Variable Recurring Payments - New UK working group drive to help accelerate and improve adoption
Tink’s Head of VRP, Andrew Boyajian, has been named to a new VRP working group in the UK following proposals published this year by the Joint Regulatory Oversight Committee (JROC). Andrew will be representing the European Third Party Providers Association (ETPPA) in the group after they chose him to represent them in discussions. Tink’s Head of Industry & Wallets, Jan van Vonno, has also been admitted to join the other new JROC working group which is focused on the design of the future open banking entity. Here, we spoke to Andrew to find out what the VRP group hopes to achieve in the coming months, such as establish standard principles, promote collaboration, and drive competition in this area of open banking.
Tink is playing a key role in a new working group in the UK, advocating for standardisation and faster implementation of VRPs in open banking.
The lack of schemes and standards has slowed progress so far, leading to complex bilateral agreements between banks and third-party providers.
The working group aims to establish standard principles to facilitate collaboration and understanding between parties, promoting competition and benefiting end-users.
JROC, which is co-chaired by the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR), is spearheading the next phase of open banking's growth in the UK. The group’s recommendations empower the industry to take charge of delivering VRPs, prioritising user-centric solutions. Rather than relying on regulators to dictate actions, the industry can proactively problem-solve and innovate. We expect this collaborative approach to yield superior products and experiences compared to mere compliance-driven efforts by banks.
Recognising the significance of variable recurring payments in this evolution, the new working group will emphasise the need for standardisation and accelerated implementation, and “make sure the correct foundations are in place for open banking to grow in a safe and sustainable way”.
Establishing standards
“One of the primary obstacles hindering the progress of VRP lies in the lack of principles and standards. Banks have faced difficulties in negotiating multiple bilateral agreements with third-party providers (TPPs), resulting in slower advancements,” said Andrew. “To address this, the new working group aims to develop standard approaches and a common language for liability and dispute management, which can be seamlessly integrated into bilateral agreements.
“The ultimate goal is to create a framework that fosters a faster and smoother partnership between banks and TPPs, without imposing rigid rules but rather enabling creative application of the established principles.”
Andrew stressed the importance of collaboration and openness among all stakeholders, and emphasised that the willingness to collaborate extends not only to the application of principles but also to the creation of principles themselves. As in any marketplace, healthy competition is also crucial, and this approach ensures that VRP becomes an accessible and user-friendly payment method, with positive competitive impacts benefiting all parties involved.
“Having some of these standard principles will allow competition amongst the TPPs as well - and that ultimately benefits end users. Because it's going to make sure that TPPs are negotiating the best terms, that they're providing the best support, and that they're figuring out ways to actually create those selling points for them that are unique, which should translate to benefits to either merchants or billers or consumers.”
Taking a holistic view
Andrew and the working group also recognise that the focus should be across many potential use cases. A comprehensive and long-term perspective of VRPs across various payment verticals is crucial. By adopting a holistic view and maintaining an open dialogue, the working group strives to foster an innovative and resilient VRP ecosystem that drives growth and delivers long-term value to all stakeholders involved.
“It's a balance of appreciating the need for speed to honour some of these timelines that JROC and UK Finance have set, but also keeping in mind that we need to really look holistically at VRP and not try to solve just for, say, 5% of the potential payment volume.”
At Tink, we strongly believe that VRPs will play an important role in the evolution of payments and that initiatives like the new working groups, with buy-in from major stakeholders, can boost the momentum behind this exciting solution. Watch this space…
If you’d like to hear more from Andrew on VRPs, why not check out his recent appearance on our Fintech Findings podcast.
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