PSR Explores Expanding Variable Recurring Payments in UK

Great Britain’s payments regulator has taken another step in its variable recurring payments (VRP) project.

In December, the Payment Systems Regulator (PSR) put forth a “call for views,” which included proposals for how it could support an expansion of VRPs. On Thursday (Aug. 15), the PSR published its response to the call.

Kate Fitzgerald, head of policy at the PSR, noted in a news release that upwards of 10 million British consumers and businesses are benefiting from open banking.

“Our call for views response aims to provide the transparency around what’s needed to make sure open banking keeps growing, delivering new financial opportunities and services that increase choice and flexibility for consumers,” she said.

“This is an important step in keeping up momentum to expand the use of VRPs. We’ll continue to work closely with the ecosystem to ensure this happens effectively and identify where regulation will have the most impact — promoting competition and driving better value and outcomes for consumers.”

According to another U.K. regulator — the Competition and Markets Authority (CMA) — VRPs are a type of payment that lets customers connect authorized payment providers to their bank account to make payments on their behalf “in line with agreed limits.”

The CMA has approved nine British banks — known as the CMA9 — to implement a VRP open banking API to allow for an easier sweeping of funds from a customer’s current account to another of their accounts.

The feedback the PSR got showed support for coordinating the expansion of VRPs through a multilateral agreement (MLA), along with concerns about the need for an MLA and whether it should include a central price.

And while a majority of respondents supported the need for a central price, the PSR added, there were mixed views on how best to price Application Programming Interface (API) access for VRPs in the first stage of the project. The PSR plans to evaluate different price approaches.

“The PSR will also consider the potential effectiveness of interventions that do not establish a VRP API access price, such as price transparency or reporting requirements,” the regulator said.

In other open banking news, recent research by PYMNTS Intelligence finds a gap between consumer interest in open banking and its actual usage in the U.S.

While 46% of American adults expressed strong interest in open banking payments, just 11% of them have used it.