Insights Magazine from CMSPI
Page 22 | November 2021
An In-Depth Look at this Quarter’s Top News
UK BRINGS VARIABLE RECURRING PAYMENTS TO OPEN BANKING
Recurring payments can be made through standing orders, but only for fixed amounts like rent rather than variable amounts.
British authorities have taken a step toward consumers being able to use open banking to move money automatically even when the amount due varies. The United Kingdom’s Competition and Markets Authority has mandated that the CMA9 – the nine largest banks in the U.K. – begin offering variable recurring payments when “sweeping” funds from one account held by a customer to another account held by the same customer. In one potential application, a consumer who uses one account for spending and another for savings could choose to have the spending account automatically replenished if it falls below a certain amount. Third parties like a budgeting app could also be authorized to move funds within certain limits. U.K. consumers have long been able to use direct debit to automatically make variable recurring payments like their electric or credit card bills. But payments under the U.K.’s three-year-old open banking system are predominantly single transactions, with each transaction requiring authentication.
While the move might not appear to affect merchants at first glance, “sweeping” represents just one particular use of variable recurring payments. Another could be the ability to process variable subscription payments – perhaps a monthly Uber or Lyft bill – over open banking rails in a business-to-consumer scenario.
Even though variable recurring payments have only been mandated for sweeping, this is a step in the right direction for the practice more generally and could be a key to expanding more uses for open banking payments. The mandate takes effect in early 2022.
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