The UK has a once-in-a-generation opportunity to bring further competition and innovation into payments via reforms to the Direct Debit market this year.

Variable Recurring Payments are set to transform the financial lives of many, from the automating of the management of savings and investments to dynamic maintenance of subscriptions and making utility payments lower cost and more efficient.

Businesses and their end customers are asking for new types of bank payments that can move funds in real time, keep end-customers fully in control of their finances, and yet allow business transactions to happen safely and securely, with the minimum of friction.

Whether as a replacement for the ageing and inflexible centralised Direct Debit service, or as a gateway for true interbank systems competition for cards at Point of Sale, the opportunities and customer demand are clear and immediate.

Third-party providers such as Ordo are live with open banking-powered single immediate payment solutions. But there’s a gap in the current capability which, unless filled, will prevent open banking from becoming the competitive choice for businesses. It could even risk the UK’s position at the forefront of FinTech.

The new payment mechanism that will fill this gap is called Variable Recurring Payments, or VRP. A simple, swift and secure real-time payment method, VRP deals with repeated payments, both regular and irregular, for the same or varying amounts. 

It could enable a new competitive set of real-time debit services to succeed the centralised inter-bank Direct Debit service that is fit for 2022 rather than the 1960s.


Consumers’ expectations of how they manage their money, and the degree of day to day control they want over their bank accounts, are changing. With instant access to their bank accounts via mobile apps, and a growing proportion of the adult population moving from receiving a regular, fixed monthly salary, to zero-hours contracts, the uncertain income of self-employment and the current sky rocketing of the cost of living and inflation, consumers want – and need – to be in control of all their payments.

The current Direct Debit service no longer fully meets the needs of consumers. With the growing adoption of eCommerce and enhancements to other parts of the UK banking system such as Faster Payments, businesses are getting used to a much more dynamic flow of funds into and out of their companies. These make Direct Debit, with its multi-day process of requesting and delivering funds and multi-week set-up time, an ineffective payment solution and is forcing businesses towards quasi-real-time and expensive card payments.

UK businesses want to be able to collect regular payments from their customers, at low-cost and in real-time, without customers having to repeatedly re-approve every payment they make to their supplier. Just look at the success and adoption of Amazon One-click.

The future of recurring payments sits in competitive overlays rather than core central clearing and settlement services. So what does this mean for UK businesses and their FinTech partners?

With the drivers for change laid out as to how open banking VRP can be deployed to provide the UK with new, competitively provided services that can better meet the needs of businesses and their customers, in due course this will also allow the retirement of the existing central Direct Debit service.

In the first instance, for the remainder of this year, if your business involves people transferring money between their own accounts – be it from their current account to their savings account, repaying loans or topping up pre-pay cards – you can take advantage of the first VRP use case to come to market: sweeping. 

Get your customers transferring their funds in real-time in no time, with a one-time mandate set up in minutes, and endless friction-free secure repeated payments.

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