diff --git a/python/x402/extensions/bazaar/facilitator.py b/python/x402/extensions/bazaar/facilitator.py
index e7563c919c..94677ad8ad 100644
--- a/python/x402/extensions/bazaar/facilitator.py
+++ b/python/x402/extensions/bazaar/facilitator.py
@@ -102,6 +102,47 @@ def _contains_control_char(s: str) -> bool:
 # of bypasses as the decimal form above.
 _HEX_LITERAL_RE = re.compile(r"^0x[0-9a-f]+$", re.IGNORECASE)
 
+# Maximum number of successive unquote passes applied while canonicalizing a
+# routeTemplate before giving up and rejecting it.
+#
+# A legitimate single-encoded value reaches a fixed point (further decoding
+# changes nothing) after one pass. This allows a few extra passes so
+# multiply-encoded traversal/injection payloads (not just doubly-encoded
+# ones) are still caught, while bounding the work done on adversarial input.
+_MAX_ROUTE_TEMPLATE_DECODE_PASSES = 5
+
+
+def _fully_decode_route_template(value: str) -> str | None:
+    """Repeatedly percent-decode value until a fixed point is reached.
+
+    Further decoding produces no change, or ``_MAX_ROUTE_TEMPLATE_DECODE_PASSES``
+    is exhausted. Returns the fully-canonicalized string.
+
+    A single decode pass only catches a payload encoded exactly once (e.g.
+    ``%2e%2e``); a double- or triple-encoded payload (``%252e%252e``,
+    ``%25252e%25252e``, ...) would still contain literal ``%`` sequences after
+    one pass and slip past a traversal/injection substring check performed on
+    that partially-decoded result. Decoding to a fixed point closes that gap
+    for any encoding depth, not just the double-encoded case.
+
+    Args:
+        value: The string to canonicalize.
+
+    Returns:
+        The fully-decoded string, or None if the pass budget is exhausted
+        without reaching a fixed point.
+    """
+    decoded = value
+    for _ in range(_MAX_ROUTE_TEMPLATE_DECODE_PASSES):
+        next_decoded = unquote(decoded)
+        if next_decoded == decoded:
+            return decoded
+        decoded = next_decoded
+    # Still changing after the pass budget: either pathologically deep
+    # encoding or a `%` that never resolves to a fixed point. Either way,
+    # there's no safe canonical form to validate against. Reject.
+    return None
+
 
 def _is_valid_route_template(value: str | None) -> bool:
     """Check whether a routeTemplate value is structurally valid.
@@ -116,8 +157,8 @@ def _is_valid_route_template(value: str | None) -> bool:
     Enforces:
     - Must be a non-empty string starting with "/"
     - Must match the safe URL path character set (alphanumeric, _, :, /, ., -, ~, %)
-    - Must not contain ".." (path traversal)
-    - Must not contain "://" (URL injection)
+    - Must not contain ".." (path traversal), at any percent-encoding depth
+    - Must not contain "://" (URL injection), at any percent-encoding depth
 
     Args:
         value: The raw routeTemplate string from the client payload.
@@ -129,8 +170,12 @@ def _is_valid_route_template(value: str | None) -> bool:
         return False
     if not _ROUTE_TEMPLATE_RE.match(value):
         return False
-    # Decode percent-encoding before traversal checks so that %2e%2e is caught.
-    decoded = unquote(value)
+    # Decode to a fixed point before traversal checks, so that %2e%2e,
+    # %252e%252e, and deeper encodings are all caught rather than just the
+    # single-encoded case.
+    decoded = _fully_decode_route_template(value)
+    if decoded is None:
+        return False
     if ".." in decoded:
         return False
     if "://" in decoded:
diff --git a/python/x402/tests/unit/extensions/bazaar/test_facilitator.py b/python/x402/tests/unit/extensions/bazaar/test_facilitator.py
index 6e86517dae..e969584458 100644
--- a/python/x402/tests/unit/extensions/bazaar/test_facilitator.py
+++ b/python/x402/tests/unit/extensions/bazaar/test_facilitator.py
@@ -2,6 +2,7 @@
 
 import threading
 from http.server import BaseHTTPRequestHandler, HTTPServer
+from urllib.parse import quote
 
 from x402.extensions.bazaar import (
     BAZAAR,
@@ -69,6 +70,40 @@ def test_rejects_percent_encoded_traversal_sequences(self) -> None:
         assert _is_valid_route_template("/users/%2e%2e/admin") is False
         assert _is_valid_route_template("/users/%2E%2E/admin") is False
 
+    def test_rejects_double_encoded_traversal_sequences(self) -> None:
+        # %25 decodes to "%", so %252e%252e decodes-once to "%2e%2e" (still
+        # encoded) and only decodes-twice to "..". A single-pass decode
+        # wouldn't see the traversal here.
+        assert _is_valid_route_template("/users/%252e%252e/admin") is False
+        assert _is_valid_route_template("/users/%252E%252E/admin") is False
+
+    def test_rejects_triple_encoded_traversal_sequences(self) -> None:
+        assert _is_valid_route_template("/users/%25252e%25252e/admin") is False
+
+    def test_rejects_double_encoded_scheme_injection(self) -> None:
+        # %3a decodes to ":", %2f decodes to "/" — %253a%252f%252f decodes-once
+        # to "%3a%2f%2f" (still encoded) and decodes-twice to "://".
+        assert _is_valid_route_template("/users/javascript%253a%252f%252fevil") is False
+
+    def test_still_accepts_a_legitimate_single_percent_encoded_segment(self) -> None:
+        # One decode pass resolves this to plain text with no further
+        # encoding, reaching a fixed point immediately — must not be rejected
+        # just for containing a "%".
+        assert _is_valid_route_template("/search/caf%C3%A9") is True
+
+    def test_rejects_a_value_whose_percent_encoding_never_resolves_to_a_fixed_point(
+        self,
+    ) -> None:
+        # Pathologically deep encoding (more than the decode-pass budget) has
+        # no safe canonical form to validate — reject rather than decode
+        # indefinitely. ":" is re-encoded ("%3A" → "%253A" → ...) on every
+        # encodeURIComponent pass, so this compounds correctly (unlike "..",
+        # whose dots encodeURIComponent leaves untouched).
+        value = ":"
+        for _ in range(8):
+            value = quote(value, safe="")
+        assert _is_valid_route_template(f"/users/x{value}/admin") is False
+
 
 class TestValidateDiscoveryExtension:
     """Tests for validate_discovery_extension function."""