finbold.com
Visa (NYSE: V) will use the current standard for Account Abstraction (ERC-4337) on Ethereum (ETH) in order to allow users to pay for their transaction’s gas fees directly with a Visa Credit Card, instead of keeping a certain amount of tokens available in the wallets for transactions fees.
As announced through an official post, this should be possible even with self-custody wallets, like Metamask, and could drive adoption of blockchain technologies.
“One of the major obstacles in the world of crypto is the complex process of paying for transactions or operations on blockchains. 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. In the case of Ethereum, this gas fee must be paid in the blockchain’s native token, ETH.”
— Visa
The paper also explains that even for stablecoins transactions, like Circle USD (USDC), users are still required to have Ether (ETH) for gas fees.
How is it possible to pay gas fees with Visa’s credit cards?
According to the example diagram shared by Visa, a user who wants to make a $200 worth purchase on a merchant’s website using Circle USD, but only has 1,000 USDC and no ETH, would initiate the blockchain transaction in a self-custodial wallet that supports ERC-4337, and chooses ‘Visa Card’ for gas fees.
The system would process the payment, paying the gas fees on the user’s behalf, allowing the transaction to be successfully sent to the Merchant’s wallet.
“In this proposed solution, we once again put the paymaster at the heart of the process”, explains Visa. “A paymaster is a specialized type of smart contract account that can sponsor gas fees for user Contract Accounts (think of these as user-centric smart contracts).”
“Our proposed solution liberates users from the need to hold native blockchain tokens or constantly engage in bridging tokens merely to cover gas fees. From a user’s perspective, this solution is appealing in its simplicity and ease of adoption.”
The above process is still experimental, and users should be aware that there are risks involved.
Meanwhile, most users will still face the burden of having to pay fees in order to use the vast majority of the available cryptocurrencies. Although, there are a few projects looking to solve the ‘fee issue’ on a protocol level, by completely removing transaction fees, like nano (XNO) or IOTA (MIOTA).