Visa’s new move could pave the way for a transition from traditional banking infrastructure to the Ethereum blockchain.
Paymaster Smart Contract Deployment
Visa’s head of crypto, Cuy Sheffield, announced Thursday that Visa has deployed its initial paymaster smart contract on the ETH Goerli testnet. This move reflects Visa’s ongoing research and experimentation with account abstraction and ERC-4337.
The payment giant has won mainstream support in the community. Raj Parekh, CEO of Portal and formerly associated with Visa Crypto, expressed enthusiasm about this recent development.
The executive stated that a Visa-powered paymaster could significantly contribute to the ecosystem’s growth. Visa had previously introduced the concept of ‘account abstraction’ (AA), which utilizes smart contracts to enable automated programmable payments on the Ethereum platform.
Visa’s report detailing its experiments with ERC-4337 is now live. ERC-4337 (Account Abstraction Using Alt Mempool) was implemented on the Ethereum mainnet in March. The idea of AA is to enable users to make transactions using smart contract wallets.
In one of the experiments, Visa created two prototypes to showcase potential use cases for a new Paymaster flow. The first prototype utilized the Paymaster to facilitate the use of ERC20 tokens for covering gas fees. The second prototype covered the gas fees for a transaction entirely.
In line with these developments, the Visa team deployed experimental Visa Paymaster contracts on Ethereum’s Goerli Testnet.
The demonstration involved paying ERC-20 tokens using the ERC-4337 Paymaster through the initial Visa Paymaster contract. This experiment explored the possibility of users paying transaction fees with alternative tokens, such as a dollar stablecoin or potentially a Central Bank Digital Currency (CBDC) in the future.
ERC-4337 offers users bank-like functionalities, eliminating the need to place trust in traditional banking institutions. By streamlining the process of crypto involvement, this innovation paves the way for the integration of countless new users into the crypto market, opening up vast opportunities for expansion.
The remarkable impact of ERC-4337 was evident when it generated considerable excitement during its mention at the esteemed ETH Denver conference held in early March 2023.
ERC-4337 had already been successfully integrated into StarkWare’s zk-Rollup layer 2 and zk Sync, further enhancing its reach and capabilities.
With the abstraction feature, Visa can simplify crypto payments for crypto users with Ethereum accounts, enabling direct payments without relying on crypto exchanges.
Visa To Expand its Footprint in Digital Payment Landscape
Visa reportedly joins Alibaba Group’s Alipay Financial, Mastercard Asia, Ripple Labs, and HSBC to develop a digital Hong Kong dollar pilot. The Hong Kong government’s stance on the digital currency has undergone notable transformations.
The government has granted approval for crypto investors who fulfill specific transactional criteria and licenses for crypto companies operating within the country.
According to Hong Kong Monetary Authority, The pilot will occur on the Ripple CBDC Platform, a platform developed by Ripple that allows central banks, governments, and financial institutions to create their national digital currencies.
The Ripple CBDC Platform will use a separate ledger from the XRP Ledger and offer improvements like support for offline transactions and transactions without a smartphone. Ripple previously worked with other countries, including Montenegro, Palau, and Bhutan, on their CBDCs pilot projects.
Visa, known for its proactive stance, has consistently demonstrated a penchant for staying ahead of the curve. Recognizing the transformative potential of stablecoins and Central Bank Digital Currencies (CBDCs) in the ever-evolving payment landscape, Visa has embraced a bullish outlook on their future roles.
The company has dedicated itself to active involvement in an ongoing blockchain interoperability project. It aims to foster seamless compatibility and harmonious coexistence between various blockchain networks.
Other leading names such as Mastercard or PayPal, don’t stay silent behind Visa’s developments. In October 2021, Mastercard announced its intention to ready its payment infrastructure for seamless integration with Central Bank Digital Currencies (CBDCs).