- Summary:
- Visa says its solution enables users to use fiat currency to pay for gas fees, in a move aimed at onboarding the masses into web3.
Global payments giant Visa has announced the completion of testing of a solution that enables customers to pay for on-chain fuel fees with fiat currency. The card company’s novel approach uses the ERC-4337 standard used by Ethereum’s “Paymaster” smart contract to provide off-chain gas fee settlement.
The new solution will make it possible for users to conduct blockchain transactions without worrying about keeping enough Ether on hand to cover gas fees. Instead, they will be able to pay for these fees directly with their Visa cards using the paymaster contract integrated with account abstraction and ERC-4337.
For those unfamiliar with the technology, completing a blockchain transaction can be a lengthy and difficult process. That is because Ethereum’s gas fee payment system is complex, expensive, and is only accessible to those who have ETH. Buying Ethereum (ETH) using fiat currency or another cryptocurrency, or transferring ETH from an exchange to a wallet, can be daunting processes that leave users vulnerable to price swings.
Visa says that its solution saves users from the requirement to hold native blockchain tokens or exchange them for bridging tokens to pay for gas. It is a straightforward and user-friendly solution, simple enough for anyone to use.
How the concept works
Visa’s test used a paymaster contract to sponsor gas fees, and it was run on Ethereum’s Goerli testnet. It involves the initiation of payment by a user to the paymaster by sending an Ethereum transaction from their wallet. In the blockchain ecosystem, a paymaster contract is a specialised form of smart contract designed to facilitate the management of gas charge payments. Visa also added that its dedicated paymaster solution could be used by either merchants or dApps.
To authenticate and finance User Operations, Visa developed a prototype that utilizes a Verifying Paymaster that communicates with an off-chain service. The term “User Operation” refers to blockchain operations that can be carried out by a smart contract without the need for a user’s approval. The off-chain service uses a secret key to sign the data, and the paymaster contract uses the public key to validate the signature. With account abstraction, programmers can create new flows that simplify every monetary transaction with less effort.
The rising appetite for blockchain transactions processing
Visa’s move signals increasing competition among mainstream financial services providers on who will take the lead in the blockchain-based payments space. Earlier in the week, PayPal launched its US dollar-backed stablecoin, PayPal USD. With this, Visa takes a major step towards its goal of making blockchain-based payments more widely available and user-friendly.