Out-Law News 1 min. read
Recurring payment consultation will help move towards widespread use of ‘open’ payment method
12 Feb 2025, 4:07 pm
A recently launched consultation seeks to lay the groundwork for the launch of commercial variable recurring payments (cVPRs) method across the UK, ensuring that there are no material errors or deficiencies in the documents underpinning this innovative payment product.
cVPRs offer businesses greater flexibility and control than the use of traditional recurring payment mechanisms.
Payments expert Ann Zheng of Pinsent Masons was commenting following the launch of a consultation (17 pages/3.2 MB) by Open Banking Limited (OBL), the standard-setting body for open banking in the UK. The consultation, which is on the multilateral agreements (MLA) which will underpin cVPRs, sets out to tackle any issues of poor service delivery or customer experiences of cVPRs.
Zheng said: “The UK anticipated that cVPRs will be launched in the UK in the second half of 2025 for a limited number of use cases. For instance, utility companies, payments to central and local government, and payments to a range of regulated financial products such as insurance and mortgages. This is known as wave one functionalities, with wave two set to be expended to accommodate e-commerce transactions in 2026.
Unlike traditional recurring payments, cVPRs allow businesses to set up variable payment amounts and frequencies based on their commercial needs. This innovation is expected to enhance the efficiency and convenience of payment processes for both businesses and consumers.
The MLA is a critical component in the implementation of cVPRs. It compromises a participation agreement, a rulebook, and various schedules that outline the operational and legal framework for cVPRs. The participation agreement establishes the contractual relationship between the operator and each participant, which can be either payment initiation service providers (PISPs) or account servicing payment service providers (ASPSPs). The rulebook details the rules all participants and the operator must adhere to, ensuring a standardised approach to cVPRs.
The consultation’s primary objective is to ensure that MLA documents are robust and fit for purpose, seeking feedback from industry stakeholders including banks, fintech companies, and other financial service providers. OBL seeks to address any potential issues that could negatively impact the delivery and customer experience of cVPRs.
OBL has published the draft MLA documents alongside the consultation paper, inviting responses via an online survey or email by 28 February.
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