The American multinational financial service giant Visa announced in a proposal that Ether cryptocurrency users can now set up automatic payments directly from their self-custodial wallets. With this development, banks or other centralized financial institutions will not be able to interfere in the scenario.

Despite the recent spiraling down of the crypto industry, the company is ready to advance with the future financial demands. Head of central bank digital currencies and protocols of Visa, Catherine Gu, further edited the proposal and 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 well as today, if not better.”

The proposal shared by the company describes a new concept known as Account Abstraction. Moreover, the proposal is a leading developer concept that utilizes smart contracts to achieve automatic payments.

The Visa explains, “In this technical paper, we utilize a novel concept and one of the leading Ethereum developer proposals known as Account Abstraction to explore how smart contracts can be implemented to enable automated programmable payments. 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 company has even explained the method with the help of a hypothetical scenario.

Externally owned accounts/ user accounts or smart contract accounts make up Ethereum accounts. To combine them all into one Ethereum account type, Visa wants to use Account Abstraction. In addition, this would add smart contract functionality to user accounts of Ethereum.

In 2017, Vitalik Buterin formalized the number of advantages of account abstraction as EIP-86. Account Abstraction enables multi-owner accounts via multi-signature verification and delegable accounts. It also lets public accounts to transacted by anyone. “Essentially, AA allows for programmable validity to verify and validate any blockchain transaction,” Visa explained.

There will be some time before Ethereum implements Account Abstraction, although the latest 2021 EIP-4337 proposes an Account Abstraction method in which network protocol changes will not be required.

Visa aims to provide better security and interoperability with the capability to handle an increased volume of transactions. The team of Visa is also working closely with Ethereum developers. 

If you want to be in the know about all things blockchain and cryptocurrency, then be sure to subscribe to our weekly newsletter. You’ll always have access to the latest and greatest information because our blockchain consultants are constantly updating our blockchain knowledge base with new reports and insights. Plus, you can use our Knowledge Base as a resource for anything you need related to blockchain technology.