Variable Recurring Payments (VRP): Commercial VRP & Open Banking

Variable Recurring Payments, usually shortened to VRPs, allow a customer to give a regulated payment provider permission to initiate a series of payments from their bank account within agreed limits.

Unlike a one-off Open Banking payment, the customer does not necessarily need to return to their bank and authenticate every individual payment.

Instead, they approve a payment permission at the beginning of the relationship.

That permission can define rules such as:

• who can receive the payments;
• the maximum amount per payment;
• the maximum amount over a period;
• how frequently payments may be taken;
• the duration of the permission; and
• other limits agreed with the customer.

Payments can then vary within those agreed parameters.

For merchants, VRPs are particularly interesting because they extend Open Banking beyond one-off Pay by Bank transactions into recurring and repeat-payment relationships.

What is a Variable Recurring Payment?

A Variable Recurring Payment is a series of payments initiated by a Payment Initiation Service Provider using a longer-term customer permission.

The customer authenticates when the VRP permission is established.

Subject to the particular VRP structure and Strong Customer Authentication rules, subsequent payments can then be initiated within the customer's agreed payment rules without requiring the customer to approve every transaction individually.

The important word is variable.

The amount or timing of individual payments does not necessarily need to be fixed when the permission is established.

Instead, the customer agrees the boundaries within which future payments can be made.

VRP is not simply another name for Direct Debit

Both can support recurring payments, but the underlying payment arrangements are different.

VRPs use Open Banking payment-initiation infrastructure and customer-defined payment permissions.

Direct Debit uses the Direct Debit scheme and mandate framework.

Recurring card payments use stored card credentials and card-network rules.

Businesses should therefore compare the complete payment model rather than treating the three methods as interchangeable.

There are two main types of VRP

The UK Open Banking framework now distinguishes between two important VRP use cases.

Sweeping VRPs

Sweeping involves moving a customer's money between accounts where the relevant accounts belong to that customer.

Examples can include:

• moving surplus money into savings;
• moving money between a salary and spending account;
• topping up another account belonging to the customer;
• managing overdraft exposure; and
• certain forms of debt or credit-account management.

Sweeping was the first major implementation of VRP within UK Open Banking.

Commercial VRPs

Commercial Variable Recurring Payments, often shortened to cVRP, allow payments from the customer's bank account to a business or other organisation.

This is the model most relevant to merchants accepting recurring customer payments.

Potential uses include:

• utility payments;
• telecommunications;
• financial services;
• charity payments;
• subscriptions;
• memberships;
• repeat purchases;
• variable bills; and
• other recurring commercial payments.

Are commercial VRPs live in the UK?

Yes, but merchants should understand that commercial VRP is still developing.

Commercial VRPs are now live through a dedicated UK scheme operated by the UK Payments Initiative.

The scheme provides a commercial and operational framework for businesses and payment providers using cVRP.

However, this does not mean that every UK bank, Open Banking provider, merchant sector and recurring-payment use case is immediately available through every provider.

The rollout is developing in phases.

Merchants considering cVRP should therefore check:

• whether their intended use case is currently supported;
• which banks participate;
• which Open Banking providers support cVRP;
• merchant eligibility;
• commercial pricing;
• customer coverage; and
• how the provider expects the market to expand.

How does a VRP work?

A simplified commercial VRP journey can look like this:

1. The customer chooses to establish a Variable Recurring Payment.
2. The merchant or payment provider explains the proposed payment rules.
3. The customer is taken to their bank to authenticate.
4. The customer authorises the VRP permission.
5. The permission defines what future payments can take place.
6. The Payment Initiation Service Provider can subsequently initiate payments within those rules.
7. The customer's bank checks that each instruction remains within the agreed parameters.
8. The customer can review or revoke the permission.

The customer therefore authorises the payment relationship rather than manually approving every individual transaction.

What payment limits can customers set?

