On December 19, 2022, the Head of Central Bank Digital Currencies and Protocol at Visa Crypto announced Visa’s plans to bridge the cryptocurrency ecosystem and Visa’s global payment network for traditional transactions.
Exciting news for the Ethereum ecosystem!
Visa has proposed using StarkNet and Argent to facilitate automatic recurring payments on self-custodial wallets, making it easier for users to manage their payments and providing a more convenient payment experience.
— Starknet 🦇🔊 (@Starknet) December 19, 2022
Catherine Gu, Visa’s Head of CBDC and Protocol at Visa Crypto, tweeted about Visa’s vision to explore the novel avenues of blockchain innovation and Web3 infrastructure as they relate to payments. Security, scalability, interoperability, and privacy are the four main areas in which Visa, the digital payment corporation, is interested, according to Gu.
A major hurdle to the mass adoption of cryptocurrency and the blockchain has been their inability to support the speedy completion of a large number of transactions simultaneously without breaking security or sacrificing decentralization. The problems of scalability are actively being worked on by developers who see the future of crypto’s mass adoption as just over the horizon.
Ethereum’s vision for scalability, for example, has multiple solutions being researched and tested. This vision sees completing the two main goals of greater speed and throughput, while remaining secure and decentralized, as “fundamental” to Ethereum’s mass adoption.
Visa’s proposal sees the company serving as one of these solutions by allowing automated payments from self-custodial wallets.
Visa plans to and has tested using Account Abstraction. This Ethereum-based concept grants every account the features of a smart contract with its own logic, to perform recurring automated payments that do not require the active participation of the user to initiate each payment. This process is developed to work with self-custodial wallets. Basically, Visa proposes to bring the autopayment functionality of traditional fintech solutions to self-custodial cryptocurrency wallets.
The network used in this case is StarkNet, a Layer 2 (L2) network built on the Ethereum blockchain that supports account abstraction. StarkNet is a decentralized and permissionless ZK-Rollup that solves the scalability issue for dApps, allowing unlimited computation scale without compromising Ethereum’s security. The wallet is Argent X, developed by Argent, which is the first wallet on StarkNet.
While some users were concerned about the potential effects of autopayment and whether it would undermine the security that cryptocurrency wallets provide over conventional Visa cards, the technology is being investigated for potential future implementation, and it will have significant implications for users on the Ethereum ecosystem. For one, payments in day-to-day life will no longer need to be conducted off the blockchain, as autopayments will be able to cover everything from the bill and fee payments to even payroll.
