The open banking roadmap: What’s next for VRPs?

Adoption of open banking has been showing steady growth since its inception in 2018 but some sectors are adopting faster than others.

Why? At present, open banking offers the greatest opportunity for businesses that collect one-off, large value transactions where it’s much cheaper and more efficient than the alternatives.

Variable Recurring Payments (VRPs) offer the potential to collect recurrent payments for different amounts. This will be powerful for businesses who collect card-on-file style payments or recurring payments such as ecommerce or utilities.

At the time of writing, VRPs are only available in a limited form and there’s still much speculation about exactly when new use cases will open up. So when will we see the wider rollout of VRPs? And what is holding us up at the moment?

How can VRPs be used today?

VRPs enable recurring account-to-account payments in a similar way to Direct Debit or card-on-file payments. The key difference is that they are powered by open banking, meaning that businesses can collect recurring payments with the increased speed and security that open banking offers. Businesses will also be able to vary the amount and timing of the payment.

This functionality is only available in ‘sweeping’ use cases at the moment. This is where a transaction is made between two accounts owned by the same person. Examples of this are regular deposits to savings accounts or loan repayments on credit cards. Because of this, the financial services industry is leading the charge on adoption of VRPs.

Yonder is one of those businesses already leveraging VRPs. They use VRPs to offer their customers flexibility with their card repayments.

“In these economic conditions, consumers want more control over their finances. VRPs are the perfect solution. Since we’ve introduced them, we’ve seen many members move from monthly to weekly or even daily repayments.

“The instant nature of VRPs means they can immediately free up their credit line and take full advantage of our rewards. Simply put, VRPs allow our members to manage their repayments in the way that works for them.”

Tim Chong, Co-Founder and CEO, Yonder

What’s next for VRPs?

The next milestone in the development of open banking payments is commercial VRPs. It essentially means the opening up of VRPs to be used in a commercial setting i.e. payments going from a customer account to an account owned by a business.

Enabling transactions to go between accounts owned by different entities will throw the use cases for VRPs wide open. Businesses such as the utilities sector or ecommerce will be able to use open banking in place of Direct Debit or card-on-file payments.

When will commercial VRPs happen?

The CMA9 banks (nine largest banks in the UK, as determined by the Competition and Markets Authority) and Revolut currently support VRPs for sweeping use cases.

A wider rollout of VRPs for commercial use cases in the UK is due to happen in the second half of 2025, likely autumn at the earliest. Banks such as HSBC, Barclays, Lloyds Banking Group, NatWest and others like PayPal, Monzo, Revolut and Starling are set to support the roll out.

Initially, commercial VRPs will be available to a select number of industries such as government agencies, FSCS-protected services and charitable organisations. Industries such as energy and utility are tipped to follow with the hope of expanding to e-commerce early next year.

What is being done to help get us there?

GoCardless has co-founded an initiative to create a new company that will drive the creation of commercial VRPs.

This newly established entity will act as an independent VRP scheme, owned and managed by the payment industry.

Working alongside 30 other organisations, including FinTechs, high street banks, challenger banks and payment providers, GoCardless will accelerate the development of commercial VRP use cases for finserv, utilities, charities and others in the ‘first wave’ sectors.

This sort of collaboration, as we outlined in our research with 11:FS, will help us to drive a better commercial model to incentivise the banks and create a better infrastructure for businesses and consumers.

What can you do now?

Commercial VRPs are due to happen towards the later part of 2025 and will continue to develop from there. We know that British businesses want a way of taking payments that are cheaper, faster and more secure than many options available on the UK payments market.

To find out more about VRPs and how they could work for you, get in touch with our team of payment experts.