VRPs are based around defined payment parameters.

Depending on the implementation, these can include limits such as:

• maximum amount per transaction;
• maximum amount per day;
• maximum amount per week;
• maximum amount per month;
• overall payment limits;
• payment frequency;
• start date;
• end date; and
• the permitted payee.

Open Banking's current customer-experience guidance recommends explaining these to customers as payment rules rather than relying solely on technical terminology such as consent parameters.

Can customers cancel a VRP?

Yes.

Customer control is an important part of the VRP framework.

Customers can view payment permissions and revoke VRP access through relevant banking and provider interfaces.

The Open Banking standards include requirements for dashboards through which customers can see information such as:

• who has been given payment permission;
• whether the permission is active;
• when the permission was granted;
• payment limits;
• payment history; and
• when the permission expires where applicable.

Businesses using VRP should therefore consider what happens commercially if a customer revokes their payment permission while a contract or subscription remains active.

VRP vs Direct Debit

Direct Debit is already a well-established way of collecting recurring bank payments in the UK.

VRP does not automatically make Direct Debit obsolete.

The two models have different characteristics.

Direct Debit

• uses the Direct Debit scheme;
• is established through a mandate;
• is widely available across UK bank accounts;
• has a mature recurring-payment infrastructure;
• includes the Direct Debit Guarantee; and
• is commonly used for regular bills, memberships and subscriptions.

Variable Recurring Payments

• use Open Banking payment-initiation infrastructure;
• use customer-approved payment rules;
• can allow amounts and timing to vary within agreed limits;
• give the customer visibility over the payment permission;
• can allow the permission to be revoked through the banking environment; and
• are still expanding commercially across merchant use cases.

The appropriate method depends on the business model, customer journey, provider coverage and payment requirements.

VRP vs recurring card payments

Recurring card payments typically rely on a payment provider securely storing or tokenising the customer's card credentials.

Future charges can then be processed under card-network stored-credential and merchant-initiated transaction rules where appropriate.

VRP is different because payments are initiated from the customer's bank account using Open Banking infrastructure.

Businesses comparing the two should consider:

• customer adoption;
• provider availability;
• payment acceptance;
• failed-payment handling;
• expired or replaced cards;
• payment permissions;
• customer cancellation;
• refunds;
• disputes;
• pricing;
• settlement;
• reporting; and
• reconciliation.

Some merchants may eventually use VRP alongside recurring cards rather than replacing the card option altogether.

Are VRPs better for subscriptions?

They can be relevant, but it is too early to say that VRP is universally better than Direct Debit or recurring cards for subscriptions.

The potential attraction is that a customer can establish a controlled recurring payment permission without the business relying on a stored card credential.

However, businesses still need to consider:

• customer bank coverage;
• customer adoption;
• commercial VRP availability;
• payment limits;
• permission expiry;
• revoked permissions;
• failed payments;
• customer notifications;
• refund processes; and
• subscription cancellation.

A subscription business should therefore compare VRP with its existing recurring-payment setup rather than assume one payment method is automatically superior.

VRPs for variable bills

VRP can be particularly relevant where the value of a recurring payment changes from one period to another.

Potential examples include:

• utility bills;
• telecommunications;
• usage-based software;
• variable memberships;
• financial-services payments;
• repeat orders;
• services charged according to usage; and
• other recurring bills where the amount is not fixed.

The customer can agree payment rules broad enough to cover expected variation while retaining an upper limit on what can be collected.

VRPs for subscriptions and memberships

Commercial VRP also creates potential for recurring subscription and membership payments.

This could eventually be relevant to businesses such as:

• gyms;
• software providers;
• clubs;
• membership organisations;
• digital subscriptions;
• professional services; and
• other recurring-revenue businesses.

However, broader commercial VRP support is still developing.

A merchant should confirm that its particular provider, banking coverage and use case are supported before rebuilding an existing subscription model around cVRP.

