The Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) have announced the creation of a new independent central operator for variable recurring payments (VRP), as part of the next steps for Open Banking in the UK.
It follows a letter sent earlier this month to Prime Minister Keir Starmer and Chancellor Rachel Reeves in which Nikhil Rathi, chief executive of the FCA, set out plans to support UK economic growth, citing the introduction of VRP.
In a statement published today (23 January), the FCA and PSR acknowledged that Open Banking Limited (OBL) has “been central to delivering progress”, and said OBL will now “play a key role” in establishing an independent central operator to coordinate how variable recurring payments are made.
The FCA and PSR stated that they expect “significant progress” in 2025, which will see live services available for consumers to make recurring payments to, including utility companies, government, and financial services firms.
“In addition, we are working with industry and trade associations to progress development of the commercial arrangements underpinning both variable recurring payments and use of Open Banking for ecommerce,” the FCA and PSR said in a statement.
They added that it is “critical that the collaboration seen in 2024 across the industry continues this year”.
VRPs give consumers the ability to control how much can be paid at one time or over the course of a month, thereby reducing the risk of unexpected expenditure.
For businesses, VRPs offer greater competition to current payment methods and could help reduce processing fees, as well as increase the proportion of customers who complete a payment, according to the regulators.
In the UK, there are now more than 11.7 million active users and in excess of 22.1 million Open Banking payments made monthly.
Earlier this month, the PSR made a commitment to working closely with the FCA to take forward work on the overall framework for commercial Open Banking payments, focusing on the initial phase of VRPs, over the next two years, following a mid-term review of its five-year Strategy.
Industry reaction
“The FCA’s support for the development of an independent central operator to drive forward Open Banking is a significant and commendable step towards fostering competition and innovation in the UK payments landscape,” said Francesco Simoneschi, co-founder and chief executive officer of TrueLayer.
“By championing an open, transparent – and most importantly, independent – operator, the FCA is ensuring that consumers and merchants will benefit from lower costs, greater choice, and more secure payments.”
He added: “This is a crucial move that not only supports the future of Pay by Bank, but also strengthens the UK’s position as a leader in digital financial services.”
Yapily’s Nicole Green
Nicole Green, vice president API product strategy, innovation and policy at Yapily, said: “We are pleased the FCA and PSR have come to a decision on who will drive forward the development of the cVRP MLA Operator.
“We look forward to working with OBL, UK Finance and the wider ecosystem to shape the Operator over the coming months.”
Green added: “Progress in this regard is crucial, along with the development of the commercial model and decision on bank participation, to launching Wave 1 use cases later this year.
“Ultimately, it is key to get going so that we can make crucial learnings that will enable us to progress to ecommerce use cases in 2026.”
Tom Burton, GoCardless’ director of external affairs and public policy, said: “Last week, the FCA wrote to the Prime Minister and Chancellor to say that, ‘certainty and predictability underpin business and investor confidence’.
“Today’s statement is welcome clarity that an independent central operator for variable recurring payments (VRPs) will be created. We need the regulators and industry to pull in the same direction now and work out how this will be done successfully with a view to launching VRPs as early as possible this year.”
