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The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have confirmed plans to establish a new company to drive forward variable recurring payments (VRPs) in the UK.
VRPs offer a comparable outcome to direct debits. Currently, only sweeping VRPs are mandated for banks in the UK, involving transactions between a customer's account and a merchant.
“As part of the next steps to deliver variable recurring payments, Open Banking Limited will play a key role in establishing an independent central operator to coordinate how variable recurring payments are made,” the statement said, setting out the next steps.
So far, the UK has pulled ahead of other nations in Europe in terms of open banking adoption, although the progress has still not been optimal.
The latest figures show more than 11.7m active users and over 22.1m open banking payments made monthly, with particularly successful use cases with HM Revenue & Customs and in the gambling and gaming sectors.
The regulators have thrown their support behind Open Banking Limited, the standard setter for UK open banking that was established in light of the Competition and Markets (CMA) Order, stating that it has been “central” to milestones achieved in open banking thus far.
“We support it in doing that, working with industry and trade associations, and look forward to significant progress being made in 2025,” the regulators said.
A firm commitment
According to the FCA and PSR, live services will become available for consumers to make recurring payments to utility companies, financial services firms and the government during 2025.
“It is critical that the collaboration seen in 2024 across the industry continues this year,” the regulators said.
“We thank industry for their continued support and engagement in the success of open banking so far and we will continue to work together constructively as we implement the next steps.”
This intervention comes a week after FCA CEO Nikhil Rathi’s letter to the Prime Minister regarding economic growth.
Rathi committed in the letter to “introduce a new open banking payment method — variable recurring payments — increasing competition and choice”.
