> ## Documentation Index
> Fetch the complete documentation index at: https://a-identity.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Circle Nanopayments

> Gas-free, sub-cent USDC over the x402 exact scheme, settled by Circle Gateway in batches.

Nanopayments are A-Identity's **second x402 rail**. Where our on-chain rail settles
each call as a real USDC transfer, Nanopayments settle **off-chain and in batches**:
the buyer signs an EIP-3009 authorization (zero gas), Circle Gateway verifies and
credits it instantly, and the on-chain settlement is netted across many payments into
a single transaction. That is what makes true **sub-cent** payments economical for
high-frequency agent traffic.

It is the same [x402](/protocols/x402) negotiation, using Circle Gateway's
`GatewayWalletBatched` scheme. **Permissionless on Arc testnet — no Circle API key.**

## How one nanopayment works

<Steps>
  <Step title="Deposit once">
    The buyer deposits USDC into the Gateway Wallet on Arc — a one-time on-chain
    transaction that establishes a spendable Gateway balance. (This is the same
    deposit [Circle Gateway](/chains/gateway) uses.)
  </Step>

  <Step title="402 Payment Required">
    The buyer requests a paid resource. The seller answers `402` with the
    `GatewayWalletBatched` requirements (network `eip155:5042002`, USDC, the
    verifying contract).
  </Step>

  <Step title="Sign off-chain (zero gas)">
    The buyer signs an **EIP-3009 `TransferWithAuthorization`** against the Gateway
    contract and retries with the signed payload. No gas, no on-chain transaction.
  </Step>

  <Step title="Settle and serve">
    The seller submits the authorization to Circle Gateway, which verifies it, credits
    the seller's balance, and returns a settlement id. The resource is served
    immediately; Gateway batches the on-chain settlement.
  </Step>
</Steps>

## x402 on-chain vs Nanopayments

A-Identity ships **both** rails, and says which is which:

|            | On-chain x402                                    | Nanopayments                                             |
| ---------- | ------------------------------------------------ | -------------------------------------------------------- |
| Where      | `mcp/src/x402.ts`                                | `mcp/src/nanopay.ts`                                     |
| Settlement | A real USDC transfer per call, verified on-chain | Off-chain EIP-3009 auth, **batched** on-chain by Gateway |
| Gas        | Paid per call (USDC on Arc)                      | **Zero** for buyer and seller                            |
| Proof      | An arcscan tx hash                               | A Gateway batch settlement id                            |
| Best for   | Provable, standalone settlement                  | High-frequency, sub-cent streams                         |

<Note>
  Verified live on Arc testnet: an EIP-3009 authorization signed off-chain settled
  through Circle Gateway with `success: true`, a real batch settlement id, and the
  buyer's Gateway balance debited by the paid amount — on both the local and the live
  production backend. SDK: [`@circle-fin/x402-batching`](https://developers.circle.com/gateway/nanopayments).
</Note>

## Why it matters for agents

An AI agent paying per model response, per dataset row, or per API call cannot afford
gas on every micro-transaction. Nanopayments make **streaming, sub-cent, machine-to-machine**
payments economical — the buyer's own key still authorizes every payment, so authority
stays bounded.

<Card title="The x402 standard" icon="coins" href="/protocols/x402">
  Both rails share the same 402 negotiation. See how the on-chain rail verifies and
  binds each payment.
</Card>