Yesterday, Visa published a thought-leading article on blockchain payment automation where the digital currency is held in a self-custody wallet. Recurring payments are easier if the cryptocurrency is held in escrow because the owner can instruct the custodian to execute payments similar to a bank account. However, for self-custodial wallets, the Ethereum blockchain requires a private key to make a payment.

An analogy in banking is if you set up a recurring payment with a debit or credit card, but had to enter the card’s security or verification code each time a payment is made. That’s not practical for recurring payments.

At the same time, the concept of a public blockchain sending payments without your permission is amazing. However, the solution is relatively simple: get a list of recipients to approve, so you don’t end up paying a random person. Visa refers to it as a new type of account agreement, a delegable account.

Ethereum has a proposed improvement called Account Abstraction (AA) that does something similar but has not been implemented yet. Visa’s methodology is implemented on StarkNet’s Layer 2 blockchain scaling solution.

Meanwhile, Visa has been active for years in the blockchain and crypto spaces and launched a crypto advisory practice last year. It provides payment cards for numerous crypto exchanges and participates in the NFT art for the FIFA World Cup with the Crypto.com exchange.

On the central bank digital currency front, it has won prizes in two major CBDC challenges in Singapore and Hong Kong and is also active in Brazil’s CBDC trials. Since his CBDC work uses Ethereum technology, he might also be considering these automated payments for CBDC applications. Two years ago, he proposed a solution for offline CBDC payments.