We recently sat down with our Commercial Variable Recurring Payments (CVRP) expert, Serenna Cole, Senior Product Manager at Yapily, to gather her insights and expertise on the future outlook of CVRP. During our discussion, Serenna shared her deep understanding of the transformative potential of CVRP for the retail industry, its competitive advantages over existing payment solutions like Apple and Google Wallets, and her recommendations for both regulators and banks in embracing this innovative payment method. Join us as we delve into the promising prospects of CVRP and its expected impact on the financial landscape.
What has the pilot with NatWest depicted about Commercial VRP?
Developing a seamless checkout experience, whether online or in-store, entails thoughtful consideration of critical elements such as registration, merchant onboarding, consent management, refunds, commercial model, controls, liabilities, and user interface design. Our cVRP pilot offers an early opportunity to effectively address these considerations, positioning us as a key player in the market.
As a new payment method, incentivising users is pivotal in driving adoption. Consumer confidence, reassurance and trust counts towards adoption of open banking. Once users have granted their consent, their subsequent payment experiences can mirror the ease of a one-click checkout, streamlining their transactions and enhancing overall payment experience.
While concerns persist regarding cVRP coverage, it’s worth noting that NatWest commands a substantial market share of 29%. This sizeable presence provides a solid foundation for initiating a pilot program to delve into the potential of cVRP and its implications for our future payment strategies.
What is the potential for CVRP in the retail industry for both merchants and their customers?
The potential for cVRP in the retail industry is vast for both merchants and their customers. For merchants, cVRP offers reduced costs in comparison to cards with the ability to compete with the frictionless experience offered by the likes of ‘Apple Pay’. Conversion rates are expected to be higher as funds are directly debited from the customer’s bank account. By integrating cVRP into their payment systems, merchants can provide a seamless and convenient experience for customers, ultimately leading to increased sales and customer satisfaction.
For customers, cVRP presents a hassle-free payment option that simplifies the checkout experience. With cVRP, customers have full control of their spend when setting up the initial mandate and can make secure transactions with just a glance or a tap, eliminating the need for physical cards or cash. This convenience not only saves time but also enhances overall shopping experiences, encouraging repeat business and loyalty.
Overall, cVRP has the potential to revolutionise the retail industry by offering a faster, more secure, and more convenient payment method for both merchants and customers, while empowering customers with greater control over their spending habits.
What is the value of CVRP over Apple or Google Wallets?
cVRP will bring more competition into the payments landscape. The primary consideration is the cost-effectiveness and efficiency for merchants. Its versatility extends to both single and subscription-based payments, including combinations of the two, which enables it to cater to a wide array of use cases. cVRP’s device-agnostic nature allows for seamless integration for both online and offline use cases, providing businesses of all sizes with unparalleled flexibility and scalability. Powered by Open Banking, merchants can proactively verify fund availability before collections, enabling tailored CRM strategies and enhanced predictability of fund availability.
What is your outlook for commercial VRP?
In terms of my outlook on cVRP, I believe it will unlock open banking opportunities in retail. I perceive it as a substantial stride forward in the domain of open banking payments, offering unparalleled convenience, control and security for both consumers and businesses alike. As a consumer, I value the autonomy it affords me, along with the ease of use and security features inherent in Open Banking, instilling confidence when engaging in transactions.
From a business standpoint, I am enthusiastic about the prospects cVRP presents for merchants to elevate the customer experience, curtail costs, and bolster conversions. By introducing a seamless and frictionless payment alternative, businesses can entice and retain customers while simplifying their checkout process.
There is a wealth of industry discourse, aims to ensure cVRP success by fostering ecosystem harmonisation, promoting interoperability, and strengthening consumer protection through liability regulations and better control to prevent fraud.
Looking ahead, I envision cVRP progressively gaining ground in the market from 2025 onwards, seamlessly integrating into our daily routines. As open banking payments become increasingly prevalent, I am confident that cVRP will assume a pivotal role in shaping the future of commerce. Its presence promises to drive innovation, streamline processes, and amplify convenience for both consumers and businesses alike.
What are your recommendations for regulators?
It’s evident that achieving harmonisation in the ecosystem and delivering value to all market participants are crucial components which will contribute to the success of open banking. While we recognise the significance of consumer protection in building trust in the payment method, it’s essential to avoid prolonged debates within the ecosystem that could impede progress. Instead, we should focus on collaborative efforts that prioritise innovation, efficiency, and inclusivity, ultimately offering valuable alternatives to cards , providing consumers and businesses with additional options while promoting innovation and inclusivity in the payment landscape.
Time is of the essence here, if UK is to remain at the forefront of payments innovation and wants to remain competitive. The proposed improvements in v4.0, aligning information flows with JROC workstream 4 recommendations, represent a crucial advancement for Open Banking’s success in retail and commerce. If mandated, it will ensure payment certainty and enable the delivery of clear error messaging which are essential for us to effectively rival card payments.
What is your recommendation for UK banks to adopt CVRP for their customers?
Banks face a critical juncture where they must embrace innovation with a calculated balance of risks to remain at the vanguard of industry evolution.
Ongoing discussions among industry bodies and regulators regarding cVRP pilots and rollout strategies have led to a degree of uncertainty. This uncertainty has prompted some banks to postpone their cVRP launch initiatives.
The payment landscape is in a constant state of evolution, emphasising the need for speed and agility. Banks must have a balanced approach to risk and navigate the competitive landscape shaped by a diverse array of players, each vying for a share of the growing digital payments market. NatWest stands out as a leader in innovation, spearheading the cVRP rollout and deserving recognition for their efforts.
Discover the benefits of Commercial Variable Recurring Payments for your business by booking a consultation with our open banking experts at Yapily. Enhance your payment processes and customer experience with tailored insights from the leaders in financial innovation. Connect with us today and take a significant step towards transforming your business operations.
