The Payment Systems Regulator (PSR) has published a response to its December call for views, which set out initial proposals on how it could support the first phase of expansion of Variable Recurring Payments (VRPs) to regulated financial services, regulated utilities sectors, and local and central government.
Enabled through open banking, VRPs enable customers to set up recurring payments of varying amounts (for household bills for example) with greater visibility and control compared to existing payment methods.
Kate Fitzgerald, head of policy at the Payment Systems Regulator
Kate Fitzgerald, head of policy at the PSR, commented: “More than 10 million consumers and businesses are benefitting from open banking in the UK. Our call for views response aims to provide transparency around what’s needed to make sure open banking keeps growing, delivering new financial opportunities and services that increase choice and flexibility for consumers.
“This is an important step in keeping up the 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.”
The PSR has summarised stakeholder feedback regarding VRP expansion, and revealed its viewpoints in response. It revealed that it saw support for greater levels of coordination, although concerns exist about the need for a multilateral agreement (MLA). The PSR continues to think that an MLA would be an efficient way of managing relationships between sending firms and payment initiation service providers (PISPs). It now plans to 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.
PSR: Increasing open banking transparency
Stakeholders also appear to support some level of mandated participation, while some believe the PSR should not only focus on the ‘CMA9’. The PSR explained it agrees with this, however, it still thinks a sufficiently large number of consumer accounts supporting VRPs is crucial to Phase 1’s success.
While more respondents than not supported the need for some form of central price, there were mixed views on how best to price Application Programming Interface (API) access for VRPs in Phase 1. The PSR will evaluate different pricing approaches, including those suggested by respondents.
The PSR will also consider the potential effectiveness of interventions that do not establish a VRP API access price, such as price transparency or reporting requirements.
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