What your payers really think about Variable Recurring Payments
3 min read
Last year we shared the exciting news that our Instant Bank Pay feature can now support both one-off and variable recurring payments. At the moment, we’ve only unlocked variable recurring payments to businesses taking part in our Early Access Programme as we’re still in the process of gaining real-world feedback. But, because we didn’t want anyone to miss out, we also launched a live payment demo which lets anyone with an RBS bank account try the new feature by setting up a monthly donation to Charity Right.
Before we go any further - here’s a quick overview of what Instant Bank Pay for recurring payments is all about. Here at GoCardless, we love open banking as it unlocks the direct movement of money from one bank account to another in a faster and more secure way than traditional payment methods. Instant Bank Pay for recurring payments is powered by open banking and it supports variable recurring payments (VRPs) - which works in a similar way to direct debit except for the amount of money collected can be easily changed without constant re-authorisation or repeat set-up. So, in the case of our donations to Charity Right, if money is a little tighter then you can reduce the amount you’re donating that month and then when you have a month with higher disposable income, you can then increase the amount again all without having to cancel and re-set up or authorise a mandate. Pretty useful stuff.
We think it’s a modern approach to payments, especially as many of us pay set amounts each month to suppliers and then find ourselves in credit or debit. But - we know that the GoCardless team are payment geeks, so we wanted to find out how the rest of the UK feels about variable recurring payments.
As part of our new report, Demystifying Payer Experience, we worked with YouGov to survey over 2,500 payers from across the UK and asked for their honest perceptions and opinions about VRPs.
29% of consumers are ready to start using VRPs
A massive 91% of UK payers trust bank payments, making them the most trusted way to pay. So, when asked if they would try the latest way to make recurring payments via their bank account, it isn’t surprising to learn that 29% of consumers said they’re likely to when the technology is available to them.
When asked why they would try VRPs, a technology that isn’t widely available to them yet…
36% said VRPs sound like a convenient way to make payments
29% believe that they could be a better version of direct debit
More than one in 10 are seeking an easier way to make payments using their bank account
9% are interested as VRPs potentially offer a more secure way to pay
When we took a closer look at the demographics, we noticed that 25-34 years olds are the most likely to try making a payment through VRPs. This doesn’t seem surprising given that our previous research has found that 54% of Gen Z and millennials plan to explore new ways to save and make money to combat the effects of the cost of living crisis.
We did also find out that around a quarter of consumers haven’t made their minds up yet about VRPs and whether they would use them. It will be interesting to see how this evolves as VRP options become more widely available and consumers can start to explore how it works for themselves.
Your competitors are getting ready to use VRPs
We divided our survey results so we could see the opinions of UK businesses, and we discovered that a third have already decided that they’re likely to start using VRPs as soon as they’re widely available. Given that we know 29% of consumers want to try VRPs, these businesses may be making themselves more appealing to payers and standing out against their competitors who are slow to learn about or adopt new payment technology.
When asked why their business would embrace VRPs
26% believe it sounds like a better version of direct debit
23% say it offers a convenient way to pay
16% are excited to try new technology
What stood out is that businesses aren’t just thinking about ways of collecting money, they’re also thinking about ways to easily and securely make their own payments. A fifth said they want an easier way for their business to make payments via bank accounts so that’s why they would be likely to use VRPs.
What else are your competitors planning?
The full Demystifying Payer Experience Report is now available to download and read for free. In the report, you can find out more insights on what payers want when it comes to making payments, plus where your competitors are planning to invest over the next two years.