Variable recurring payments. The future of recurring payments? Or a pipe dream destined to remain forever on the horizon? It’s true that the timeline for rolling out VRP for all use cases has been a frustrating one, but there has also been genuine progress.

Not least, VRP now accounts for 5.5 million payments every month in the UK, which equates to over 16% of all Pay by Bank payments. This is especially impressive when you consider the limitation on current use cases (more on that below).

There have also been several policy and regulatory milestones — including the formation of the UK Payments Initiative (UKPI) as the commercial operating company for VRP — which all point to 2026 being a major year for VRP, and by extension, the next generation of recurring payments.

VRP. Bank on file. Sweeping. What’s the difference?

While VRP is the name given to this payment method by policymakers, at TrueLayer, we call it Bank on file because it deliberately echoes what it is intended to replace: card-on-file. For decades, tokenised cards have been the default method businesses stored payment details for faster checkouts. Bank on file is the bank-based alternative.

There are already too many acronyms in the world of payments, and they inhibit adoption. And simple, analogous naming matters. Pay by Bank, for example, has become a success because the industry rallied around a simple, intuitive name. Bank on file can do the same for VRP.

Find out more about why we think Bank on file is the way forward for VRP

What about sweeping?

Sweeping is simply a specific type of bank on file payment. It's a recurring payment between two accounts that belong to the same person. It’s the subset of bank on file that is already possible today, which many companies — like Lendable — are already making the most of for loan repayments, credit card repayments, smart savings and more.

Find out more about sweeping for VRP and how it works

Why do we need Bank on file?

Bank on file is a better way for both consumers and businesses to do recurring payments. For consumers, it’s about having greater control over regular payments, letting them control exactly how much is paid at one time or over the course of a month, reducing the risk of unexpected expenditure, or an expired card risking an important unpaid bill or late fee.

According to the FCA’s own research 7.4 million consumers feel burdened by bills and credit commitments, and 5.5 million have missed payments in the last six months.

The flexibility built into Bank on file gives consumers more certainty of what will leave their account when, which also means fewer failed or bounced payments for merchants.

Added to this is the improved payment matching — meaning fewer misdirected payments — and both consumers and merchants get added assurance that payments go exactly where they are meant to go.

The other major benefit, which helps all parties, is immediate settlement, unlike direct debit, with which payments run on three-day cycles and can take up to three days to settle. Consumers know what they’ve paid and when, and merchants get that money straight away, which helps them better manage their cash flow.

Again, unlike direct debit, merchants know as soon as any mandate is cancelled, rather than simply finding out when the payment fails. And recurring payments require less manual admin than several individual ad-hoc payments. This all means greater back-end efficiencies.

At Open Banking Expo in October 2025, Amazon’s UK Head of Payment Acceptance Rajni Tiwari, on a joint panel with TrueLayer, pointed out that the biggest and most forward-thinking merchants care deeply about offering choice to consumers at the checkout. They are actively searching for payment method innovations that provide more choice competition, ultimately benefiting consumers. This is a massive opportunity for a commercial bank on file scheme to provide a reliable payment rail with unique advantages over current systems.

Major milestones show real change is in motion

While Bank on file (VRP) is not yet supported by the market or regulation, we’ve had several significant milestones in the last 12 months that show an expansion of Bank on file use cases is not a matter of if, but a matter of when.

First, in a letter to the Prime Minister, Chancellor and Business Secretary at the start of 2025, the FCA identified the expansion of Pay by Bank as a way it could use regulation to boost UK economic growth, and specifically outlined the choice and competition Pay by Bank can bring to merchants and consumers.

Then in February, the FCA announced its support for industry-led work to create an independent operator to support the rollout of this new way to use Pay by Bank, citing financial services, utility providers and government as in-scope for initial use cases. These use cases are known as Wave 1 VRP.

Finally, in December of 2025, this industry-work culminated in the formation of the UK Payments Initiative (UKPI), a new company formed of 31 firms in the wider payments industry (including all major UK retail banks), to operate a commercial VRP scheme. The collaboration underscores a unified industry push to commercialise open banking payments, and the first live payments under the UKPI scheme are expected in the first quarter of 2026, signalling the next major milestone in the road to wide-scale adoption of bank on file. In the FCA’s own words, the first live payments under the UKPI scheme are “the start of a new era for payments and open banking in the UK”.

TrueLayer’s Chief Operating Officer, Rob Kerrigan, who has been elected to sit on the board of UKPI pointed out the strategic importance of this new initiative: “The establishment of the UK Payments Initiative is a major step forward for Pay by Bank and for the UK payments landscape. Just as important, however, is the level of collaboration between banks and payment providers to turn VRP (aka “Bank on file”) into a viable commercial model, driven by a shared ambition to make real progress in this space.”

With UKPI now set up, work is underway to get Wave 1 use cases live in Q1 2026, with an intention to quickly progress ecommerce use cases.

Your Bank on file use cases cheatsheet:

Take a look at our Bank on File cheatsheet below for a list of current and potential use cases of bank on file, and the benefits they offer to consumers and merchants.

If Bank on file could transform the way you collect recurring payments, reach out to speak to one of our payment experts today.