Visa Uses Ethereum for Automatic Payments!

JAKARTA – A leading multinational financial services company from the US, Visa, has reportedly proposed using an Ethereum blockchain-based account. It is aimed at presenting an automatic payment system from crypto wallets.

Visa described the automatic payment method in its official blog post on December 19, 2022. The payment service company proposed using Ethereum features for implementing automatic payments. That means the user account must be connected to the Ethereum network.

“There are two types of accounts on the Ethereum network today: Externally Owned Accounts (EOA), which are more commonly referred to as user accounts, and Contract Accounts (CA), which are referred to as smart contracts. User accounts, controlled by private keys, can send transactions. Smart contracts have associated executable code, however, smart contracts cannot initiate transactions on their own", wrote Visa's blog post.

“Transactions must always originate from the user's account and be signed by the user. Transactions can be simple transfers of tokens between user accounts on the Ethereum blockchain or more complex ones triggering a series of operations to be executed via a smart contract to perform many different actions", added Visa.

As reported by CryptoSlate, the company says that it allows users to set up recurring bill payments. Ethereum does not allow this at a basic level, because automated smart contracts cannot request transactions. Instead, user accounts must initiate and send transactions manually.

Visa notes that while bank accounts and custodial crypto wallets can easily be used to set up automatic payments, these types of payments "are not as easy to execute on the blockchain."

As such, implementing the feature in a self-custodial wallet - where users have complete control over their funds - was a challenge. The company says that it is exploring possible solutions as part of its internal Crypto Hackathon challenge this year.

Furthermore, Visa describes the use of “account abstraction". That way Visa can combine user account and smart contract functions into one type of Ethereum account. Visa refers to these as "Delegable Accounts".

This approach allows merchants to implement automatic payment smart contracts. Once a user with a delegatable account grants permission, the merchant can trigger a payout by calling the charge function of the autopay contract. Delegable user accounts also add automatic payment contracts for future payments.

This is a step forward by the financial services company Visa in an automated payment system using the Ethereum network. Visa makes use of smart contracts which are commonly used in cryptocurrency transactions.

“Transactions must always originate from the user's account and be signed by the user. Transactions can be simple token transfers between user accounts on the Ethereum blockchain or more complex ones triggering a series of operations to be executed via a smart contract to perform many different actions", said Visa.