VRPs for financial services

Financial services have been an important early commercial VRP use case.

Examples can include payments into:

• investment accounts;
• pension products;
• savings products;
• regulated financial products; and
• other customer financial accounts.

These applications sit particularly close to the original sweeping use cases because both involve automated movement of money based on defined customer permissions.

Do VRPs require Strong Customer Authentication every time?

Not necessarily.

The customer must authenticate when establishing the VRP permission.

The Open Banking standards support VRP structures where subsequent payments that comply with the agreed payment rules can be initiated without the customer completing Strong Customer Authentication again for each individual transaction.

This is one of the features that makes VRP useful for recurring payments.

However, the exact authentication treatment depends on the VRP implementation and the regulatory basis being used.

Merchants should therefore rely on their regulated Open Banking provider to implement the appropriate authentication model.

What happens if a VRP payment is outside the agreed limits?

A VRP payment must remain within the rules agreed when the payment permission was established.

If the payment instruction falls outside those parameters, it should not simply be processed as though the customer had authorised it.

Depending on the circumstances, the business may need to:

• request a new customer permission;
• ask the customer to change the existing permission;
• use another payment method; or
• require the customer to authenticate again.

This is why businesses need to think carefully about realistic payment ranges when designing a VRP journey.

How much do Variable Recurring Payments cost?

There is no universal merchant price for commercial VRP.

The commercial model is part of the evolving UK cVRP market.

Potential provider charges can include:

• transaction fees;
• platform fees;
• Open Banking provider charges;
• scheme or access costs;
• monthly charges;
• minimum commitments;
• API or integration costs;
• refund fees; and
• bespoke enterprise pricing.

The FCA and Payment Systems Regulator have been involved in work around the commercial pricing framework for UK cVRP.

Merchants should therefore compare live provider pricing rather than rely on generic claims that VRP is always cheaper than cards or Direct Debit.

Do VRPs eliminate payment failures?

No.

VRP can avoid some problems associated with an expired or replaced physical card because the payment is linked to a bank-account permission rather than a stored card credential.

But VRP payments can still fail.

Possible reasons include:

• insufficient funds;
• revoked customer permission;
• expired permission;
• a payment outside agreed limits;
• bank or API availability;
• account restrictions;
• provider issues; or
• other payment controls.

Recurring-payment businesses therefore still need a failed-payment and customer-communication process.

Do VRPs have chargebacks?

VRPs do not use the conventional Visa or Mastercard card-chargeback process.

That should not be interpreted as meaning there can never be disputes, fraud claims, refunds or other payment problems.

The protections and dispute mechanisms applicable to Open Banking payments differ from the card-scheme chargeback framework.

Before implementing VRP, merchants should understand:

• how unauthorised payments are handled;
• how customer disputes are managed;
• how refunds work;
• what responsibilities sit with the merchant;
• what responsibilities sit with the Open Banking provider; and
• what customer protections apply.

How do VRP refunds work?

The refund process should be considered before a merchant launches VRP.

Depending on the provider and payment architecture, refunds may be supported through the Open Banking payment environment or through another bank-payment process.

Businesses should establish:

• how a refund is initiated;
• whether full and partial refunds are supported;
• how the payer's account is identified;
• how long the refund takes;
• whether fees apply;
• how the refund appears in reporting; and
• how it reconciles with the original VRP payment.

VRPs and payment reconciliation

Recurring-payment businesses should look beyond the customer-facing permission screen.

The provider also needs to supply useful transaction data to the merchant.

That can include:

• customer reference;
• VRP permission reference;
• payment amount;
• payment status;
• date and time;
• refund information;
• settlement information;
• failed-payment reason; and
• reconciliation references.

Businesses with more complex payment volumes can also read our guide to payment reconciliation .

How does VRP integrate with websites and software?

Businesses do not normally build directly into every customer's bank.

