Visa Begins Plans For Crypto Automatic Debits

According to payments giant Visa, crypto users may one day automatically pay their electricity and phone bills through their self-custodial crypto wallets.

Visa’s crypto thought leadership team proposed a solution that would allow providers to automatically “pull” funds from users’ Ethereum-powered crypto wallets, without requiring the user to log out manually on each transaction.

Automatic payments for recurring bills are common in the traditional banking world, giving users the ability to allow certain service providers to draw from their chosen bank accounts to pay bills, such as a Netflix subscription or monthly phone bill .

That mechanism isn’t possible for self-custodial wallet owners, Visa said, noting that automated programmable payments that pull payments from a user’s account at recurring intervals “require engineering work.”

This is because in self-custodial wallets the user is the only person in control of the private keys, which means that they must manually close transactions, since “a smart contract cannot initiate transactions for if alone”.

In its technical piece, Visa said that automatic recurring payments using crypto would be possible through a new type of self-custody wallet called “delegable accounts”, which is based on the concept of “account abstraction” (AA) .

Ethereum co-founder Vitalik Butering introduced the concept in 2015, which basically allows Ethereum-based wallets and smart contracts to be combined into a single account, among other use cases.

Using a self-custodial wallet or AA-based delegable account, the Visa team claims user accounts would “work like smart contracts,” meaning people can schedule transactions without signing out to initiate each transaction.

“This application could allow a user to set up a programmable payment instruction that could automatically send funds from one custodial wallet account to another at recurring intervals, without requiring the user’s active participation each time,” the post says.

The proposal is part of the crypto-friendly company’s broader research into new avenues for blockchain innovation and for working with hard-coded requirements in Ethereum transactions.

AA has many potential use cases, especially how the user experience in a digital wallet can be substantially improved with more flexibility built into the user account to function more like a smart contract.

— Catherine Gu (@catgu_) December 19, 2022

AA has been proposed as part of multiple Ethereum improvement proposals over the years, but ultimately failed to pass due to implementation difficulty. This is because it requires a lot of protocol changes and “security guarantees to meet”.

The Visa team stated that it has already successfully tested its delegable accounts on a private chain of the StarkNet Layer 2 scaling solution, as the network supports AA.

As such, the post concludes that automatic payments are not far off, given that the Visa team was able to implement delegable accounts within the StarkNets “account model.”

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