Visa reimagines payments on Ethereum with Account Abstraction

Visa experiments of new techniques in the field of payments cryptonow including Account Abstraction on Ethereum and smart contracts of type Paymaster. Intended purpose: facilitate the experience.

Carrying out a transaction on a blockchain still remains largely more complex for the user than a simple transaction on the Internet. As a major player in payments and now also in crypto, Visa is working on new methods.

In order to improve theUX (user experience), the company is conducting experiments within the ecosystem Ethereum. The giant, through its crypto and CBDC director Catherine Gu, announces the release of research work on theAccount Abstraction (AA).

Gas fees paid in stablecoin, CBDC or other

This technique is applicable on Ethereum since recently through the standard ERC-4337. The purpose of using AA is therefore to simplify the execution of a transaction on the blockchain. To date, a user pays fees, gas fees paid in ether.

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With Account Abstraction, these fees could be paid not necessarily in tokens native to the blockchain, but via another means of payment. For Catherine Gu, this could be a stablecoin, a tokenized deposit or a CBDC.

The UX and the payment experience on blockchain are currently suboptimal, both for individuals and businesses,” considers Visa, therefore determined to improve them.

A new kind of smart contract, the Paymaster

The company goes even further than the choice of how to pay the fees.

Imagine a UX in which you, as a user, can’t pay transaction fees on the channel at all. All these more intuitive and accessible UX can be redesigned with AA,” the Visa executive assures.

Such a prospect is still in the experimental stage. The company is conducting tests on Ethereum’s Goerli test network. And to illustrate the potential of the ERC-4337, Visa has therefore designed two smart contracts of type Paymaster.

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“The concept of Paymasterwhich plays a crucial role in this process and is at the heart of our own exploration,” say the Visa researchers. But what exactly is a Paymaster? It’s an optional smart contract account.

Towards the disappearance of end-user fees?

Two types of accounts exist on Ethereum, the EOA (Externally Owned Accounts), i.e. user accounts, and Contract Accounts (CAs) used by smart contracts. Visa introduces a new category of CA, the Paymaster.

In the model imagined by VisaThis contract is therefore able to sponsor transaction fees for traditional contract accounts. It thus plays an intermediary role. The Paymaster will drive the fee logic and enable the use of payment options (ERC-20, stablecoin, etc.).

This model makes it possible to go as far as eliminating fees for the end user, as is the rule in P2P transactions on Web 2.0.

Account Abstraction offers a solution by allowing users to bypass these costs if a third party, such as a wallet provider fintech is willing to cover them.”

“In this case, the wallet provider or dApps can act as Paymasters, covering the gas costs for users and greatly reducing friction. The ERC-4337 Paymaster concept may be a potential way to encourage user adoption by making transactions through their wallet platform free,” Visa suggests.

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