Stripe and Muse [unclear: “stripe and music”] came to an agreement around Muse taking liability for disputes. But that’s actually created a lot more complexity between the merchant, the buyer, and now Stripe, as well as Muse, all being parties involved in this transaction. But yeah, at the end of the day, it all falls to the merchant.
Remy Blaire: And I do want to expand on this. So your merchants already live with high dispute rates and also heavy scrutiny. Does agentic commerce hit them harder than a mainstream retailer?
Alaxic Smith: I would say that it potentially could, certainly. Obviously, if a particular agent or cohort of consumers decides to use agentic commerce to purchase items from them, certainly it could. But we’re not seeing that. I think DoorDash came out on their earnings call, [unclear: “the other end”], and mentioned that there have been maybe a few hundred agentic commerce transactions that have occurred on DoorDash that they’re aware of.
So again, while it certainly could increase their liability from chargebacks and disputes, fortunately, at the current time, while we’re still trying to figure out all these frameworks, it’s a very small number of transactions, fortunately.
Remy Blaire: And finally, Alaxic, before I let you go, we are still in the early days when it comes to agentic commerce. So one year from now, what do you think the landscape will actually look like?
Alaxic Smith: Yeah, I think it’s tough to say. It feels like AI, specifically agentic commerce, is one of the areas of AI that is changing on a week-by-week basis. A while back, I mentioned there needed to be a way to identify an AI agent in a transaction, and that’s now come out, with Visa and Mastercard developing frameworks there.
So I think the reality of it is that the consumer potentially will become accustomed to using and leveraging agents to facilitate purchases on their behalf. But again, if I were to try to predict what that might look like a year from now, I feel like it’ll look very, very different, just given the rapid pace of innovation and the speed that the space is moving. But yeah, I definitely think the consumer will eventually become more comfortable with that. But I think the actual implementation and execution of that will probably look very different from what we think about today.
Remy Blaire: Yeah, definitely a lot of moving parts here. So we’ll have to wait and see how all of this shakes out. So, Alaxic, appreciate your time. Thank you so much for weighing in today.
Alaxic Smith: Awesome. Thanks for having me.
