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UK's CMA mandates Variable Recurring Payments

Wednesday 28 July 2021 12:02 CET | News

UK’s Competition and Market Authority (CMA) has decided to mandate Variable Recurring Payments (VRPs) as the mechanism for implementing sweeping.

The CMA published a letter to the Implementation Trustee of the Open Banking Implementation Entity (OBIE) stating that making effective provision for sweeping is an important element of the Open Banking remedy and it is important that sweeping provisions include the ability to move funds out of current accounts into accounts earning a higher rate of interest, and conversely enables customers to access alternative and cheaper sources of short-term credit.

Sweeping is the automatic transfer of money between a customer’s own accounts, such as moving excess funds into a separate savings account or using them to repay a loan or overdraft account. VRPs allow customers to safely connect authorised payments providers to their bank account so that they can make payments on the customer’s behalf within agreed parameters that offer more control and transparency than existing alternatives.

This decision means that the largest UK current account providers will have to implement VRPs within the next six months and allow free access to third party providers who are using VRPs to enable their customers to move money from their current accounts to other accounts.

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Keywords: Competition and Markets Authority, Open Banking, recurring payments, TPP
Categories: Banking & Fintech | Payments General
Countries: United Kingdom
This article is part of category

Banking & Fintech