Visa Plans Auto–Payments From Self Custodied Wallets

Updated: 20 December 2022

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Visa has suggested a blockchain account structure, which will potentially allow Ethereum users to arrange auto-payments from a self-custodied wallet.

The payment giant's approach allows recurring #ETH payments from self-custodied wallets.https://t.co/4JyaJx9pYz

— CryptoSlate (@CryptoSlate) December 19, 2022

The news came in a Monday, December 19 blog post where the payments giant described its proposed approach, summarizing an earlier research paper published in August 2022. Based on the company’s crypto thought leadership proposal, while automated recurring payments are prevalent on regular mobile banking apps, they are more difficult to implement on the blockchain. An excerpt from the blog reads:

“We see auto payments as a core functionality that existing blockchain infrastructure lacks.”

Cognizant of this, the Visa team probed into the use of smart contracts in providing automatic and programmable payments using a unique idea dubbed Account Abstraction.

Visa To Use Account Abstraction For Automatic Payments Implementation

Account Abstraction is an Ethereum feature that developers are currently considering, and most notably, Ethereum does not allow the functionality at a basic level because automated smart contractions are unable to request transactions. Instead, user accounts must initiate and send transactions manually.

Visa says that the feature will allow users to establish recurring bill payments, noting that while bank accounts and custodial cryptocurrency wallets can easily serve to arrange auto-payments, this type of payment is “not as straightforward to execute on a blockchain.” This means that it will be a challenge to implement the feature in a self-custodied wallet, particularly one where the user has total control over their funds.

Visa’s Delegable Account on StarkNet

In the blog, Visa says that it has explored a possible solution as part of its 2022 Crypto Hackathon challenge, and to this effect, revealed that it was able to merge the functions of user accounts and smart contracts into a singular type of Ethereum account by using account abstraction. With this success story, Visa called the resultant account a ‘delegable account’.

The methodology makes it possible for a merchant to send an automated payment smart contract. Once a user with a delegable account grants permission, a merchant can initiate a payment by calling the charge function of the automatic payments contract.

The user’s delegable account will also add the auto-payment contract to a whitelist for future reference when they need to make another payment to the same account.

Given that Ethereum has not yet implemented the Account Abstraction functionality with exists as part of several proposals like the EIP-4337, Visa felt limited. The payments giant, however, found a way around these limitations, and as explained in the blog, implemented delegable accounts on StarkNet- an Ethereum layer-2 network with the capability to extend the base blockchain’s functionality to support the feature.

In as much as Visa seems to have developed a working auto-payments solution, there is no communication of whether the company will be offering the feature to its customer base. Moreover, the chances of the feature being implemented within Visa’s expansive cryptocurrency payment cards are low, as these cards are often linked to custodial exchanges.

Nevertheless, the feature may come into action in Visa’s merchant and bank-oriented settlement services that may require interaction with non-custodial Ethereum wallets.

Visa Says StarkNet May Help Self-Custodial Wallets Pay Bills More Easily

According to Visa, StarkNet will potentially help bridge the gap separating crypto and the real world by enabling self-custodial wallet users to make payments on their bills.

This is not the first time Visa is using StarkNet. In the construction of its proof of concept with the crypto wallet Argent, Visa employed the StarkNet scaling platform, a choice also inspired by the fact that the feature is currently not active on Ethereum.

In the current discussion of the auto–payments from self-custodied wallets functionality, Visa describes a method where users can leverage the self-custodial wallet to automatically transfer payments without the need to sign each transaction individually.

Moreover, in an attempt to enhance payments privacy and security prior to unleashing the functionality to the public, Visa has focused on crypto infrastructure and protocols for payments, declaring that it is “willing to discuss their ideas with businesses researching programmable payments.”

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