By
Chimamanda U. Martha
May 6th, 2024
Visa’s solution revolves around Ethereum’s ERC-4337 account abstraction standard and the utilization of a “paymaster” smart contract feature which allows off-chain settlements of gas fees.
On Thursday, August 10, payments giant Visa Inc made an important announcement allowing users to pay the on-chain Ethereum gas fees directly in fiat currencies, either using a credit or debit card.
Visa said that it first conducted the test on the Ethereum Goerli testnet by using a paymaster contract in order to sponsor gas fees on behalf of users. Thus, users can send blockchain transactions without having to worry about maintaining an ETH balance. As per Visa, the contracts would make transactions accessible to a wide range of users. Commenting on the development, Visa’s technical team wrote:
“Our experiment aims to offer a promising approach to substantially addressing the challenges of blockchain-based transactions. By leveraging the innovative concept of a paymaster, in conjunction with account abstraction and the ERC-4337 standard, we explored the potential for a process that could redefine blockchain-based transactions.”
A paymaster contract is a specialized variant of a smart contract in the blockchain ecosystem, intended for overseeing the settlement of gas fees.
The company has proposed that merchants or decentralized applications (Dapps) have the option to implement their own paymaster solution. Alternatively, established wallet and paymaster service providers could present a gas fee payment option using cards in conjunction with their existing paymaster services.
This initiative is a continuation of Visa’s ongoing efforts in the field. The company has been actively exploring methods to enhance the user-friendliness and accessibility of blockchain-based payments. At the beginning of 2023, Visa started converting digital assets into fiat payments on the Ethereum blockchain.
Using Visa Card Payment for Gas Fee
In the usual Ethereum usage process, individuals acquire ETH through exchanges or on-ramp services. Then, they transfer the acquired ETH to their wallets to ensure they have enough to cover fluctuating gas fees. However, this dynamic gas pricing often leads to situations of overpayment or insufficient ETH supply, introducing complexity and challenges.
Visa’s solution revolves around Ethereum’s ERC-4337 account abstraction standard and the utilization of a “paymaster” smart contract feature. This approach enables off-chain settlements of gas fees. The five-step sequence is as follows:
- A user initiates an Ethereum transaction using their wallet, which forwards the transaction details to the paymaster web service.
- The web service calculates the gas fee’s cost and charges the user’s Visa card using Visa’s Cybersource system for payment processing.
- Once completed, the web service sends a digital signature back to the wallet, validating the payment. This validation is effective within a specified timeframe.
- The wallet attaches this signature to the transaction and submits it to the Ethereum network.
- The paymaster smart contract then verifies the signature’s authenticity and covers the gas fee, facilitating the transaction processing.
This series of actions enables users to pay gas fees using their Visa card off-chain. It also eliminates the necessity to hold ETH solely for fee payments. This approach greatly streamlines the user experience, enhancing the convenience of transactions.