A regulated Open Banking provider provides the payment-initiation infrastructure and bank connectivity.

VRP could therefore sit within:

• a website;
• a mobile app;
• subscription software;
• billing platforms;
• membership systems;
• ERP software;
• accounting systems;
• embedded payment platforms; or
• custom API integrations.

The technical requirement should therefore include both the payment permission and the systems that need to trigger, record and reconcile subsequent payments.

What should businesses compare between VRP providers?

Commercial VRP support

Does the provider actually support cVRP for the merchant's intended use case?

Bank coverage

Which customer banks and account types are supported?

Merchant sectors

Is the business and payment model within the provider's current eligibility criteria?

Payment rules

What limits and payment frequencies can be configured?

Customer controls

How can customers view, change and cancel payment permissions?

Pricing

What transaction, scheme, platform and integration costs apply?

Failed payments

What payment statuses and failure reasons are returned?

Refunds

Can full and partial refunds be managed through the same provider?

Integration

Does the provider work with the merchant's website, billing platform, app or business software?

Reporting and reconciliation

Can each recurring payment be matched back to the customer, permission and underlying order or invoice?

How Merchant Advice Service helps with Variable Recurring Payments

Merchant Advice Service does not provide Variable Recurring Payments or regulated payment-initiation services.

Our role is to help businesses understand their payment requirements before identifying providers that may be suitable.

For VRP enquiries, that can include:

• commercial VRP requirements;
• subscription and recurring-payment models;
• variable billing;
• existing Direct Debit arrangements;
• recurring card payments;
• Open Banking;
• customer payment frequency;
• payment limits;
• monthly transaction volume;
• average transaction value;
• website or app integration;
• billing-platform integration;
• settlement;
• refunds;
• failed payments;
• reporting; and
• reconciliation.

Businesses new to the subject should also read our main Payment Gateway advice hub and Alternative Payment Methods guide .

Sources & References

• Open Banking Limited – Variable Recurring Payments and commercial VRPs – current guidance covering sweeping VRPs, commercial VRPs, customer permissions and UKPI.
• Open Banking Standards – Variable Recurring Payments – technical standards covering VRP permissions, payment parameters and authentication.
• Open Banking Standards – VRP Customer Experience Guidelines – guidance covering customer payment rules, dashboards and revocation.
• Financial Conduct Authority – UK Payments Initiative – June 2026 FCA update on the development and rollout of commercial Variable Recurring Payments.
• Financial Conduct Authority and Payment Systems Regulator – Commercial VRP Pricing – current regulatory position relating to the UKPI commercial pricing framework.
• Merchant Advice Service – Alternative Payment Methods – guidance on Open Banking, wallets, BNPL and other payment methods.
• Merchant Advice Service – Payment Reconciliation – guidance on matching recurring payments, refunds and settlement.
• The Payments Directory® – Open Banking Providers – explore Open Banking and account-to-account payment providers.
• Merchant Advice Service – Editorial & Research Policies

Editorial & Commercial Disclosure

This guide provides general information about Variable Recurring Payments, commercial VRP, sweeping and Open Banking payment initiation.

Commercial VRP is developing rapidly in the UK. Provider participation, bank coverage, eligible use cases, pricing and scheme arrangements can change as the market develops.

Businesses should confirm whether their particular use case is currently supported rather than assuming that all recurring-payment models are available through every VRP provider.

Merchant Advice Service does not provide regulated payment-initiation services or operate the UK Payments Initiative, Open Banking standards or customer bank accounts.

MAS is an independent payments information and provider-matching service. MAS may receive a referral fee or commission from some payment providers where a business proceeds following an introduction. Commercial relationships do not determine the factual information or provider-selection principles contained within this guide.

Businesses should confirm current functionality, regulatory status, commercial VRP availability, bank coverage, pricing and contractual terms directly with the relevant provider.

Information is provided for general guidance and should not be treated as legal, regulatory or financial advice.