Commercial variable recurring payments (cVRPs) are set to reshape how UK consumers pay for everything from utilities to subscriptions – but the road to e-commerce is longer than many hoped
The UK Payments Initiative (UKPI) is weeks away from launching the country’s first commercial variable recurring payment (cVRP) scheme, with participating banks and fintechs due to complete share subscription in May ahead of a go-live shortly after.
UKPI has been tight-lipped on a precise launch date, but testing is well underway and scheme governance is the last piece outstanding.
As Payment Expert understands, an exact launch date for cVRPs could arrive during the first week of June, in alignment with Money20/20 Europe in Amsterdam.
What are cVRPs?
cVRPs are an open banking technology which allows consumers to authorise a merchant to take payments directly from their bank account on an ongoing basis, without re-authenticating every transaction.
Where a standing order fixes an amount and date, and a direct debit is merchant-initiated but rigid, a cVRP allows payments to flex within limits the payer has agreed upfront.
A utility customer using variable amounts of energy each month can be billed accurately without a new authorisation each time – the same logic applies to subscriptions, loan repayments, and further down the road, one-click e-commerce.
According to A&O Shearman, cVRPs already account for 16% of all open banking transactions in the UK, largely through sweeping between accounts held by the same person. cVRPs extend that to third-party merchants, which is where the payments industry’s long-term interest lies.
The scheme and its scope
In 2025, 31 firms from across the payments and open banking ecosystem came together to establish UKPI, tasked with expanding VRPs into commercial applications.
Wave one covers regulated financial services, utilities, rail, government, and charities – chosen for their low fraud risk and existing consumer protections that fit the scheme’s dispute framework. E-commerce sits in wave two.
One argument which has followed UKPI since its formation is whether the banks funding it have a genuine interest in making it succeed, given that cVRPs compete with card payments on which those same banks earn interchange.
Jack Wilson, Public Policy Lead at TrueLayer says: “It’s not just cards that VRP is competing against – it’s direct debits too,” he said.
“Banks don’t get much, if any, revenue from direct debits. So this might actually be a net gain for them, because they are getting solid revenue through VRP.”
It’s true the underlying infrastructure – the APIs required to run cVRPs – were built under regulatory compulsion and have largely been running as cost centres. Wave one gives banks a commercial reason to productise what they were already obliged to maintain.
“They’re sitting there as infrastructure which is at the moment a cost centre for them,” Wilson said. “This is the start of commercialising those APIs that they have to have. It’s a no-brainer, really, unless they want to continue operating them as a cost centre.”
TrueLayer has been processing VRP transactions in financial services ahead of the wider scheme launch. Wilson said the utility use case – long anticipated as a natural fit given the need for variable billing – was “days away” from opening up at the time of TrueLayer’s Bank on File event held in London in May.
What is blocking wave two?
Wave two, expected in late 2026 or early 2027, covers wider e-commerce and lending use cases. The central obstacle to this second wave is currently a competition law exposure that has quietly shaped UKPI’s entire design, as noted by Yapily.
The issue is that UKPI, in setting a price that flows between fintechs and banks, is effectively creating an interchange-like arrangement – and banks have previously watched card schemes face prolonged litigation over exactly that kind of pricing structure.
“What UKPI is doing is creating a form of interchange between TrueLayer and banks, and the banks just don’t want to be exposed to the same kind of risk you see with card interchange litigation,” Wilson noted.
The Data Use and Access Act provides a route through, however. If the Financial Conduct Authority (FCA) has statutory powers to mandate participation and oversee pricing, the competition law risk diminishes considerably.
Wilson said: “If the FCA is basically part of the system of setting the price, or requiring participation, then some of that competition law risk goes away.”
“We’re waiting for a statutory instrument from the Treasury, and then that’ll let the FCA do their rulemaking – and as soon as that legislation passes, we can just go.”
In January, the FCA and Payment Services Regulator (PSR) – which is being folded into the FCA – confirmed they would not carry out competition investigations into the cVRP pricing arrangements for phase one, giving UKPI certainty to continue without delay. That cleared the path for wave one, but wave two still depends on how quickly the UK Treasury moves.
Consumer adoption and the naming debate
The cVRP rollout is bound up with a broader effort to establish pay by bank – and its stored-credential form, ‘bank on file’ (as Truelayer coins cVRPs) – as a standard checkout option.
Amazon is live with TrueLayer’s pay by bank product but has positioned the payment option lower in its stack for now.
Rajni Tiwari, Head of Payment Acceptance at Amazon UK, said the company was deliberately holding back marketing spend on pay by bank until conversion performance from lagging banks meets internal thresholds.
“As soon as we make some of our performance goals, the marketing budget will follow,” he said, noting that first-time user conversion rates with certain banks were running at around 50%, a figure he described as unacceptable.
“If these customers are coming in and one in two is failing, they’re failing customer trust. They were sceptical, they just came to try it, the fact that it’s not working means any marketing budget we put in, we lose half of those customers.”
How the UK’s banks respond to this is a question for another day.
Tiwari added that Amazon was also tracking a more nuanced consumer preference around friction. A subset of customers, he said, actively wants the additional authentication steps that pay by bank currently requires, as it gives them greater visibility and control over their payments.
Balancing that against the push for a smoother flow is something Amazon is continuing to work through. “We’ll use this to inform how we go with friction in the future,” he said.
For merchants facing sharper cost pressure, a more active approach is warranted. “If you put pay by bank at the top of the checkout, you’re more likely to get hits on it,” Wilson said.
“We stand behind merchants with a lot of resources – this is how you build a flow, this is what it should look like on the checkout, this is how you steer customers towards it.”
There is an argument to make that pay by bank may need a standalone identity – something analogous to Swish in Sweden or the various domestic A2A schemes elsewhere in Europe – to build mainstream recognition.
But Wilson is unconvinced. “Pay by bank says what it does on the tin – you pay by your bank. Bank on file – you put your bank on the file.”
Whether a monosyllabic brand would accelerate adoption or simply add abstraction is of course unproven, and Wilson’s view is that the merchant will own the consumer experience regardless of what the underlying scheme is called.
The FCA and PSR will assess industry-led cVRP adoption towards the end of 2026. That review will determine whether the commercial case for accelerating wave two holds or whether the e-commerce timeline slips once more.
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