Introducing Variable Recurring Payments at TrueLayer

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.

If you’re fed up with the hassle, cost and complexity of direct debit and card payments, we should talk.

What you can use it for

From today, you can use VRP with TrueLayer to power both sweeping and non-sweeping use cases. Sweeping use cases could include tasks like funding savings accounts. Say you’ve got a savings app like Chip. You set a savings plan, and the app allows you to move money into a dedicated account each month.

“At Chip, we are on a mission to build the saving and investing super app. This means offering our users a seamless journey to grow their money,” says Simon Rabin, Founder and CEO at Chip. “TrueLayer’s VRP will make it easier than ever for customers to auto save into Chip. It will enable our users to top up their accounts without having to authorise every transaction, making their experience of using Chip even smoother.”

Our recurring payments API doesn’t just stop at sweeping, though. It also offers plenty of non-sweeping applications. This includes both fixed and variable subscriptions, enabling merchants to take payments for things like your phone bill, energy bill, and streaming subscriptions.

Rental payments are another prime example. Using TrueLayer’s API, lettings apps like Pink Chilli can enable landlords to automate their rent collection and eliminate inefficient manual processes.

“Currently, we see that our customers need to manually reconcile payments, chase up late payments and ensure that audits and rent schedules are maintained correctly in case the need to evict tenants arises, a very time consuming process,” says Darren Bignall, Director at Pink Chilli. “VRP will remove all of this, driving huge efficiencies in the property industry.”

How it works

We’ve built VRP into our Payments API, so you can use both single payments and VRP through the same API interface. Take a look in our documentation for more information.

What’s next?

Our next updates are all about coverage. We continue to lead the industry as we enter into our first non-sweeping VRP partnership with NatWest, with more to come. As the managed rollout of open banking swings into full gear, we’re excited to be working with select CMA9 banks as they make their first steps with VRP in April. 

We’ll also be adding some features to our VRP API to make it easier for merchants to use. New elements like scheduling will make it easier to manage your subscription payments. And stay tuned: we’ll have more non-sweeping partnerships to announce soon.