Visa has released a paper titled ‘Monday’ that outlines the impact that auto payments can create for crypto. The global payments firm added that one day they could collaborate with Ethereum to add standing instructions (auto payments) for users. An internal hackathon at the firm sparked the idea of proposing a mechanism that will enable auto payments for users. The core problem statement that the team was trying to resolve is:
‘How can a user pay bills with crypto while having no internet access’?
“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 good as today, if not better.” Catherine Gu, co-author of the paper added.
— Catherine Gu (@catgu_) December 19, 2022
Additional Read: Ethereum Price Predictions
Visa’s paper ‘Monday’ could be the silver lining in these dark times
While the world is witnessing a prolonged crypto winter, Visa’s latest paper on developing a mechanism with starknet to create an auto payments system testifies that crypto will have a bright future. The technology is in a nascent stage and achieving a feat like auto payments could take time. However one could possibly experience the best of both worlds- traditional banking with blockchain and crypto assets conflated.
Traditional banking versus decentralized finance on blockchain networks
Banks have devised unique solutions for customers to pay their bills or loans with solutions like ECS – Electronic Clearance Service that authorizes the bank to make the payments on the customer’s behalf. In public blockchain a system like auto payments may not be as facile as it may seem like. Blockchains like Ethereum today offer externally owned accounts (EOA), or user accounts, and contract accounts, which automatically run code known as smart contracts.
What is Account Abstraction and how will it help merge crypto and banking?
The paper published by Visa outlines a technology called ‘Account Abstraction’. It is a proposal that attempts to combine user accounts and smart contracts into just one Ethereum account type by making user accounts function like smart contracts. AA proposes having more flexibility in the process for validating a transaction on the blockchain.
According to the paper, Account Abstraction can do the following.
- It enables multi-owner accounts via multisig signature verification.
- It enables the use of post-quantum signatures for the verification of transactions.
- It also allows for a so-called public account from which anyone could make a transaction, by removing signature verification entirely.
Source: Auto Payments for Self-Custodial Wallets – a research paper by Visa.
In October, Visa filed a trademark application that indicated that the payment giant is developing a crypto wallet and a metaverse. This is not the first time that traditional finance is exploring crypto. Institutions like Goldman Sachs, JP Morgan, Barclays and many others have invested in crypto assets.
In the same month Visa’s rival ‘Mastercard’ announced its collaboration with Paxos to launch crypto trading via banks.
Dated History of Visa in the Crypto Realm
Visa took the first mover advantage and has been receptive towards virtual digital assets. They launched the first crypto linked card in 2015 which now stands as tough competition to Mastercard, PayPal and Block (Known as Square previously)
Additional Read: Mastercard’s Fintech Innovation Program welcomes 7 crypto startups