Visa, the well-known financial services corporation, is currently eyeing a collaboration with the Ethereum blockchain. While simply a proposal at the moment, the primary deal is to provide a service for scheduled auto payments using secured and confirmed sources (accounts) within the network.
Major Companies’ Inevitable Shift to Cryptocurrency
Digitizing finances through cryptocurrency is a concept that is already well-accepted by many major commercial institutions and even banks at this point in time. Even Goldman Sachs, the multi-national finance entity that has denied cryptocurrencies as true assets jumped on board right after the FTX collapse fiasco, investing in at least 11 crypto firms of various managerial and developmental compositions.
But the big pot of ethereal gold still lies smaller, more regular types of transactions. This is why we see companies like Microsoft, Overstock, AT&T, and even fast-food corporations like KFC and Subway accept cryptocurrency more readily. It’s (gotten) fast, transparent, convenient, and open to everyone.
Thus, the eventual stepping forward of Visa to the frontiers of the crypto revolution is not at all surprising. That being said, acceptance and integration of such a fundamentally intrusive system require small, formative steps. In the eyes of the long-time financial conglomerate, the best way to start is to focus on automated payments.
Normal Handling of Automated Crypto Payments
Normally, a utility bill payer’s Externally Owned Account (EOA) would have to initiate an authorized transaction that would transfer tokens to the recipient. But you need an ECDSA signature for this, therefore a user must always be active and present during the transaction.
A typical custodial wallet will require handing over details of the bill payer’s private key to facilitate off-hand transactions. A self-custodial wallet, on the other hand, provides only control of the wallet, but not access to the private key.
A reconfigured self-custodial wallet using account abstraction, can instead function like a smart contract. Meaning, you can enable multi-owner accounts that can use post-quantum signatures. Furthermore, validity conditions for the transaction can easily be customized, or programmed, per type of payment.
Visa’s Different Proposal
The original paper details a partial application of all the aforementioned concepts in the form of reconfigured delegable accounts. Delegable accounts (or at least the theoretical version), extend the available programmability rules to include a pre-approved allow list, like the aforementioned regular (bill) payments. The account abstraction system delegates the ability to tell the account to officiate a payment, based on the smart contract that has been established.
In simpler terms, when a delegable account opens a payment section for a website, the system for automation is shown to the user, then the user approves whichever payment contract is viable in his/her name. The next time a scheduled transaction is made for that account, it is added to the pre-approved list, to be automatically processed as per the amount stated.
Because it is a smart contract, the user who approved the automated payment no longer has to verify the transactions. They can be confident that it will never go outside the bounds of what was already authorized at the beginning.
More and More Online Bill Payments Worldwide
As the global pandemic accelerated the development of all forms of online services, cryptocurrency also enjoyed increased awareness and knowledge among the public. So while traditional money payments are already available online for bills and other regular statements, the option to do it via cryptocurrency becomes a very important factor for further digitization of transactions.
In fact, even as early as 2019, a survey from the Consumer Payments Trend Analysis 2019 already show that a whopping 83% of its survey sample wants a secure, digital platform where they could complete regular payments using mobile devices. As the pandemic waned in 2022, 40% of adults who never tried digital transactions, were finally “forced” to do so for the first time, and never came back.
Even considering fiat currencies alone, 76% of people of acceptable financial age have a bank account, that could potentially provide online services that can pay bills regularly. The perceived convenience of cryptocurrency, because they are already digital in the first place, makes the concept of automated payments a second nature.
Will Visa Take the Next Big Step?
The deadline is still uncertain, but Visa is definitely planning to go ahead with its proposals when given the right steps. Among them of course, is the initial establishment of systems and services to maintain and provide manual cryptocurrency transactions, which Visa has already provided for the last few years.
