UK’s CMA Introduces Variable Recurring Payments to Open Banking

Fazzaco learned the UK Competition and Markets Authority (CMA) has granted the nine largest banks in the country six months to achieve variable recurring payments (VRPs) and ‘sweeping’ through their open banking APIs.

According to the Open Banking Implementation Entity (OBIE), an entity set up by the CMA in 2016 to deliver Open Banking, VRPs allow customers to safely connect authorised payments providers to their bank account so that they can make payments on the customer’s behalf, within agreed parameters that offer more control and transparency than existing alternatives.

And ‘sweeping’ is the automated movement of funds for a customer between two accounts in their name, usually to help the customer avoid charges or benefit from better interest rates.

“Many people have savings or investments accounts, but leave positive balances in their low-interest current accounts because it’s time-consuming to manually transfer funds out,” said Matt Parish, senior Product Manager at TrueLayer.

​“Sweeping will enable (third party providers) to automate this job, making customers’ money work for them effortlessly, and increasing financial well-being at the same time.”

Besides, VRPs tap the potential for a direct debit-less future, depending on whether banks decide to embrace and expand the technology beyond sweeping.

Fazzaco reported that CMA has approved the anticipated joint venture of IHS Markit and CME Group.