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(Kitco News) - Global payments provider Visa is looking to simplify the process of paying for transactions on the Ethereum network, revealing on Thursday their work on an experimental solution that enables payment of on-chain gas fees with a Visa card.
“One of the major obstacles in the world of crypto is the complex process of paying for transactions or operations on blockchains,” Visa wrote in a release about the experiment. “Each operation, whether it's a simple token transfer or a more intricate interaction with a smart contract, incurs a cost known as a ‘gas’ fee. Despite the availability of stablecoins like USDC for conducting transactions, users are still required to maintain a separate balance of ETH to cover the gas fees on Ethereum. This often leads users to adopt complex and sometimes expensive methods.”
The statement noted that when compared to the complex nature of blockchain transactions, the simplicity of fiat-based payment transactions supported by the Visa network shows that blockchain transactions need improvement.
This led Visa to ask the question, “What if sending blockchain transactions using self-custodial wallets was as straightforward for the user as using your card to pay for a cup of coffee?”
From there, Visa devised and conducted an experiment that explored the option of allowing users to pay onchain gas fees using fiat money through card payments as a way to help simplify the process.
“The result of this collaborative effort is a proposed solution flow that demonstrates how to enable users to pay their onchain gas fees in fiat money through a card on file,” Visa said. “This proposed solution utilizes Ethereum's ERC-4337 standard and a paymaster contract, allowing Visa cardholders to directly cover their gas fees.”
ERC-4337 is a standard that was introduced on the Ethereum network in March and enables the creation of smart accounts and ‘account abstraction,’ which allows cryptographic keys to be stored on standard smartphone security modules, effectively enabling them to become hardware wallets.
A paymaster is a specialized type of smart contract account that can sponsor gas fees for user contract accounts.
“A paymaster’s role is to abstract away the complexities of the gas fee mechanism while offering alternative ways for fee funding,” Visa said. “Our experimental implementation does this by accepting the user’s gas fee payment off-chain from a Visa card and covering the equivalent amount on-chain, on behalf of the user. The gas fee experience on the user's end is as simple as a regular card payment.”
Technological workflow of transactions using a paymaster and Visa card. Source: Visa
The experiment also utilized a Verifying Paymaster, which is a smart contract that delegates all necessary checks and sourcing of information to an off-chain component. “The on-chain paymaster smart contract can then use the data and approval provided by the off-chain component to authorize and pay for the gas fee,” Visa said.
For testing purposes, the verifying paymaster was deployed on the Ethereum Goerli testnet, and Visa was able “to successfully send User Operations with off-chain gas fee payments.”
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| Visa is now hiring engineers to develop a stablecoin payment system |
“Our proposed solution liberates users from the need to hold native blockchain tokens or constantly engage in bridging tokens merely to cover gas fees,” Visa said. “We believe such an innovative and flexible approach can help simplify the entry point for new crypto users and enhance the experience for current users.”
Visa also noted that the experiment shows developers can implement this solution with existing payments infrastructure, allowing merchants or decentralized applications to “run their own paymaster solution as a means to help improve customer experience by accepting gas fee payments using Visa cards.”
“The realization of such a potential solution helps set the stage for a more accessible and user-friendly approach to digital transactions,” Visa said.
