Visa will implement auto-payment system based on the Ethereum blockchain

The system allows transactions to be made without direct user involvement

20.12.2022 - 09:30

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2 min

What’s new? Visa, a payment company, plans to automate transfers between fiat money and cryptocurrencies with its Layer 2 (L2) StarkNet solution, built on top of the Ethereum blockchain. The solution is designed to create a bridge between cryptocurrencies and traditional finance by simplifying the payment system.

Material on Visa’s website

What else is known? According to Visa, one of the main disadvantages of blockchain is the lack of an auto-payment system. The company stressed that as the technology grows, new usage scenarios need to be implemented. In particular, the team considers implementing automatic programmable payments for Visa cardholders that will run on smart contracts and not require constant participation from wallet holders.

But while it is easy enough to set up auto-payments with a regular bank card, this process is much more complicated on the blockchain, since the wallet owner needs to sign off each transaction himself.

A solution to this problem could be StarkNet. The system offered by Visa allows the use of Account Abstraction (AA), which is not currently implemented in the Ethereum mainnet. They perform verification that the person (contract) making the transfer is recorded as the current owner of the token. In abstract accounts, it matters who (the address), not how (the signature) performs the transaction. This allows the use of delegable accounts and the implementation of an automatic payment model in non-custodial wallets.

Visa stressed that it sees the proposed auto-payment system as a major feature that the existing blockchain infrastructure lacks.

In late October, the media reported on a partnership between financial holding company JPMorgan and Visa to join forces to work on optimizing cross-border payments using their private blockchains, Liink and B2B Connect. The main goal of the joint project is to reduce the number of failed payments related to incorrect account information.

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