The majority of senior Open Banking and payments professionals have a strategy to commercialise variable recurring payments (VRPs) once banks support them, although 36% of banks do not have a timeline for implementation of VRPs, according to a new survey conducted by Token in partnership with Open Banking Expo.
The findings revealed that while 36% of banks intend to support VRPs by 2022, the same percentage do not know when they will endorse them.
When asked about readiness to commercialise VRPs once they are supported by banks, 67% of the more than 55 respondents said they were ready, while 33% said they are not.
The survey was undertaken following the news in July this year that the Open Banking Implementation Entity (OBIE) had been given the green light by the Competition and Markets Authority (CMA) to mandate VRPs for sweeping.
The CMA has left it for OBIE implementation trustee Imran Gulamhuseinwala to determine a deadline in January 2022 for the CMA9.
The Token and Open Banking Expo survey also uncovered merchant appetite for VRPs.
The results revealed that when asked to consider whether if VRPs were available tomorrow, they would make this available as a scheduled payment mechanism, 100% said they would.
Todd Clyde, CEO of Token (pictured), wrote in the report that the research reveals VRPs are “poised to ignite further explosive growth for Open Banking payments as they make finance smarter”.
“But are we, the industry, ready for VRPs? In short: it’s still early days. With a deadline of January 2022 for the CMAA to implement VRPs, our industry must now swiftly define consumer protection mechanisms and build commercial models with banks,” Clyde said in the report’s foreword.
When the survey asked about their greatest concern when it comes to VRPs, 46% of respondents said disputes/reversing the flow of funds, followed by 21% who are most concerned about consumer protection.
The survey also uncovered respondents’ views on use cases for sweeping, VRP fee structures and authorisation periods.
In the report, Chris Michael, CEO of Ozone API, wrote: “VRPs have real potential to transform payments – improving customer experience and security for banks, merchants and end customers, as well as reducing settlement times, complexity and costs.
“The foundations to deliver truly embedded commerce are here.”
To download the survey report ‘Variable recurring payments and sweeping’, click here.