Although merchants, payment service providers (PSPs) and third-party providers (TPPs) recognise the potential of commercial Variable Recurring Payments (VRPs) to deliver better payment experiences, more choice, and lower processing costs, a lack of bank support is impeding their delivery, according to a new report.
According to a new survey published by account-to-account (A2A) payment infrastructure provider, Token.io, and Open Banking Expo, there is substantial market appetite for both provisioning and adopting commercial VRPs.
Over half of surveyed merchants (57 per cent) plan to convert card payments to commercial VRP (CVRP). Both UK and European PSPs and TPPs also recognise the importance of commercial CVRP in driving greater merchant adoption of A2A payments, with 97 per cent describing CVRP as ‘important’, and 28 per cent and 33 per cent, respectively, as ‘extremely important’.
These findings come following a survey of over 100 senior leaders across UK and European banks, merchants, PSPs and TPPs to gauge their readiness and attitudes towards CVRP and Dynamic Recurring Payments (DRP).
The survey findings also highlight the potential for CVRP to empower consumers with greater control over their payments while providing businesses with more efficient, cost-effective and secure recurring payment options. Respondents expect CVRP and DRP to surpass traditional methods like card-on-file and direct debit in delivering superior user experiences (59 per cent and 51 per cent, respectively) and increasing payment success rates.
While the SEPA Payment Account Access (SPAA) scheme has established a commercial model for DRP in Europe, no consensus has emerged as to an ideal pricing model for CVRP in the UK.
“This year’s survey findings provide good evidence that there is indeed scope for a model that provides sustainable compensation for banks and also delivers a strong incentive to merchants to adopt CVRP as a lower cost alternative to debit cards,” explained Charles Damen, chief product officer at Token.io.
Further support needed
Ellie Duncan, head of content at Open Banking Expo, also commented: “Merchants are ready to embrace commercial VRPs but to increase confidence and enable the frictionless user experience that is needed to encourage consumer adoption, the bank infrastructure and support needs to be in place. While there has been progress, we are yet to see the momentum that many across the ecosystem were expecting by now.”
Although 79 per cent of surveyed banks believe CVRP will benefit their account holders and the UK payments ecosystem, only 32 per cent expect to support CVRP for low-risk use cases in 2025, and just 26 per cent for e-commerce use cases. This lack of bank support was a significant concern for survey participants, with 73 per cent suggesting regulatory intervention may be necessary.
Survey results also point to consensus on the need for a consumer protection framework for CVRP, while most banks surveyed view CVRP as an opportunity to develop a new framework that benefits all ecosystem participants and addresses key issues with the current framework, like operational overhead, abuse, and inefficiencies.
Todd Clyde, CEO of Token.io, concluded: “We believe these survey results will reignite a sense of urgency and collaboration among industry stakeholders, working together to overcome obstacles and shape a brighter, more innovative future for the payments landscape.”
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