Visa is consistently striving to enhance users’ experiences and streamline processes. In December 2022, Visa introduced an innovative concept that enables cryptocurrency users to conveniently settle their phone and utility bills through their crypto wallets.
On August 11, 2023, the payment giant Visa has taken another significant step to simplify blockchain transactions by introducing a practical solution that allows users to pay on-chain gas fees with their Visa cards. This development could revolutionize the user experience.
Visa’s Product Manager, Mustafa Bedawala, shared this news while also explaining the ongoing challenges with crypto wallets, particularly in managing ETH balances for gas fees.
Traditionally, the process of using Ethereum involves buying ETH from an exchange or service and then transferring it to a wallet to account for fluctuating gas fees. However, this approach often leads to users facing challenges, such as overpaying for fees or not having a sufficient amount of ETH, resulting in a complex experience.
Visa’s solution leverages Ethereum’s ERC-4337 account abstraction standard and a “paymaster” smart contract feature. Here’s how it works:
- A user initiates an Ethereum transaction from their wallet, which sends transaction details to the paymaster web service.
- The web service calculates the gas fee cost and charges the user’s Visa card using Visa’s Cybersource system.
- The web service sends back a digital signature to the wallet, approving the payment within a specific time window.
- The wallet attaches this signature to the transaction and sends it to Ethereum.
- The paymaster smart contract verifies the validity of the signature and covers the gas cost to process the transaction.
ImageThis process allows users to pay gas fees directly with their Visa cards off-chain, eliminating the need to hold ETH specifically for fees. This simplifies the user experience and enhances transaction convenience.
Visa has tested this solution on the Ethereum Goerli testnet using open-source tools like Stackup’s userop.js library. Successful test transactions demonstrated that gas fees could be covered via the paymaster without requiring ETH. Importantly, this innovation has significant potential to reduce friction for blockchain users. If wallet providers or merchants adopt paymaster solutions, users could pay gas fees using Visa cards.
Additionally, this setup could enhance the customer experience for merchants and decentralized applications (dApps) by enabling Visa card payments for gas fees. Existing wallet and paymaster providers could also adopt this approach to offer gas fee payments through Visa cards.