The regulator pair emphasises the creation of an independent entity to oversee variable recurring payments (VRPs). This development aims to improve the flexibility and security of regular payments for consumers and businesses alike.
With over 11.7 million active users and more than 22.1 million payments made on a monthly basis, Open Banking continues to grow in the UK. In 2024, additional strides were achieved through voluntary funding by 20 major firms, enabling progress in areas such as fraud analysis, consumer protections, and the introduction of new services like VRPs.
VRPs represent a key innovation, reportedly allowing consumers greater control over regular payments by enabling them to set limits on payment amounts or durations. This capability seeks to reduce the risk of unexpected expenditures, offering users a transparent and customisable payment experience.
For merchants, VRPs present an opportunity to increase competition with existing payment methods, lower processing fees, and improve payment completion rates through improved user experiences.
Open Banking Limited, a pivotal organisation in the sector’s growth, will play a central role in forming an independent operator to manage VRPs. This operator will oversee the coordination of recurring payments across sectors, including utilities, government services, and financial firms.
The Paypers recently featured an expert opinion article from Open Banking Limited, available here.
Collaboration with industry stakeholders will also focus on developing commercial arrangements to expand the use of Open Banking in ecommerce.
As part of the UK’s National Payments Vision and the government’s growth agenda, the FCA and PSR remain committed to driving the success of Open Banking. A joint steering committee will oversee continued collaboration across the industry to achieve key milestones in 2025, including the rollout of live VRP services for consumers.
The FCA and PSR expressed gratitude to industry participants for their ongoing engagement and emphasised the importance of sustained collaboration to realise the full potential of Open Banking innovations.
By fostering secure, efficient, and consumer-focused payment systems, Open Banking is poised to remain a cornerstone of the UK’s financial ecosystem, the official press release concludes.
The Paypers reached out to the co-founder and CEO of TrueLayer for comments. He declared that the FCA’s support for the development of an independent central operator, to drive forward Open Banking is a significant and commendable step towards fostering competition and innovation in the UK payments landscape.
He continued by saying that by championing an open, transparent – and most importantly, independent – operator, the FCA is ensuring that consumers and merchants will benefit from lower costs, greater choice, and more secure payments. This is a crucial move that not only supports the future of Pay by Bank, but also strengthens the UK’s position as a leader in digital financial services.
To discover more insights into the present and future of Open Banking payments in the UK and Europe, we invite you to download our Open Finance Report 2024.
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