Born as an internal company hackathon project, the idea to schedule crypto payments sent from self-custodial wallets on Ethereum has all chances to become the next big thing in fintech, as it is expected to serve as a bridge between the crypto ecosystem and real world.
“As blockchain adoption increases, there will be a greater need for products with a superior user experience and core functionality that support real use cases. In a few simple steps, we can set up automatic recurring payments today directly on our mobile banking applications. In fact, online bill pay is growing rapidly, and customers - especially younger ones - have come to expect the ability to set up recurring payments and take advantage of other conveniences associated with using their Visa cards,” the paper reads.
The novel feature proposed by Visa will one day enable self-custody wallet users to schedule recurrent payments with the same ease as on traditional mobile banking apps. In TradFi, auto-payments have been around for a long time and are increasingly used for subscription-based services, when a fixed sum is pulled automatically from a user’s account at recurring intervals. However, on a blockchain such capability requires a great deal of creative engineering work.
“For a self-custodial wallet, the user controls the private key and so for each tx, this requires the active participation of the user to initiate payment to push onto the blockchain,” Catherine Gu, Visa’s Head of CBDC and Protocols and co-author of the proposal, explained in a Twitter thread.
To bring recurrent payments to Ethereum, Visa team proposed to utilize account abstraction, a popular EIP that brings smart contract functionality to user accounts, enabling them to schedule automatic transactions. However, this feature isn’t live yet on Ethereum, so Visa implemented its auto-payment solution on StarkNet, a Layer 2 network built on top of Ethereum.
“With AA [account abstraction], one could setup pull payments with a delegable account instead of push payments on the backend, so that on the front end, an end user can set up auto payments in the same way we do today,” Catherine Gu wrote.
“As one of the world's largest payments network, Visa is at the forefront of designing innovative payment products and solutions with real-world applications in mind, and we are actively exploring novel approaches of smart contracts to help make money and payments programmable,” the authors concluded.
Earlier this year, Visa filed two trademark applications indicating that the payments giant has far-reaching plans to develop a crypto wallet and a metaverse product.