The next steps for open banking in the UK will involve the establishment of a new independent company to advance variable recurring payments (VRPs).
According to the Financial Conduct Authority (FCA) and the Payment Systems Regulator, open banking has emerged as a “UK success story,” with more than 11.7 million active users and over 22.1 million open banking payments processed monthly.
The introduction of VRPs aims to enhance e-commerce by allowing consumers to manage payment amounts over time, helping to mitigate the risk of unexpected expenditures. For businesses, these payments promise to lower processing fees associated with card transactions.
Open Banking Limited has been mandated to set up an independent central operator responsible for the coordination of variable recurring payments. Once the live service is operational, users will have the ability to make recurring payments to utility companies, government agencies, and financial services firms.
Furthermore, the FCA has indicated that it is collaborating with industry stakeholders and trade associations to develop the commercial frameworks necessary for both variable recurring payments and the application of open banking in e-commerce.
VRPs are a natural progression within the open banking landscape. Looking ahead, significant developments are expected to extend this model into other business sectors, collectively referred to as open finance. The FCA recently announced its commitment to advancing initiatives in this domain, with a particular focus on SME lending as a key area for growth.