Merchants, payment service providers (PSPs) and third-party providers (TPPs) recognise the potential of commercial variable recurring payments (CVRP) to deliver better payment experiences, more choice, and lower processing costs, but said that lack of bank support is impeding delivery, according to a new report.
The findings are published in a new survey report, ‘Variable Recurring Payments and The Future of Payments’, published by account-to-account payment infrastructure provider Token.io and Open Banking Expo.
The survey was conducted among more than 100 senior leaders across UK and European banks, merchants, PSPs and TPPs to gauge their readiness and attitudes towards CVRP in the UK and dynamic recurring payments (DRP) in Europe.
Of the merchants surveyed, 57% plan to convert card payments to CVRP, the report revealed.
Meanwhile, both UK and European PSPs and TPPs recognise the importance of CVRP in driving greater merchant adoption of A2A payments, with 97% describing CVRP as “important”, and 28% and 33%, respectively, as “extremely important”.
Token.io’s chief product officer Charles Damen
“This year’s survey findings provide good evidence that there is indeed scope for a model that provides sustainable compensation for banks and also delivers a strong incentive to merchants to adopt CVRP as a lower cost alternative to debit cards,” said Charles Damen, chief product officer at Token.io.
Respondents to the survey expect CVRP and DRP to surpass traditional methods, like card-on-file and direct debit, at 59% and 51%, respectively, in delivering superior user experiences and increasing payment success rates.
One-click ecommerce payments were identified as a top use case.
Ellie Duncan, head of content at Open Banking Expo, added: “Merchants are ready to embrace commercial VRPs but to increase confidence and enable the frictionless user experience that is needed to encourage consumer adoption, the bank infrastructure and support needs to be in place.
“While there has been progress, we are yet to see the momentum that many across the ecosystem were expecting by now.”
Although 79% of surveyed banks believe CVRP will benefit their account holders and the UK payments ecosystem, only 32% expect to support CVRP for low-risk use cases in 2025, and just 26% for ecommerce use cases.
With a lack of bank support, 73% of those surveyed suggested that regulatory intervention may be necessary.
“Our 2024 industry survey unveils key challenges that need to be addressed to unlock the full potential of CVRP and DRP in delivering greater consumer choice and enhanced payment experiences,” said Todd Clyde, chief executive officer of Token.io.
“We believe these survey results will reignite a sense of urgency and collaboration among industry stakeholders, working together to overcome obstacles and shape a brighter, more innovative future for the payments landscape.”
To learn more, download the full report here.
