The UK Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have announced plans to establish a new independent entity, Open Banking Limited, to enhance variable recurring payments.
Open Banking Limited will oversee the creation of an independent central operator to coordinate Variable Recurring Payments (VRPs), aiming to launch live services in 2025.
These services will cover payments for utilities, government services, and financial institutions.
VRPs allow consumers to manage the amount and timing of their regular payments, will improve financial control and reduce unexpected expenditure risks.
For businesses, VRPs could lead to lower processing fees and improved payment completion rates.
The FCA and PSR will continue to collaborate with industry stakeholders to ensure the implementation of VRPs and the broader adoption of open banking.
Regulators claimed that open banking has proven to be a “success” in the UK, with over 11.7 million active users and more than 22.1 million open banking payments made each month.
In 2024, 20 “leading” firms’ voluntary funding support enabled the development of enhanced fraud analysis capabilities, better consumer protections, and the introduction of new services.
The FCA and PSR have emphasised the importance of continued success in open banking, particularly with the government’s growth agenda and the National Payments Vision in mind.
The PSR, in its strategic update, revealed that it is working alongside the Bank of England to drive forward work to upgrade Faster Payments, reform Pay.UK, and assess other long-term retail infrastructure needs, setting out an approach by the end of Q2 2025.
Last month, the PSR proposed the introduction of a cap on cross-border card fees, following a review that found these fees had risen to “unduly high” levels for European consumers purchasing online from UK businesses.
In a letter to UK Prime Minister Keir Starmer last week, the FCA outlined plans to remove the £100 contactless payment limit, emphasising its focus on open financing.
