The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have unveiled plans to advance open banking in the UK, highlighting its ongoing success with over 11.7 million active users and 22.1 million open banking payments processed monthly.
Key Developments:
- Variable Recurring Payments (VRPs):
- A new independent entity will oversee and coordinate VRPs, enabling recurring payments for services such as utilities, government departments, and financial services.
- VRPs allow consumers to control payment amounts and frequency, offering more protection against unexpected expenses.
- For businesses, VRPs promise lower processing fees compared to traditional card payments.
- Expansion into Open Finance:
- Open banking’s next phase will focus on broader applications under the “open finance” model.
- SME lending is being considered as a priority area for development, signaling opportunities to extend financial services beyond individual consumers.
- Industry Collaboration:
- The FCA is collaborating with industry players and trade associations to create robust commercial frameworks for VRPs and open banking applications in e-commerce.
Next Steps
Open Banking Limited will be tasked with launching a central operational unit to manage VRPs. Future developments may enable seamless, automated payments while supporting a wider array of financial services through the evolution into open finance.