Today we’re excited to share that TrueLayer is the first organisation to deliver Variable Recurring Payments (VRP) for both non-sweeping and sweeping use cases through a single application programming interface (API). With TrueLayer’s API, businesses will be able to connect to select UK banks to take VRP from their customers — from utility bills and subscription payments to rent instalments. Our VRP API also allows businesses to ‘sweep’ payments, transferring money between two accounts belonging to the same customer.This first-of-its-kind API enables us to bring the transparency, speed and control of VRP to more people in the UK as a replacement for direct debit and card-on-file payments.So far on the TrueLayer blog, we’ve talked about what VRP is and what you can use it for, where we expect it to go in the future, and our thoughts on what exactly sits inside and outside of the ‘sweeping’ provision that enables VRP for many merchants. Throughout all of our updates on VRP, we’ve been very clear about one thing: VRP for sweeping is only the beginning. It’s really exciting to announce that we’re finally here.
The problems with direct debit and card-on-file
Using open APIs, VRP allows companies to collect recurring payments of variable amounts from their customers. In a way, they’re similar to direct debit and card-on-file payments, but without the issues that affect these methods.Unlike open banking, direct debit and card payments weren’t made for the speed of digital transactions. It can take up to five days for a direct debit transaction to settle. And with card payments, the wait can be as long as 10 days. This delay is less than ideal for businesses, as it keeps them from managing their cash flow effectively — and doesn’t let users access the services they want to use.Both direct debit and card-on-file payments also lack key security features. Setting up card-on-file payments requires customers to share sensitive credentials. This leaves them vulnerable to security breaches and fraud. Direct debit doesn’t involve credential sharing, but it lacks strong customer authentication (SCA) measures. Cards in particular present several other issues for merchants. They can draw steep interchange and processing fees, both of which are expensive for businesses. Then there are chargebacks, which present additional penalties and could expose companies to friendly fraud.The solution: VRP
VRP solves many of the problems typically associated with direct debit and card-on-file. For users, the benefits of VRP are clear. Instead of having a single payment credential — such as a card — consumers can set up unlimited recurring payments by creating multiple VRP mandates that are bound to specific merchants and payment amounts. That gives users the opportunity to know exactly what they’re paying for, how much they can pay, and to revoke specific allowances or subscriptions more easily. VRP also has SCA measures baked in, allowing for a smoother customer experience compared to cards.Businesses can also benefit from:- Real-time settlement: unlike direct debit and card-on-file payments, VRP uses open banking to settle transactions in seconds. This helps merchants gain access to their funds faster and manage their cash flow more effectively.
- Lower transaction costs: VRP lacks both the high fees of card payments and the operational costs of direct debit, creating substantial cost savings for merchants.
- Elimination of card fraud: since VRP uses open banking payments, it doesn’t store customer credentials and has SCA firmly integrated in its flows. This makes it impervious to most types of fraud.
- Reduced customer churn: VRP doesn’t require re-authentication or re-authorisation. Since payment consent is tied to a bank account, it doesn’t expire until it’s revoked by you or the user.
- No chargebacks: whereas card-on-file transactions are vulnerable to chargebacks, VRP offers other customer protections that remove merchant liability for transactions.
