The Payment Systems Regulator (PSR) has responded to its December consultation on expanding Variable Recurring Payments (VRPs) to financial services, utilities and government sectors.
In its response, the PSR has published all non-confidential feedback from the Open Banking ecosystem. Participants in the consultation include Monzo Bank, HSBC, Apple and Open Banking Limited, among the 39 responses made public.
The call for views outlined initial proposals for how the PSR might facilitate the Phase One expansion of VRPs to financial services, utilities and both local and central governments.
VRPs are a payment function that allows for recurring transactions with varying amounts, rather than a fixed sum. Unlike traditional direct debits, which have a set amount and date, VRPs can adapt to changes in the amount being paid each time, providing greater flexibility for consumers and businesses.’
Stakeholder feedback
The PSR has summarised feedback from the consultation, noting support for better coordination but also concerns about the need for a Master Licensing Agreement (MLA) and whether it should have a central pricing element.
The PSR believes an MLA could effectively manage interactions between sending firms and payment initiation service providers (PISPs), and plans to work with the VRP implementation group to determine the specific rules for the MLA and identify the most suitable operator.
There was general support for some level of mandated participation, but feedback suggested that the PSR should not limit its focus to just the ‘CMA9’.
The PSR agrees with this standpoint but emphasises that having a substantial number of consumer accounts supporting VRPs is vital for Phase One’s success and will keep evaluating the need and extent of mandated participation.
In terms of pricing principles and possible price intervention, most respondents supported having a central price, but opinions varied on the best way to price API access for VRPs in Phase One. The PSR has said that it will explore various pricing methods and consider alternative measures, like price transparency or reporting requirements, to ensure effective pricing for VRP API access.
Moving forward, the PSR plans to present updated proposals for stakeholder feedback in the autumn and will also release a draft cost-benefit analysis alongside these proposals.
Kate Fitzgerald, Head of Policy at the PSR, said: “More than 10 million consumers and businesses are benefitting from open banking in the UK.
“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.
“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.”
In 2022, HSBC, who took part in the consultation, became the first bank to implement online VRPs.
