Visa Unveils Solution to Bolster Auto Payments on Ethereum’s Layer 2 Chain

Visa Explores an Ethereum Auto-Payment Solution for Self-Custodial Wallets

Dec 21, 2022
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The financial giant revealed is exploring “novel approaches of smart contracts to help make money and payments programmable”.

Financial services giant Visa has introduced a new design for blockchain accounts that could potentially allow smart contracts on the Ethereum network to perform automated programmable payments from a self-custodied wallet.

The company revealed the project, known as Account Abstraction (AA), on a technical paper published on its blog, explaining that the novel solution leverages the concept of account abstraction to provide self-custodial wallets with automatic recurring payments capability. Because Ethereum does not yet support AA, Visa implemented the solution on the layer two (L2) scaling solution Starknet.

We propose a new solution towards a real-world application of auto payments to demonstrate how to write a smart contract for a self-custodial wallet that can pull funds automatically, instead of requiring the user's active participation each time to instruct and push payments on a blockchain,” the post reads.

Essentially, Account Abstraction “allows for programmable validity to verify and validate any blockchain transaction. This means that instead of hard coding validity conditions into the Ethereum protocol that will apply to all transactions in a generalized way, validity conditions can instead be programmed in a customizable way into a smart contract on a per-account basis (…) In essence, AA allows us to delegate the ability to instruct the user’s account to initiate a push payment to a pre-approved auto payment smart contract,” the paper explains.

The company also details that beyond recurring payments, other real-world applications could be brought to the blockchain using the approach such as “third-party account recovery services where multiple parties must consent to initiate an account recovery, third party asset managers with restrictions on the specific Ethereum Request for Comments (ERC) tokens which they can manage, and how they can trade these tokens, and more.”

Visa’s concludes its paper inviting companies working on this forefront “to discuss ideas in programmable payments.

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