Open Banking ‘close to truly rivalling’ UK card networks

Open Banking ‘close to truly rivalling’ UK card networks

The Joint Regulatory Oversight Committee (JROC) assertions that the UK is keeping momentum with its Open Banking leadership ambitions have been welcomed by payments stakeholders.

Responding to the latest progress report from JROC earlier this week, Ben Ruffels, VP Public Policy at real-time payments provider Volt, praised the committee’s plans to pilot consumer-to-business Variable Recurring Payments (VRP) under a commercial API model.

In Ruffels view, the piloting of VRPs is a move “that will see Open Banking move closer to truly rivalling the card networks, delivering much-needed choice to UK consumers.”

He continued: “This major development will bring the instancy, security and cost-effectiveness of Open Banking payments to the heart of our digital economy.”

Although JROC’s update did detail much needed progress on the development and launch of VRPs, the Committee did note that some sections of its action plan are still ongoing or yet to begin, while some have been delayed.

JROC is a joint committee between the Payment Systems Regulator (PSR) and the Financial Conduct Authority (FCA), and engages heavily with Open Banking Limited (OBL) and the PayUK payments standards body.

Under JROC’s proposals, OBL – launched by the Competition and Markets Authority (CMA) in 2018 to develop a UK Open Banking Standard – will eventually hold chief oversight of British Open Banking development.

To support this, OBL was tasked with creating a data collection framework it can use to collect and analyse API performance and availability data. This process was completed in Q3 2023, but data collection began this quarter and is still ongoing and any necessary subsequent consultations will have to begin in Q2 2024.

The transition of OBL into an Open Banking oversight entity which JROC expects will ‘play a central role in the development and improvement of new and existing open banking propositions’ is also projected to occur in the second quarter of next year.

Meanwhile, the VRP pilot is due to commence in Q3 – however, this has been welcomed as a ‘rightly aggressive timetable’ by Ruffels, although he noted that the pilot will ‘require open, active and balanced engagement by Pay.UK with the Open Banking ecosystem, with strong oversight from JROC’.

Cultivation and retention of Open Banking leadership status for the UK has been a major talking point in the country’s payments circles this year, having been one of the main subjects of the Future of Payments Review published last month.

“We need to bring VRPs to ecommerce,” Ruffles asserted. “VRPs will give consumers the ability to initiate recurring payments of varying amounts, directly from their own bank account to the bank account of their service provider, within predefined limits and time periods they control. 

“The pilot will initially focus on enabling consumers to make VRPs to financial services firms, utilities and government, given existing consumer protections in these areas. We should look to extend VRPs to ecommerce use cases without delay.”

There is still more work to be done, however, particularly with regards to consumer dynamics. For example, Volt’s VP of Public Policy noted that a successful pilot requires strong market participation.

On the other hand, the PSR, for its part, has sought to address this. The regulator has suggested making the participation of the CMA9 group of banks – Barclays, HSBC, Lloyds Banking Group, Nationwide Building Society, NatWest and Santander – in the pilot mandatory, which would cover around 90% of UK bank accounts.

Concluding, Ruffles remarked: “We look forward to working closely with the PSR, Pay.UK and industry colleagues to make the pilot a success.”