VISA Proposes Concept for Crypto-Powered Recurring Bill Payments

Popular payment processor and credit card manufacturer VISA has proposed the launch of a new feature that would allow customers to make automatic bill payments using their crypto wallets.

Automatic Settlements for Recurring Bills

In a press release shared on Monday, the payments company postulated a new feature that would make it easy for providers to withdraw automatically from their users’ Ethereum-powered crypto wallets without requiring consumers to manually sign off on every transaction. The feature will be targeted at bill payments, allowing automatic settlements similar to the traditional finance sector.

The proposal is part of VISA’s ongoing research into new applications for blockchain technology, which the company believes has the potential to become the foundation of next-generation payment infrastructure.

At @Visa , we want to serve as a trusted bridge between the crypto ecosystem and our global network. Excited to share some update today, here is the 🧵 pic.twitter.com/OK1sWIaxY3

— Catherine Gu (@catgu_) December 19, 2022

As VISA explained, automatic payments for recurring bills have already become commonplace in the traditional banking sector. Users can easily link their bank accounts to subscription services, billing platforms, utility providers, and more to pay off their bills without having to give their consent every time. 

However, this feature isn’t possible yet with self-custodial wallet providers, with VISA explaining that the programmable payments that pull funds from users’ accounts at recurring intervals will require engineering work.  

Merging Wallets & Smart Contracts

The primary issue here is that their users control private keys in self-custodial wallets. And with these keys being required to process transactions, users would need to sign off on transactions manually. 

There is also the fact that smart contracts, which power most blockchain-based payments, can’t initiate transactions automatically. The human element is part of this equation at all times.

For now, the obvious solution will be to make these payments via wallets hosted by third parties – such as cryptocurrency exchanges. However, this also means users must entrust these third parties with their funds.

With the recent events in the market, trust in centralized crypto platforms has been at a significant low point. Customers prefer to have control over their funds and make recurring payments, and self-custodial wallets are not designed for this functionality.

Nonetheless, the company believes that delegable accounts – a new self-custodial wallet based on the Account Abstraction (AA) idea – can provide a solution. The concept was first introduced by Ethereum creator Vitalik Buterin back in 2015, and it essentially allows the combination of smart contracts and Ethereum wallets into a single account.  

VISA’s engineers believe users’ accounts will function like smart contracts through an AA-based self-custody wallet. They can set up programmable payment instructions that will push funds automatically from one self-custodial wallet to the other in a recurring manner without the need for their active consent at all times. Thus, users can schedule transactions and process payments without signing off.

For now, the integration of AA into wallets will need more work. The concept has already been proposed as part of several Ethereum Improvement Proposals (EIPs) over the years, but it hasn’t necessarily gone through due to its difficulty in implementation. Because AA will need several protocol changes and would need to fulfil different security conditions, Ethereum developers have mostly kept it out of their proposals.

However, the VISA team believes this could be an interesting use case for blockchain-based payments in the future.