INSIGHTS ¦ Commercial Variable Recurring Payments

UK Finance


This report discusses the implementation and governance of Commercial Variable Recurring Payments (cVRP) in the UK, focusing on model clauses that could potentially form a part of multi-lateral or bi-lateral contracts. It examines various aspects of the cVRP system, including payer protections, risk management, and the regulatory framework, aiming to foster a robust, efficient, and secure environment for these types of payments.

Key Points

  1. Definition and Scope: cVRPs are an evolution of the payment industry, leveraging open banking frameworks to enable variable recurring payments.
  2. Regulatory Background: Governed by the PSRs 2017 and the CMA Order, cVRPs lack a solid regulatory mandate, which leads to reliance on contractual agreements.
  3. Stakeholder Engagement: Wide participation from banks, fintechs, and other payment service providers under the oversight of UK Finance and Addleshaw Goddard.
  4. Standardisation and Clauses: Development of model clauses for voluntary adoption, aiming to standardise practices and reduce transaction costs.
  5. Risk Management: Emphasis on robust biller onboarding and monitoring processes to mitigate risks associated with bad actors in the system.
  6. Consumer Protection: Consideration of existing and potential future protections under cVRP transactions.
  7. Technological Infrastructure: The importance of maintaining adaptable and secure API standards for cVRP transactions.
  8. Change Management: Strategies for managing and communicating changes in cVRP standards to ensure consistency and minimize disruption.
  9. Future Directions: Potential for an industry-wide multilateral agreement to further streamline and secure cVRP practices.
  10. Compliance and Legal Considerations: Continuous review of competition and data protection laws to align with evolving payment practices.
  11. Dispute Resolution: Focus on developing effective mechanisms for handling disputes arising from cVRP transactions.
  12. Record Keeping: Importance of detailed and accessible records to support transparency and facilitate dispute resolution.
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Key Statistics

  • Participation from 12 major UK Finance members, including six banks and five fintech companies.
  • Development led by a diverse steering committee, with representation from across the financial services industry.
  • Proposed standards aim to reduce the transaction cost of bilateral negotiations and enhance user experience.
  • Adoption of model clauses is entirely voluntary, with no regulatory obligation enforcing their use.

Key Takeaways

  • cVRPs offer a flexible and potentially efficient payment method but require careful governance to ensure security and trust.
  • Effective stakeholder collaboration is crucial for the development and acceptance of cVRP standards.
  • There is a significant focus on risk management, particularly regarding the onboarding and monitoring of billers.
  • Consumer protection is a priority, with ongoing discussions about extending existing safeguards within the cVRP framework.
  • The development of a multilateral agreement could standardise practices and reduce inefficiencies in the cVRP market.
  • Continuous technological and regulatory updates are necessary to adapt to the evolving payment landscape.
  • Record-keeping plays a vital role in ensuring transparency and accountability in cVRP transactions.
  • Dispute resolution mechanisms must be robust to maintain consumer confidence and system integrity.
  • The industry must remain vigilant against the misuse of cVRP systems by bad actors.
  • Future enhancements may include stricter regulations and expanded protections for users.
  • Collaboration with regulatory bodies is essential for the successful integration of cVRP into the broader payment ecosystem.
  • The model clauses serve as a foundational step towards a more regulated and structured cVRP environment.

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