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In late July, the CMA mandated the UK’s nine largest banks to implement Variable Recurring Payments (VRPs) for sweeping. This means that customers will be entitled to make automatic transfers of money between accounts using Open banking-powered services.

As we discussed during our 16th September Campfire, this regulatory move made by the CMA and OBIE can be a real game-changer. In order to learn more about VRPs and Sweeping, we sat down with Todd Clyde, CEO at Token, to get his views on this hot Open Banking topic and to give us some insights into one of his company latest publication: ‘New Survey Report on Variable Recurring Payments and Sweeping


What is the significance of the green light for the OBIE to mandate sweeping through VRPs?
“The green light for the OBIE to mandate sweeping through Variable Recurring Payments (VRPs) marked a significant milestone for A2A payments. VRPs have the potential to offer a more secure, faster and cost-effective alternative to direct debit and card-on-file payments, which represent a massive slice of overall online payments. Suppose you think about VRPs and sweeping as giving consumers the ability to programme rules for their payments. In that case, VRPs and sweeping could also open up new forms of financial automation for PSPs, banks and merchants.

Looking at sweeping specifically, as the OBIE have rightly highlighted, sweeping can also deliver significant benefits to society. In the UK alone, around 11 million people don’t save regularly or have little savings. Sweeping could help start savings habits by making saving smarter and more effortless. It can also help both consumers and SMEs make their money work harder. I think we can all agree this makes VRPs and sweeping that much more exciting”.


You recently published a report which looks at VRPs and Sweeping, featuring insights from over 55 senior Open Banking and Payments professionals. What are the key results emerging from this study?
“Our key results revealed a core theme: appetite. We found that there is a considerable appetite for VRPs among merchants. Every merchant we surveyed indicated they would make VRPs available to consumers once banks support them, and 69% of merchants would also actively attempt to convert existing card-on-file payments to recurring bank transfers”.


In your opinion, what needs to happen next to keep the momentum going?
“Sixty per cent of the Open Banking and payment professionals we spoke to (representing ASPSPs, payment providers, TPPs, regulators and merchants) believe that the VRP fee structures banks would charge to PISPs should be regulated. We also found that most people (65%) believe a bilateral or multilateral agreement is required between PISPs and ASPSPs to address liability.

With a looming deadline for the CMA9 to implement VRPs, the industry must swiftly define consumer protection mechanisms and build commercial models with banks. It will take time to get this right. However, I believe the tremendous appetite for VRPs and sweeping that we’ve identified in our recent study will fuel significant progress”.


With VRPs for sweeping now mandated, what are, in your view, the key opportunities that financial services and fintech players can grab? Do you think there is any main risk that might need to be tackled?
“Opportunity and risk are two sides of the same coin. Regarding VRPs and sweeping, financial institutions and fintechs have three such coins to consider: consumer education, consumer protection and user experience.

A2A payments will become mainstream because the costs, cash flow, and security benefits are so compelling for merchants, and the user experience is so good for consumers. And VRPs and sweeping can drive even better, smarter user experiences — but as we have seen with A2A payments in general, achieving consistent user experiences across banks makes all the difference. The OBIE has helped achieve consistency in the UK, and Europe is on the road to the same destination. Now, the challenge — and opportunity — is to replicate that with Variable Recurring Payment and Sweeping journeys.

Both financial institutions and fintechs also have an opportunity to start educating consumers that VRPs and sweeping will be part of their financial lives within two years. But, as we begin to stoke consumer awareness and turn that awareness into consumer demand, we risk a false start if we don’t get the next part right: consumer protection.

Consumer protection is the lynchpin of VRPs and sweeping. If financial institutions and fintechs work together, we have a tremendous opportunity to create a balanced, practical approach to consumer protection that will deliver on the promise that sweeping and VRPs can truly make consumers’ financial lives better. Get it right, and VRPs and sweeping will ignite explosive growth for A2A payments. Get it wrong, and we risk walking back the inroads open banking payments have already made”.


What are, in your view, the most exciting use cases that are emerging and are most likely to emerge over the next year?
“Our research reveals that the three most compelling use cases for variable recurring payments are subscription payments, bill payments, and one-click e-commerce payments (think Amazon). Personally, e-commerce and subscription payments are the use cases that I’m most excited to use myself. I often joke that I’m not retiring until I can step out of an Uber and my bank account gets charged without me doing anything. But in all seriousness: I genuinely believe we’re entering a world where I will be able to pay with my account-on-file instead of my card-on-file. And that’s an exciting world”.

Helen Child, Founder & CEO, Open Banking Excellence

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