The UK's Payment Systems Regulator says it will assess the necessity and scope of mandated participation in Phase 1 expansion of Variable Recurring Payments (VRPs) following stakeholder feedback.
VRPs are a form of payments instruction that allows customers to authorise registered payment service providers to initiate payments from their bank account on an ongoing basis, where the timing or the amount might vary, within agreed limits.
Late last year, financial regulators agreed plans for a Phase 1 roll out of non-sweeping VRPs by the third quarter of 2024. The blueprint recommends payments to regulated utilities, regulated financial services, and central and local government as the first step in creating wider uses for VRP and open banking payments.
The PSR called for stakeholder feedback on the plans, which have now been published, highlighting some potential areas for tweaks:
- Mandated participation: There was support for some level of mandated participation, but also a suggestion that the PSR should not focus only on the big nine lender (CMA9). The regulator says it agrees with this but it still thinks a sufficiently large number of consumer accounts supporting VRPs is crucial to Phase 1’s success and will "continue to assess the necessity and scope of mandated participation".
- Coordinating expansion through a multilateral agreement (MLA): There was support for greater coordination, however, concerns were raised around the need for an MLA and whether it should include a central price. However, the PSR says it continues to think that an MLA could be an efficient way of managing relationships between sending firms and payment initiation service providers. The PSR will work closely with the VRP implementation group to look at what specific rules an MLA should include and who might be best placed to operate it.
- Pricing principles and possible price intervention: While more respondents than not supported the need for some form of central price, there were mixed views on how best to price API access for VRPs in Phase 1. The PSR says will evaluate different pricing approaches.
The regulator will now offer updated proposals in the autumn for further stakeholder comment.
Kate Fitzgerald, head of policy, PSR, says: “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.”