HSBC has become the first bank in the UK to complete the rollout of sweeping variable recurring payments (VRP). The £3tn bank today the managed rollout of the service, overseen by the Open Banking Implementation Entity (OBIE).
Sweeping VRP are the method chosen by the UK’s Competition and Markets Authority (CMA) for automated ongoing payments between a banking customer’s own accounts with external providers, such as moving excess funds into separate savings account or using them to repay a loan or overdraft accounts.
“Sweeping VRPs allow for the automated movement of funds between a customer’s own accounts without the need for any manual intervention once the initial consent is setup. This service can, for example, be used to pay off a monthly credit card bill, move money regularly into a savings account or to reduce an overdraft balance,” said George Miltiadious, Head of Open Banking Channel Management (UK) at HSBC.
“HSBC has embraced Open Banking as an opportunity to innovate and bring the best services and products to our customers. We’re looking forward to working with Third Party Providers to drive Sweeping adoption for the benefit of consumers across the UK.”
The announcement from HSBC follows the November 2021 extension of the timetable to implement sweeping VRP, after the CMA deemed the nine largest banks and building societies in the UK (the CMA9) unlikely to roll out sweeping VRPs by January 2022.
“The CMA’s decision in line with OBIE’s advice, is a win for competition and innovation, which will deliver significant benefits to consumers and small businesses. We’ve been anticipating a decision from the CMA on this for some time now and have been on standby to implement this by the end of this year,” said Imran Gulamhuseinwala, the OBIE’s implementation trustee, at the time of the extension.
The OBIE will now mandate Variable Recurring Payments for the purpose of sweeping, which is the automatic movement of money between an account holder’s different accounts. We like to think of it as the smarter version of direct debit payments.
Third-party providers at the ready
A part of the requirement is for the CMA9 to provide API access to third-party providers, allowing for easier transfer of funds between different financial services firms.
In the lead-up to full-scale implementation of sweeping VRPs by the CMA9 (Lloyds, Barclays, Nationwide, RBS, Santander, Danske Bank, HSBC, Allied Irish Banks and Bank of Ireland), third-party providers have made moves over the first half of 2022 to support the service.
In April, open banking payments provider TrueLayer, announced the launch of an API supporting both sweeping and non-sweepingVRP.
In June, Plaid and GoCardless each announced sweeping VRP services, with supporting developer docs and a sandbox for merchants to test their VRP preparedness.