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UK open banking platform TrueLayer has launched the industry’s first variable recurring payment API for both sweeping and non-sweeping payments.
The novel payment option enables customers to automatically repeat money transfers between their own two accounts (sweeping) or other businesses (non-sweeping) through a single API without the need for re-authentication.
The Competition and Markets Authority (CMA)’s mandate to the UK’s nine largest banks, issued in July 2021 with a target of January 2022, and subsequently postponed by six months, only covers VRPs for sweeping. TrueLayer’s API, however, includes the non-sweeping payments mandate, making it the first open banking provider to deliver both recurring payment types.
“The mandated approach, while beneficial, only supports payments between an individual customer’s accounts, limiting the ultimate potential of VRP,” said Matt Parish, product lead for VRP at TrueLayer.
“We believe that to truly deliver on the promise of Open Banking, boost fintech innovation in the UK and provide businesses and consumers with payment options that work for them, every CMA9 and non-CMA9 bank should make VRP APIs for sweeping and non-sweeping available as soon as possible.”
For sweeping, TrueLayer’s VRP API facilitates recurring payments between the user credit, savings, and current accounts.
For non-sweeping, the company is collaborating with selected banks, offering businesses recurring payments to their customers for a range of services, including utility bills, subscriptions, and other forms of digital payments.
The VRP allows vendors to initiate the recurring collection of variable amounts within set parameters without needing the account holder to re-consent to each individual payment.
According to TrueLayer, multiple businesses are in line to go live with the two payment options soon.
“We have a number of clients that have seen the potential for VRP to deliver significant benefits to their business and their customers, working with us to implement sweeping and non-sweeping recurring payments in the coming months,” said Parish.
TrueLayer’s VRP API launch follows the first live open banking VRP transaction it executed with NatWest in December 2021.
Sweeping value for consumers and SMEs
With the availability of sweeping VRPs under the CMA’s mandate, bank account holders are expected to benefit from annual savings and better interest rates.
According to the Open Banking Implementation Entity (OBIE), sweeping will enable up to 20 million consumers and one million SMEs to save up to £300 million to £600 million each year.
The OBIE also estimates that up to 40 million consumers and six million SMEs will benefit from better interest rates, gaining up to £600 million to £1.2 billion annually.
NatWest leads VRP implementation among mandated banks
The CMA had initially mandated the nine UK banks – AIB, Bank of Ireland, Barclays, Danske, HSBC, Lloyds, Nationwide, NatWest, and Santander – to implement the VRP by 31 January 2022.
However, the deadline was extended by six months to July under OBIE’s recommendation in November last year.
In March, it was reported that Natwest’s open banking payment solution, Payit, also completed its first VRP transaction in a live environment.
Payit plans to pilot the VRP functionality in a live customer environment with NatWest Rapid Cash in the first half of 2022.
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