HSBC has announced that sweeping Variable Recurring Payments (VRP) is available to all Open Banking participants for the HSBC Personal and HSBC Business. HSBC is one of the first banks to complete the managed rollout process overseen by the Open Banking implementation Entity (OBIE).

Sweeping VRPs allow for the automated movement of funds between a customer’s own accounts without the need for any manual intervention once the initial consent is setup. This service can, for example, be used to pay off a monthly credit card bill, move money regularly into a savings account or to reduce an overdraft balance. As mentioned in one of our previous articles, VRP allows businesses and consumers to use Open Banking for recurring payments of varying amounts, without the need to re-authenticate every transaction.

This could be automatically moving money between their own bank accounts now and paying subscriptions or household bills in future. VRPs are an anticipated Open Banking solution that promises greater returns for merchants and much safer and more convenient payments for end users. Competition and Markets Authority deadline for VRPs In November 2022, the Competition and Markets Authority (CMA) has approved a revised deadline of July 2022 for the implementation of VRPs for sweeping services by the largest UK current account providers, on the recommendation of the Open Banking Implementation Entity (OBIE).

The deadline has been pushed back from January 2022, after the OBIE wrote to the CMA on 8 November with a proposed new timeline for the CMA9, which includes Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, NatWest Group and Santander, to implement the requirements. While the current requirements for VRPs only apply to sweeping, the work that the banks need to do now to create and open up these application programming interface (APIs) will create an infrastructure that could be used for much more. If the banks choose to use this infrastructure, there could be several use cases that go beyond ‘me-to-me’ payments and fall under the category of ‘me-to-business’ payments.

The evolution of VRP implementation The latest news about HSBC follows similar announcements from Yapily, GoCardless, and Plaid. Open Banking platform TrueLayer has also introduced access to its VRP API for sweeping and non-sweeping payments, subscriptions, utility bills, and more. VRPs have been designed to ensure it maintains the central ethos of Open Banking of the customer being in control.

They will be able to ask the third-party providers (TPP) to cancel the recurring payments at any time. They will also be able to ask their bank to remove the TPP’s access, as an additional way to cancel. Given the benefits to consumers and businesses including subscription businesses, telcos, and utility firms, the belief is that the regulatory and market developments will unlock this functionality.

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