Visa Unveils Plans For Auto-Payments From Self-Custodied Wallets
Payments Giant Chooses StarkNet For Proposed Implementation
By: Owen Fernau •DeFi News
Paying bills with crypto while on holiday may soon be getting easier.
On Dec. 19, payments giant Visa shared plans for auto-payments on StarkNet, a Layer 2 scaling solution for Ethereum.
Visa’s proposed solution would enable people to pay recurring bills while maintaining custody of their assets, a core tenet of DeFi.
Ethereum is designed for “push payments,” meaning that users typically need to sign transactions in order to send them. Visa proposes to allow merchants to initiate “pull payments” — users could opt into these recurring payments, which could be capped at a certain amount per month or otherwise customized.
Account Payment Process. Source: Visa
The implementation relies on a shift in how the Ethereum network treats accounts. Currently, Ethereum’s mainnet only allows user accounts to initiate transactions, while smart contracts cannot.
A new system, called Account Abstraction, which is still in the proposal stage of Ethereum development, would essentially combine the two kinds of accounts. This allows for functionality like auto-payments, as a user could approve specific future transactions which could access their assets without necessitating real-time approval.
As account abstraction isn’t currently available on mainnet, Visa chose StarkNet, a generalizable smart contract network developed by Israeli startup StarkWare, to implement its auto-payments solution.
It bodes well for crypto that Visa, the tenth-largest company in the world by market capitalization, believes it’s worth building tools specifically for self-custodied wallets.
Self-custody, always a defining feature of DeFi, has taken even more of the limelight in the wake of FTX’s implosion, with the exchange’s collapse highlighting, yet again, the risks that come with users entrusting a third-party with their assets.
Visa’s move is a bet on DeFi’s ethos, a welcome development for those who worry the space has been co-opted by VC-backed centralized entities, colloquially known as “CeFi.”
Visa did not immediately respond to a request for comment about the status of its proposed implementation.
The payments giant is no stranger to digital assets. Catherine Gu, who announced the auto-payments feature on Twitter, also spearheaded plans in September 2021 to make Central Bank Digital Currencies (CBDCs), interoperable, meaning that one country’s currency could potentially seamlessly settle in another’s.
Visa also settled transactions in USDC, the stablecoin, for the first time on Ethereum in March 2021. Its most recent move shows it hasn’t given up on crypto despite the bear market, and may even be doubling down on some of the space’s most fundamental values.