Ethereum's smart contracts significantly enhance its potential in IoT payment scenarios by enabling automated, trustless transactions. These self-executing contracts facilitate secure, transparent payments between IoT devices without intermediaries, reducing costs and delays. For instance, a smart contract can automatically trigger payments when a sensor confirms delivery or service completion, ensuring efficiency and reliability. Ethereum's decentralized blockchain ensures data integrity and security, critical for IoT ecosystems where devices exchange sensitive information. Additionally, smart contracts support micropayments, ideal for IoT use cases like pay-per-use services or real-time energy trading. However, challenges like scalability and high gas fees may hinder widespread adoption, though solutions like layer-2 scaling are emerging. By streamlining transactions and enhancing trust, Ethereum's smart contracts position it as a robust platform for IoT payments.