Visa engineers design automatic payment application for the Ethereum blockchain

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(Kitco News) – A team of Visa researchers and engineers has outlined a smart contract application for a self-custodial wallet on the Ethereum blockchain that can enable programmable payment instructions such as automated bill payments via a bank account.

Visa announced the new application design in a blog post on Monday. “To help our customers and partners innovate, we need to delve into technologies that can add real value to the payments ecosystem,” said Catherine Gu, Head of CBDC and Protocols at Visa. “We are focused on expanding our core competencies in Web3 infrastructure layers and blockchain protocols that drive crypto development.”

Visa published the details of the automatic payment application in a new technical piece, which explains how to write a smart contract application for a self-service wallet, “a wallet controlled solely by the user and the associated private key.” This application will enable a user to set up “a programmable payment instruction that can transfer funds automatically from one self-custodial account to another at recurring intervals, without requiring the user’s active participation each time.”

The application is built around the idea of ​​Account Abstraction (AA), “a developer proposal currently being explored within the Ethereum ecosystem.” Account Abstraction makes user accounts on Ethereum act more like smart contracts by allowing users to set up programmable functions in the wallet.

In the technical document, Visa engineers demonstrate “a new type of account contract that can delegate the ability to initiate a payment from a user account to a pre-approved automatic payment smart contract, mimicking the process you use today to set up a recurring card payment.”

“Our solution for automatic payments is to leverage AA and create a new type of account contract – a delegable account,” they write. “Our main idea is to extend programmable transaction validity rules to include a pre-approved permission list. Essentially, AA allows us to delegate the ability to instruct the user’s account to initiate a push payment to a pre-approved smart contract for automatic payment.”

According to the paper, a merchant would first deploy a smart contract for automatic payment on their website. “When a user with a delegable account visits the merchant’s website, they will see a request to authorize automatic payments — similar to Visa authorization for billers today,” they wrote. “Here the user can see the actions that the automatic payment contract will take on behalf of the user.”

The user can then choose the option to be charged only once per month, and can also limit the maximum charge amount. When the user authorizes automatic payments, the wallet will add the address of the auto-payment contract to the list of allowed contracts on the user’s delegate account.

Once concepts like AA are enabled on the Ethereum blockchain, Visa said its proposal “could help bring familiar payment experiences, such as automatic payments, to the blockchain ecosystem.”

“While blockchain technology and digital assets are still in their infancy, we’re digging into these new innovations to find out how they might impact the movement of money today and into the future,” they wrote. “Visa will continue to explore these evolving technologies and concepts — including common consensus mechanisms, privacy and scaling solutions, and other possible blockchain use cases — to create a bridge between the crypto ecosystem and our global network of customers and merchant locations.”

Last month, Visa was forced to terminate its highly publicized partnership with FTX four days after the exchange declared bankruptcy. The plan, announced in early October, called for FTX Visa debit cards to be rolled out in 40 countries with a focus on Latin America, Asia and Europe.