The next steps for open banking in the UK will include a new independent company to drive forward variable recurring payments.
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Setting out the plans, The Financial Conduct Authority and the Payment Systems Regulator acclaim open banking as a “UK success story” with over 11.7 million active users and over 22.1 million open banking payments made monthly.
Expanding its use for for e-commerce, variable recurring payments will help consumers to control how much can be paid at one time or over the course of a month, reducing the risk of unexpected expenditure.
For businesses, variable recurring payments are touted as a means to reduce processing fees from card payments.
Moving forward, Open Banking Limited has been tasked with establishing an independent central operator to coordinate how variable recurring payments are made.
At the live service comes onstream, users will be able to make recurring payments to utility companies, government departments and financial services firms.
In addition, states the FCA, “we are working with industry and trade associations to progress development of the commercial arrangements underpinning both variable recurring payments and use of open banking for e-commerce”.
VRPs are a natural evolution of open banking. Of more signicance will be forthcoming steps to extends the model to other business areas under the name of open finance. The FCA on Wednesday stated that it is working to progress activity in this area, with SME lending seen as a potential priority area for development.
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