United Kingdom: Open Banking & VRP

The Transition from BACS to Open Banking

Traditionally, B2B payments and payroll in the UK relied on the BACS network (a slow, 3-day clearing cycle equivalent to US ACH legacy). For speed, Faster Payments (FPS) was introduced, allowing 24/7 instantaneous clearing.

Today, the UK has mandated the opening of banking APIs, launching the "Pay by Bank" era. A user simply selects their bank at checkout, gets pushed to their banking app (Monzo, Barclays, Starling), authenticates with FaceID, and pushes funds instantly via the Faster Payments rails. No card numbers, no interchange fees.

VRP: Variable Recurring Payments

Open Banking historically only worked for single, one-off cart checkouts. You couldn't use it for a Netflix subscription—until VRP.

Variable Recurring Payments is a new API standard in the UK. A consumer grants a merchant a long-lived, cryptographic consent mandate to pull funds from their bank account up to a certain maximum amount per month. It replaces the archaic Direct Debit system. VRP offers instant settlement, lower costs, and zero chance of an expired card disrupting subscription revenue.

The Card Market Status Quo

Despite these innovations, the UK remains one of the heaviest card-using nations in Europe. Debit cards (predominantly Visa Debit) handle massive volume. Any merchant entering the UK must ensure optimal, local processing of domestic UK cards alongside the deployment of Open Banking APIs to cater to the differing demographics.