Voice of the Industry

VRP: How to take advantage of the USD 1.5 bln opportunity

Thursday 19 January 2023 12:30 CET | Editor: Vlad Macovei | Voice of the industry

Plaid’s Quan Nguyen dives into the topic of Variable Recurring Payments and lets us know what companies must do to leverage this USD 1.5 bln opportunity.


Plaid’s Quan Nguyen dives into the topic of Variable Recurring Payments and lets us know what companies must do to leverage this USD 1.5 bln opportunity.


Introduced in 2021, Variable Recurring Payments, or VRP for short, are a type of payment instruction that allows people to automate recurring future payments of varying amounts with one authentication. It also empowers consumers and merchants to control those recurring payments. Recently, Plaid launched VRP in beta to make online payments work better for people in the UK.

For companies like Expensify – a payments super app that helps individuals and businesses around the world simplify the way they manage money across expenses, corporate cards, and bills – VRP holds the potential to dramatically shift how they do business. With Plaid’s VRP, Expensify can automatically pull varying repayments from their customers’ business accounts to settle card balances.

‘When we set out to launch the Expensify Card in the UK, we chose to partner with Plaid because VRP are the best way to securely and quickly move money in the UK,’ said Sophie Pinto-Raetz, who's leading up the charge to launch the Expensify Card in the UK. ‘Our aim is to bring the Expensify Card to the UK as quickly as possible while maintaining the same industry-leading standards as our US version of the card: direct and seamless integration with the Expensify app, easy options to automate card payment, and transparency throughout the entire expense and pre-accounting process. Plaid's cross-Atlantic presence meant that we could unlock the value of instant payments more quickly with one provider. By partnering with Plaid for VRP, we'll be able to introduce the Expensify Card to our UK customers much sooner than it would otherwise be available’.



The Competition and Markets Authority (CMA) has mandated VRP for sweeping use cases, where money is automatically moved only between bank accounts held in one person’s name, also known as me-to-me payments. For example, these could be moving excess funds from a low-interest current account to a high-interest savings account or topping up a current account with a low balance to avoid hefty overdraft fees. As part of the current mandate, banks must allow Open Banking companies like Plaid to have free access to APIs for sweeping.

VRP could encompass a wider set of potential use cases than the me-to-me payments set out in the CMA's mandate, such as managing active subscriptions, paying energy and water bills, and more. In a new report, a Plaid data analysis shows that extending VRP to use cases beyond sweeping–and, crucially, protecting their low cost–would save UK businesses over GBP 1.5 billion annually in payment processing fees. 



Furthermore, VRP holds massive potential because of its low cost. For small businesses, the potential savings are massive, and in the current economic climate, they’re even more critical.  

It’s early days for VRP – they hold great potential but in order to fulfill the CMA mandate, VRP requires immense collaboration with financial institutions and policymakers. Plaid’s origins in North America mean our team has deep expertise in managing relationships and work streams with thousands of financial institutions on Open Banking, such as educating them on the value of setting up APIs. Similarly, our policy team is working hand-in-hand with regulators in the EU to broaden PSD2 to include a VRP equivalent.

This article has first been published in the Open Banking and Open Finance Report 2022. Click here to download the report.

About Quan Nguyen

Quan Nguyen is the VRP Product Lead for Plaid. In his role, Quan shapes product strategy driving impactful financial services innovation. Prior, Quan worked at Booking.com, Sift, and Microsoft in areas including payment fraud prevention and digital trust.



About Plaid

Plaid powers digital financial experiences: our Open Banking network and payments platform is the easiest way to embed fintech products and services and onboard customers. Over 6,000 companies including Kraken, Curve, Bumble, and Moneybox use Plaid to make it easy for their customers to connect and pay from their current accounts.

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Keywords: Open Banking, Variable Recurring Payments, Open Banking payments
Categories: Banking & Fintech
Companies: Plaid
Countries: World
This article is part of category

Banking & Fintech


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