What are Variable Recurring Payments?

Variable Recurring Payments, or VRPs, enable customers to access the benefits of open banking technology for recurring payments with a single consent. VRPs offer a smarter, faster, and more flexible solution than Direct Debits, enabling businesses and consumers to have more control over real-time payments. Read our guide on VRPs to find out more.

Sweeping

Following the Competition and Markets Authority (CMA) mandate, the UK’s nine largest banks were told they must support VRPs for sweeping by 31st July 2022. Sweeping, also known as me-to-me payments, enables users to move money between their own accounts on a regular basis via bank transfer. This can be used to maximise savings potential where interest rates are higher or to avoid overdraft fees.

We have seen a positive response from industry to the implementation of sweeping, however, only when VRP APIs become more widely available will truly innovative use cases for open banking be unlocked. At Yapily, we believe that more collaboration between banks, third-party providers, and policymakers is needed to ensure the transition from me-to-me to me-to business (non-sweeping VRP) payments materialises.

Non-sweeping

Non-sweeping expands the scope of VRPs to include movement of funds between different accounts, where the payment destination is not restricted to your own account. This could include paying monthly subscriptions or regular household bills, for example. Non-sweeping use cases have huge potential to transform the retail landscape and be the catalyst for providing frictionless payment solutions to everyone.

Why do they matter?

At Yapily, we believe in the promise and potential of open banking payments for the whole ecosystem. That’s why we have partnered with Ozone API to enable more participants within the open banking ecosystem to benefit from VRP. Together, we will empower all banks and financial institutions to go beyond minimum regulatory requirements and commercialise their APIs. This partnership will offer everything a bank needs to switch on and monetise the growing VRP opportunity. Now the CMA deadline has passed for the UK’s nine largest banks, it’s our joint mission to ensure that no bank gets left behind.

“Partnering with Yapily means we can now deliver the benefits of VRP to banks and financial institutions, enabling them to build deeper customer relationships, reduce losses to payments fraud, and ultimately generate new revenue streams"

- Huw Davies, Co-Founder and Chief Commercial Officer at Ozone API

We are also advocating for VRPs to be mandated beyond sweeping by working alongside the Financial Conduct Authority (FCA) and the Payments Systems Regulator (PSR) as well as with Her Majesty’s Treasury to highlight the significant potential these could bring to open banking adoption for both businesses and consumers.

How can Yapily VRP help your business?

The implementation of non-sweeping VRPs has the potential to disrupt the movement of money for good. In future, consumers will be able to pay for their household bills, streaming services, and other subscriptions such as gym memberships without the hassle of setting up Direct Debit.

The same opportunity is also evident for e-commerce businesses that are almost completely reliant on card payments. For our customers like Volume Pay, the one-click checkout payments platform, Yapily VRP will enable their merchants to save costs, increase payment volumes, and provide a frictionless alternative to standing orders and Direct Debit payments over time.

“VRP has triggered the next wave of disruption at the checkout. It is the direct debit equivalent of open banking, except where the movement of money is quicker, cheaper, and the customer has more control. This has the potential to be transformative for any business. At Volume, we are on a mission to remove hidden fees at the online checkout for both consumers and merchants, and Yapily is helping us to turn that vision into a reality.”

- Simone Martinelli, Co-founder and CEO at Volume

VRPs are a great example of how open banking is creating a healthy payments ecosystem, demonstrating value for every participant. We are proud to be at the forefront of payments innovation and deliver a product that meets the evolving needs of banks, merchants, payment service providers, businesses, and consumers alike.

Get in touch to find out more.