• By using Account Abstraction on Ethereum VISA has managed to unlock the auto-payment smart contracts feature.
• VISA said that it would still conduct more research on this matter before getting this feature to retail players.

American multinational and payments giant VISA announced plans to allow Ethereum users to conduct auto-payments from their self-custody wallets. As a result, Ethereum users won’t need to manually sign each transaction. This move is a big step in eliminating banks or other centralized players entirely from the equation.

A team of engineers and researchers from VISA have been working to understand the foundations of different blockchain networks. In a blog post on Monday, December 19, VISA said that its key focus will be on scalability, security, interoperability, privacy, and the use cases of different protocols.

To implement this automatic payment feature, VISA has proposed Account Abstraction. This is basically a feature of the Ethereum blockchain currently under consideration by its development team. The payments giant believes that this feature will allow users to set up recurring bill payments.

Currently, this function isn’t available on Ethereum at a very basic level since automated smart contracts cannot request transactions. Thus, user accounts have to initiate and send transactions manually. VISA’s head of central bank digital currencies and protocols, Catherine Gu, has co-written this proposal. She said:

If one of the major use cases of blockchain is for payments, then the basic requirement is that the blockchain has to function just as good as today, if not better. We want to have an opportunity to actively contribute to technical developments happening in the crypto ecosystem.

The best way to do that is learning by doing—actually getting deeper into Web3 infrastructures and blockchain protocols, areas I think are going to be really important for payments.

Overcoming the Executional Challenges on Blockchain

VISA said that executing such a system with traditional bank accounts is easy since the financial institution can write any code for its account holders. However, there are some serious challenges that arise from implementing the same on public blockchain platforms.

This development comes just after Ethereum successfully conducted its Merge upgrade in September 2022. The Ethereum blockchain is now moving towards greater scalability which would cater to VISA’s requirements.

Using the Account Abstraction method, VISA managed to combine the functions of smart contracts and user accounts into one single Ethereum account. The company called this resulting account a “delegable account”. Using this approach, merchants will be now able to deploy smart contracts for automatic payments.

Once the user grants permission through their delegable accounts, merchants need to trigger a payment by calling the charge function of the automatic payments contract. For future payments, the user’s delegable account adds these automatic payment contracts to the whitelist.

Although VISA has been successful in producing the auto-payment solution, it hasn’t commented yet on getting this to clients. Speaking to Decrypt, VISA’s Catherine Gu said:

This technology is very nascent right now, but there could be something there down the road. A lot of research needs to be done around fundamental aspects important for payments, like security and scalability.

It’s very important to figure out what’s the signal and what’s the noise. We’re taking a much longer-term perspective on this technology. It may have real utility, and that’s why we’re here: to invest more, to do research.