At least 95 jurisdictions around the world have some form of open banking, and the UK is one of them. Open banking gives third-party service providers access to consumer data from traditional banking systems through application programming interfaces (APIs).

The first phase of open banking in the UK was about data access and getting banks to open account information to third parties through standardized APIs. The second phase, still unfolding, is largely about variable recurring payments (VRPs). VRPs enable customers to connect authorized payment providers to their bank accounts and make payments on their behalf. The goal with VRPs is to make recurring payments programmable, consent-driven, and genuinely useful for commercial relationships.

Below, we elaborate on what open banking variable recurring payments are, where they’re being used in the UK today, and how businesses should be thinking about their payments infrastructure ahead of any upcoming commercial mandate.

Highlights

• Sweeping VRPs are already live. The Competition and Markets Authority (CMA) mandated that the nine largest banks and building societies in the UK implement a VRP open banking API.

• The consent model makes VRPs different. VRP authorization is scoped to customer-defined parameters and is revocable by the customer.

• To be viable, commercial VRP likely needs a settled liability framework for disputed or erroneous payments and an economic model that persuades banks to invest in commercial VRP infrastructure.

What are open banking variable recurring payments?

A variable recurring payment (VRP) is an open banking payment instruction that lets a third party initiate multiple payments from a customer’s bank account over a set period of time. It exists within a set of preagreed, customer-defined parameters and generally doesn’t require reauthentication for each transaction.

The parameters separate VRPs from a blank authorization. When a customer sets up a VRP, they define a maximum payment amount, a frequency limit, a time window, and a destination account. Every subsequent payment must fit inside those boundaries, and the customer can revoke consent.

There are two categories of VRPs:

• Sweeping VRPs: Sweeping refers to automatically moving money between bank accounts owned by the same person according to preset rules. Sweeping VRPs do this via API (e.g., transferring surplus funds from a checking account to a savings account when the balance exceeds a set threshold). The CMA has mandated sweeping VRP support from the CMA9, the nine largest banks and building societies in the UK.

• Commercial VRPs: Commercial VRPs extend the same mechanics to payments made from people to businesses. This category covers use cases such as subscriptions, on-demand billing, and utility payments. Participation from banks has so far been voluntary and uneven.

What is the evolution of open banking in the UK?

The CMA first mandated that the nine largest UK banks implement a VRP open banking API to enable easier sweeping of funds within customers’ own accounts. It then clarified the definition of sweeping so that the CMA9 could deliver on it in 2022. As of early 2026, the use of VRP beyond sweeping is much-discussed but still just in the beginning stages in practice. The UK Payments Initiative (UKPI) was established by 31 firms (including all major UK retail banks) in late 2025 to operate a commercial VRP scheme. This suggests that VPR might soon be ready to expand into the commercial sphere.

How do variable recurring payments enhance open banking in the UK?

Existing payments systems have encountered limits and pitfalls with modern business models. Here’s how VRPs are improving on available systems:

• Consumers have control: With direct debits, the consumer hands over control to the payee, and cancellation requires action from the payee or a bank dispute. VRP consent is held by the bank and can be revoked by the customer unilaterally, without involving the business collecting the payment.

• Payment amounts reflect actual usage: A direct debit for a variable utility bill either collects an estimated average or requires advance notification of each amount. A commercial VRP can pull exactly the amount owed, up to the preagreed ceiling, on the billing date. This removes estimation errors as well as the administrative overhead of variable-amount direct debit management.

• Richer data travels with the payment: Open banking payments carry structured data (e.g., references, account identifiers, time stamps) in a way that card payments can’t always do.

• Authorization gets easier: Up-front VRP consent covers subsequent payments within the agreed parameters. This matters most for high-frequency, low-value transactions where repeated authentication costs users time.

Where are variable recurring payments being used in the UK today?

A handful of pilot programs from banks and financial technology businesses (fintechs) are currently testing commercial use cases for VRPs. These give a sense of where things are heading.

Here are some use cases:

• Overdraft protection: Rather than dipping into an overdraft and paying fees, a customer can set up a sweeping VRP that pulls from a secondary account or savings pot to cover a shortfall.

• Savings automation: Apps can have built-in sweeping-based features that move surplus funds into savings or investment accounts automatically within customer-set ceilings.

• Variable subscription billing: Historically, the on-demand economy (e.g., pay-per-use gym access, usage-tiered software, streaming services with variable consumption) has had to wedge variable billing into structures designed for fixed amounts. Meanwhile, cards carry interchange costs, chargeback exposure, and card-on-file liability. A commercial VRP bills exactly what’s owed, within preauthorized limits, directly from the customer’s bank account.

• Utility billing: This is a hypothetical use case, but VRPs could be a good way to match payment collection with actual usage rather than estimated direct debit amounts.

What challenges are slowing variable recurring payment adoption in the UK?

The sweeping VRP framework is working well, but commercial VRPs don’t have the same momentum. The structural reasons for that are outlined below.

• Bank readiness is inconsistent: The CMA9 implemented sweeping VRPs under mandate, but API quality, reliability, and documentation still vary considerably. Beyond the CMA9, there’s no obligation for other banks to support VRPs. This means the addressable customer base for any VRP-dependent product is narrower than the total UK market.

• There’s no commercial model for banks: Banks have not yet been strongly incentivized to invest in improving their VRP infrastructure or extending it to commercial use cases. Until there’s a viable revenue model, commercial VRP expansion will likely move slowly.

• Regulatory clarity is incomplete: The Joint Regulatory Oversight Committee (JROC) has signaled that a framework for commercial VRPs is coming, but the specifics aren’t fully settled. Direct debits have the Direct Debit Guarantee, and cards have chargeback avenues; VRPs will likely need something equivalent that consumers and businesses can rely on before commercial adoption scales.

• Third-party provider (TPP) fragmentation creates integration overhead: Each TPP connects to bank APIs directly or through aggregators, and the consistency of those connections affects payment reliability. A VRP payment that fails (e.g., because a bank API timed out) needs a defined resolution path that currently isn’t standardized.

How close is the UK to broader commercial variable recurring payments?

The regulatory will exists for commercial VRPs, and much of the infrastructure is in place. What’s needed now is a multilateral agreement between banks, TPPs, and payment schemes about liability, as well as economics that would make a mandated commercial framework viable.

The realistic timeline for a mandated commercial VRP framework with consistent bank participation could be as soon as 2026, though individual banks might launch commercial VRP offerings first voluntarily.

Two things would likely accelerate that timeline:

• A settled liability model for businesses and consumers: Consumers need to know who’s responsible if a VRP payment is taken in error. Businesses need to know their exposure if a payment fails or is disputed.

• A viable economic model for banks: Without a mechanism for banks to earn revenue from commercial VRP APIs, there’s no incentive to build and maintain high-quality infrastructure.

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