What are variable recurring payments?
A Variable Recurring Payment (VRP) is a type of open banking payment that lets you authorise a business to take payments directly from your bank account. The amount and timing can vary, but only within limits you set, so you don’t have to approve each payment separately.
Instead of re-entering card details or approving every transaction, the customer sets up a single standing consent in their banking app, defining a maximum amount per payment, how often payments can be taken, and how long the arrangement will run. Once set, the business can take payments within those limits without further action from the customer. The customer can view or cancel the arrangement in their banking app at any time.
Sweeping VRP vs. commercial VRP
Until recently, VRP in the UK largely referred to sweeping VRP. Sweeping VRP moves money between accounts a single individual owns often called "me-to-me" payments.; for example, automatically shifting surplus cash from a current account into a savings account or paying down an overdraft. It has been available since 2022, after the Competition and Markets Authority mandated it as part of the UK’s open banking remedies, and is free for customers to use.
Commercial VRP (cVRP) is different: it moves money from a customer’s account to a business. It can compete with Direct Debit and card-on-file for subscriptions, bills, and other recurring charges. cVRP became commercially available in the UK on 2 June 2026, when the UK Payments Initiative (UKPI) launched Wave 1 of its commercial VRP scheme.
Headline VRP numbers overstate commercial adoption. VRP made up roughly 16% of UK open banking transactions in 2025, but most of that was sweeping VRP, live since 2022. Sweeping volumes did nearly double year on year (+98%), but that is people moving money between their own accounts, not paying businesses.
How commercial VRP works, step by step
Consent: the customer sets up a VRP mandate in their banking app, defining a maximum payment amount, frequency, and an end date.
Funds check: before each payment, the customer’s bank checks that funds are available.
Initiation: the business (via its payment provider, such as Plaid) triggers a payment within the agreed limits. No action is needed from the customer.
Settlement: the payment moves instantly via Faster Payments, typically settling in <5s.
Ongoing control: the customer can view all active VRP mandates and their limits in their banking app, and cancel at any time.
The UKPI scheme: what launched in June 2026 and why it matters
This is the UK's first new major payment scheme since Faster Payments launched in 2008. The UK Payments Initiative (UKPI) is the independent, industry-owned company set up to operate the scheme for commercial variable recurring payments (VRP). It was incorporated in December 2025 and went live with Wave 1 of commercial VRP on 2 June 2026, backed by 31 founding firms spanning the UK's largest retail banks and a cross-section of payment providers. Plaid is a founding member and shareholder of UKPI, with the goal of creating a ubiquitous, faster, payment-based recurring payment solution for the UK.
UKPI created a model with a single rulebook and agreement. The common framework sets out participants' obligations and a centrally determined per-transaction access fee, paid by payment providers to the customer's bank, which replaces bank-by-bank fee negotiations.
Who can use cVRP today: Wave 1 eligibility and exclusions
Two separate factors determine whether a business can use cVRP today:
Whether its sector is within UKPI’s Wave 1 scheme scope.
Whether its bank or payment provider supports commercial VRP for that sector.
Being eligible under the scheme doesn't guarantee access. Banks and payment providers must build and enable support sector by sector, so a business can be in scope for Wave 1 before its own bank or provider is live.
UKPI Wave 1 scheme-level eligibility currently covers five sectors:
Financial services — payments into regulated products such as savings accounts, ISAs, mortgages, pensions, and insurance, as well as FCA-authorised e-money accounts
Utilities and telecoms — electricity, gas, water, broadband, and mobile
Rail — tickets purchased under National Rail Conditions of Travel
Charities — donations to organisations registered with the Charity Commission, OSCR, or CCNI
Government — central and local government bodies, including TfL-designated organisations
Further sectors are expected to be considered for later waves, including:
Buy-now-pay-later
Unsecured lending
General e-commerce
Travel (outside rail)
General commercial trade
Property and rent collection
cVRP vs. Direct Debit vs. card-on-file
Direct Debit and card-on-file have handled recurring payments in the UK for decades, but neither was designed for the kind of variable, consent-driven billing cVRP enables. The practical differences span settlement speed, consent, failure and dispute handling, and cost.
Benefits and current limitations
Commercial VRP’s advantages come directly from how it is built: consent-based, bank-account-native, and checked for funds before every payment. But it remains a young scheme with important limitations and is not a total replacement for existing rails.
Benefits:
Handles variable billing amounts without requiring re-consent.
No card-expiry or reissue-driven payment failures.
Funds availability checked before each payment, reducing failed-payment rates.
Instant settlement improves cash flow and reconciliation.
Consent is visible and revocable by the customer at any time, giving customers more control while giving businesses less control over retention than with a stored card.
Current limitations:
Eligibility is limited to Wave 1 sectors (no general e-commerce yet).
Purchase protection equivalent to card chargeback rights is still being designed for Wave 2 (not yet finalised).
The consent setup experience varies by bank because implementation differs across banking apps.
No live equivalent exists yet in the EU, limiting the ability to use a single recurring-billing approach across UK and EU markets.
Wave 2, e-commerce, and how to prepare
Wave 2 is expected to extend cVRP into general e-commerce, including subscriptions and retail. In January 2026, UK Finance and Deloitte published a proposed commercial model for Wave 2, including two candidate approaches to purchase protection: a “debit-card-efficient” model and an alternative referred to as SIP+. UKPI has not yet confirmed which model or combination it will adopt, or when.
Preparing for wider cVRP availability:
Mapping recurring billing flows can identify where Direct Debit failure rates or card costs are highest, helping businesses prioritise once Wave 2 sectors are confirmed.
UKPI’s Wave 2 scope announcement will clarify eligible sectors and timing; no specific go-live date has been confirmed.
For businesses in Wave 1 categories, a hybrid approach can run cVRP alongside existing rails while bank coverage grows (around 75% of UK current accounts at Wave 1 launch).
Choosing a payment provider for cVRP
Businesses looking to accept commercial VRP payments today need a payment provider (PISP) that supports cVRP and participates in the UKPI scheme. Participation matters because UKPI’s single rulebook and agreement set the obligations for every participant, including the per-transaction access fee paid to the customer’s bank. A provider that is not part of the scheme cannot offer cVRP under that common framework, so it is worth confirming alongside your sector and bank coverage (see “Who can use cVRP today” above).
Plaid is a founding UKPI participant, has supported VRP since 2022, and is ready to support commercial VRP. VRP is built on the same Payments API that powers Plaid’s one-time Pay by Bank, so businesses that are already integrated can add recurring payments without starting a new integration. Strong customer authentication happens once, when the customer creates the mandate, and later payments within its limits run without further steps for the customer. Plaid’s cVRP guidance explains how cVRP fits into the existing Payments API.
Get in touch to find out how Plaid can help