Commercial VRPs went live in June 2026 in the UK, offering an account-to-account alternative to Direct Debit. Here is what they do and where they stand.
Variable Recurring Payments let a customer authorise a regulated third party to take money from their bank account on a repeating basis, within limits the customer sets. The payments run on open banking and settle through Faster Payments in the UK, moving funds directly from one bank account to another rather than through a card network.
Where a VRP is established, the customer agrees a maximum per payment, a maximum over a set period and, optionally, an end date, granting it once through a strong customer authentication process.
A payment initiation service provider can then collect varying amounts inside those limits without the customer approving each transaction. The customer can view, amend or cancel the consent in their banking app.
How VRPs differ from existing rails
Predominantly, Direct Debit and card-on-file cover recurring billing in the UK today.
VRPs change the mechanics in three ways:
- Settlement is instant through Faster Payments, against up to three working days for Direct Debit.
- The customer caps spending at source rather than relying on a refund after a payment is taken.
- And payments move account-to-account, removing the card networks from recurring transactions.
Lower processing costs and faster settlement are the appeal for businesses collecting recurring payments.
Richard Mould of the UK Payments Initiative (UKPI) made visibility of the consumer argument on the Payment Expert Podcast.
Consumers often have little sight of what they have authorised and at what limits, Mould said, where a VRP would show each permission and its constraints inside the banking app.
He compared adoption to contactless: “Once you start using it and get familiar with it, it becomes a habit. Consumers aren’t interested in payments,” he said, so the work is getting the infrastructure right enough that billers offer the option.
How VRPs will roll out in the UK
The Competition and Markets Authority required the UK’s nine largest banks to build VRP APIs for “sweeping” – automatic transfers between a person’s own accounts, such as moving money into a savings pot. Those services went live from 2022.
Commercial VRPs extend this to payments made to businesses. UKPI began operating a commercial VRP scheme on 2 June 2026. The Financial Conduct Authority (FCA) called the launch a major step forward for open banking. Mould described it as the UK’s first new payment scheme in roughly 20 years, and as a change in what drives open banking.
“It stops being a compliance exercise,” he said, with banks, third-party providers and merchants now aligned around the scheme’s commercial success.
Wave 1 covers regulated and lower-risk sectors such as financial services, government, utilities and rail. Participating banks covered around 75% of UK current accounts at launch. Wave 2, which opens commercial VRPs to general e-commerce, is expected in the second half of 2026.
Mould said a Treasury statutory instrument to mandate participation and address competition risk is a dependency for Wave 2, with work on Wave 1 proceeding in the meantime.
Banks earn interchange on the card payments commercial VRPs would displace, which raised questions over their commitment to the scheme. Mould pointed to their role in building it, describing cross-industry calls with 25 to 30 participants from banks and fintechs working through problems together. “We do not have a ‘them and us’ scenario,” he said.
VRPs and Direct Debit
Direct Debit is the incumbent VRPs are measured against, and it is not retreating. The method processed a record five billion transactions in the UK in 2025, according to a Pay.UK report, which recorded a 98% awareness rate and 92% satisfaction among consumers who use it.
David Crawford, Chief Strategy and Transformation Officer at Pay.UK, told Payment Expert the two methods serve different needs.
“While Direct Debit continues to play an important and trusted role, it is one part of the payment mix and will not meet every user need or circumstance,” Crawford said.
“Supporting the development of complementary payment options, including commercial variable recurring payments (cVRPs), will therefore be important in ensuring that recurring payment solutions remain inclusive, accessible and responsive to the changing needs of consumers and businesses.”
E-commerce remains out of scope until Wave 2.
