Automated bill payments are commonplace in the traditional banking world, and Visa found a way to emulate the service using blockchain technology.
According to payments giant Visa, crypto users could one day automatically pay their utility and phone bills through their self-service crypto wallets.
In a Dec. 20 blog post, Visa’s Crypto Thought Leadership Team proposed a solution that would allow providers to automatically “draw” funds from users’ Ethereum-powered crypto wallets without the user manually signing each transaction got to.
Automatic payments for recurring bills are commonplace in the traditional banking world, giving users the ability to allow certain service providers to access their bank accounts of choice to pay bills like a Netflix subscription or a phone bill. per month.
Such a mechanism isn’t possible for owners of self-custodial wallets, Visa said, noting that automated scheduled payments that extract payments from a user’s account at recurring intervals “require some technical work.”
In fact, in self-custodial wallets, the user is the only person who controls the private keys, which means they have to manually sign transactions since “a smart contract cannot initiate transactions itself.”
In its technical paper, Visa said that automatic recurring payments via crypto would be possible through a new type of self-custodial wallet called “delegable accounts” based on the concept of “account abstraction” (AA).
The co-founder of Ethereum, Vitalik Butering, developed the concept in 2015, which, among other things, makes it possible to combine Ethereum-based wallets and smart contracts in a single account.
Through a self-custody wallet or AA-based delegable account, the Visa team says user accounts would “work like smart contracts,” meaning users can schedule transactions without logging out to initiate each transaction.
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“This app could allow a user to set up a programmable payment order that can automatically transfer funds from one self-custody wallet account to another on a recurring basis, without requiring the user’s active participation each time,” the release reads .
The proposal is part of the crypto-friendly company’s broader search for new ways to innovate on blockchain and circumvent rigid, hard-coded requirements in Ethereum transactions.
The team concedes that while automatic payments can be integrated relatively easily via wallets hosted by other parties such as exchanges, this of course means that the user should have confidence that their funds are being handled appropriately by these parties. .
That has proven to be a big risk this year, especially with the bankruptcies of FTX, Voyager, BlockFi, and Celsius, to name a few.
Related: Ethereum bulls wake up after four years to transfer 22,982 ETH
The post also points out that AA has been proposed as part of several Ethereum improvement proposals over the years, but ultimately fell through due to implementation difficulties. This is due to the fact that many protocol changes and “security measures must be observed”.
The Visa team said they have already successfully tried their delegable accounts on a private channel from the StarkNet Layer 2 scaling solution as the network supports AA.
Therefore, the post concludes that automated payments are not far off now that the Visa team has been able to implement delegable accounts in the StarkNets “accounts model”.