Visa Proposes Solution to Enable Auto-Payments From Self-Custodial Wallets

Payments giant Visa has proposed using the “account abstraction” (AA) concept to allow self-custodial wallets to execute automated recurring payments, the company said in a blog post on 20 December.

According to Visa’s crypto thought team, by using the AA concept — which was first proposed by Ethereum co-founder Vitalik Buterin in 2015 — it is possible to create a new type of wallet, called “delegable accounts”, that combines smart contracts with Ethereum-based self-custodial wallets to enable automated payments, such as phone or electricity bills. While such types of payments are nothing new in the traditional banking world, they are currently impossible for self-custodial wallets, which require users to sign off on each and every transaction. Visa’s blog post reads:

“This application could allow a user to setup a programmable payment instruction that can push funds automatically from one self-custodial wallet account to another at recurring intervals, without requiring the user’s active participation each time.”

The company acknowledged that automated recurring payments could be easily implemented for wallets hosted by third parties such as exchanges, but will require more work for self-custody wallets. By using delegable accounts, however, users will be able to give chosen merchants the ability to request a payment by calling a charge function on the auto-payment contract, which will in turn trigger a payment from their wallets without the need to sign off on the transaction.

Visa noted that it has already implemented its proposed delegable accounts on layer 2 scaling solution StarkNet — which unlike Ethereum supports AA — and successfully enabled auto-payments from self-custodial wallets. The company further noted that its approach could also enable “other real-world applications beyond recurring payments”.