Currently, payment gateways are all about prioritising the ‘Safety of users’, be it digital payments to Web3 wallets. Account abstraction which allows developers to use different authentication schemes is expected to bring a major change in the concept of digital payment gateways. “It will enhance the safety and security of self-custodial wallet products by eliminating the need for users to rely on their private keys and enabling greater programmability in wallets,” Dhruvil Shah, SVP- Technology, Liminal, told FE Blockchain. It is believed that the implementation of account abstraction in digital payment gateways can provide users with a seamless transaction experience by abstracting the account details and using temporary tokens. 

The digital payment market is expected to reach $4.8 billion by 2025, as per Kyros Ventures, an investment firm. While digital payments is all about the ‘sole authority’ of  users, it may open spaces for fraud and other safety issues. Use cases of account abstraction such as micropayments on gaming platforms with players being able to withdraw their funds whenever they want, might lead to safety issues.

Furthermore, it is expected that the global fraud detection and prevention market is expected to reach $182.66 billion by 2030, as per Fortune Business Insights, a market research platform. It is believed that one of the reasons behind a rise in fraud is the ability of companies or people to upgrade their systems with time. “Account abstraction has the ability to increase safety and greatly improve the user experience. Its widespread adoption will require upgrades to current technology and blockchain ecosystems eventually allowing users to initiate transactions through their own smart contract protocols safely,” Shilpa Mankar Ahluwalia, Partner, Head-Fintech, Shardul Amarchand Mangaldas & Co, explained. 

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Naysayers argue implementing and maintaining the infrastructure required for account abstraction is expected up expenses significantly. “Account abstraction has high costs owing to accounts being run as a combination of smart contracts which have associated gas fees for each time they are triggered or executed on the blockchain. However, this issue can be reduced once account abstraction is common on blockchains,” Kumar Gaurav, founder, CEO, Cashaa, concluded.

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