Visa explores automated payments via blockchain
Visa is exploring ways to allow automatic recurring payments through a blockchain like Ethereum.
Blockchain adoption is increasing, but setting up automatic recurring payments is a challenge because some digital wallets require engineering to allow pull payments, according to a technical paper posted on the Visa website.
It’s a problem that needs to be addressed, because consumers want the convenience of automatic recurring payments — to the extent that 30% have changed the way they pay bills in the past two years, with many citing convenience as the reason, according to the paper.
While it’s easy to make this change on a banking app, it’s more difficult on some digital wallets, the paper said.
“Ethereum supports push payments, but does not natively support pull payments – automatic payments are an example of pull payments,” the authors wrote in the technical paper.
The authors explored using smart contracts for self-deposit wallets to eliminate the need for the user to actively participate and push payments each time, instead enabling the smart contract to withdraw funds automatically.
Account abstraction (AA) proposes that user accounts should function as smart contracts and that more flexibility can be allowed in validating transactions on the blockchain, according to the paper.
“Essentially, AA allows programmable validity to verify and validate any blockchain transaction,” the authors wrote. “This means that instead of hard-coding validity conditions into the Ethereum protocol that will apply to all transactions in a generalized way, validity conditions can instead be programmed in a customizable way into a smart contract on a per-account basis.”
The authors proposed leveraging AA to create a new type of account contract, which they called a “delegable account,” which would include a pre-approved permission list.
Beyond recurring payments, this solution can support pull payments of all kinds, the authors wrote.
Ethereum does not currently support AA, so the authors implemented their delegable account solution on StarkNet and found that it enabled automatic payments for self-custodial wallets.
“At Visa, our goal is to help create better user experiences by leveraging existing as well as new payment rails,” the authors wrote. “To that end, we believe that programmable money and programmable payments represent an exciting opportunity.”
PYMNTS research has found that many consumers embrace convenience features such as automatic payment on the due date.
In fact, the largest share of consumers of all income levels — 39% — pay their recurring monthly bills using automatic payment on the due date, either through a bank’s bill payment system or the biller’s website, according to the PYMNTS report ” Streamlining Bill Payment .”
How consumers pay online with stored credentials
Convenience prompts some consumers to store their payment information with merchants, while security concerns give other customers pause. For “How We Pay Digitally: Stored Credentials Edition,” a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 U.S. consumers to analyze the consumer dilemma and reveal how merchants can win over holdouts.
