One of the greatest features of credit cards is automatic payments, such as monthly charges. With that in mind, Visa has published a study on how Ethereum could offer such a feature.
For example, the mapping giant presents a simple problem: a user is going to travel to the Alps – departing on the 25th and returning on the 10th – but his rent and other bills are due on the 10th.
While Ethereum is great for many use cases, recurring payments are not its forte. However, Visa is already thinking about solutions for people who are fully connected to cryptocurrencies.
“The example described is a common everyday use that can be solved with means that exist today”points to Visa. “However, as we want to use blockchain technology for payments, this takes a new turn when it comes to building the solution through a smart contract.”
Smart contracts aren’t helping, says Visa
Visa then points out that such an investor is the only one who has access to its portfolio. In other words, no third party could make payments for this person.
Although Ethereum is known as a “smart blockchain”, such contracts would not help in this case either. That is, such contracts cannot transact themselves, and only transact trades if they get one.
One of the solutions presented is account delegation through a proposal called ‘account abstraction’. Basically, this would allow third parties to execute pre-approved transactions.
“If the user agrees to approve automatic payments, the wallet will add the address of the automatic payment agreement to the list of allowed matches in the user’s delegable account”points to Visa.
However, it is noteworthy that such a proposal has not yet been adopted, mainly for security reasons, and therefore cannot be used.
Ethereum second layer solutions
Finally, the solution offered by Visa is to use StarkNet, a second tier solution for Ethereum. In short, the model used by such an application allows taking permissions from the main account, pre-approved of course.
“Using the StarkNet account model, we were able to implement our delegable account solution, enabling automatic payments to self-custodial wallets”concludes Visa.
Another second-tier solution that aims to offer recurring payments is Bitcoin’s Lightning Network. That is, there seems to be a demand for such a tool, especially for companies and services.
Finally, it is noticeable that the card giant is struggling to find its place in the future of money. After all, CBDCs and cryptocurrencies could put pressure on Visa and other companies to reinvent themselves.
Source: Live Coins
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
