Why 2025 is key for Pay by Bank and VRP: everything merchants need to know

Recent announcements point to a breakthrough for variable recurring payments (VRPs) in 2025, but why? And more importantly, what could it all mean for your business? In this article, we decode the industry jargon, unpack the timelines, and dive into the practical applications of VRP, all to give you the most up to date view of what’s happening next.  

What exactly is VRP?

As a reminder, VRP stands for Variable Recurring Payments, a payment method offering consumers the ability to set up repeat payments of verifying amounts. If that sounds familiar, it’s because VRP combines the benefits of card-on-file, direct debit and standing orders, but without the lengthy set-up or set backs of older payment methods. VRP represents the next stage in Pay by Bank, offering speed, flexibility, security, and efficiency. With major changes coming in 2025, businesses looking to level-up their payment tech should take note.

So, why the hype?

The ability to use Pay by Bank on a recurring basis, will level the paying field with card payments by unlocking what we’ve termed Bank on file to enable everything from seamless subscriptions to one-click checkout. This innovation is here to give consumers and businesses more choice in how they make and receive payments safely, securely, efficiently and — importantly — consistently. VRP already accounts for 3.3 million payments in the UK each month.

This reality is one step closer thanks to the FCA, which last month promised the delivery of VRP in 2025 in a letter to the Prime Minister.

What’s changing in 2025?

Today VRP is restricted to movement of funds between two accounts owned by the same customer, also known as sweeping. An example is using VRP to automatically move surplus money in a current account, into a savings account, or to automatically pay off an overdraft.

Compared to manual bank transfers or direct debit, sweeping with VRP makes the payment process faster, easier and with less of an administrative burden. While VRP, even as it stands, is miles ahead of traditional methods, it’s currently only being used on a small scale. So, yes, you bought a Ferrari, but isn’t it a shame that you only drive it to the corner shop? In other words, the payment industry is more than ready to take VRP to the open road.

It’s incredibly welcomed then, that the FCA’s letter to the Prime Minister is all about expanding VRP beyond sweeping. This was confirmed in a second FCA announcement last month. The FCA set out that it would work with industry in order to enable consumers to make recurring payments using VRP to:

• Utility companies

• Central and local government (including the purchase of rail tickets and museum entry)

• Financial services firms (eg mortgages and pensions)

Thinking it doesn’t affect your industry? The FCA also committed its support for open banking in ecommerce, pointing towards VRP being extended beyond the sectors above. This is most likely to happen in 2026.

What are the next steps to look out for?

While there is — currently — no regulation to force banks to support VRP beyond sweeping, the FCA wants to see the industry collaborate to develop a ‘sustainable commercial model’. This will act to incentivise banks to support new features by including them in the revenue chain. The commercial model will be enabled by an independent central operator, funded and run by banks and third party payment providers.

TrueLayer is keeping a close watch on these developments and will update our community whenever new information is released.

What should you do now?

As VRP momentum and adoption accelerates in 2025 and beyond, you should start exploring how you can integrate this payment method into your payment tech stack. Whether for subscriptions, invoicing, or on-demand services, VRP offers a next-generation alternative to traditional recurring payment methods, delivering benefits for both businesses and consumers.

For many merchants, VRP has been on their radar for many years. Lendable, the personal loans platform, started offering VRP within their financial ecosystem in 2023.

For other merchants, now is the time to evaluate VRP-ready payment providers and prepare for the coming shift. The future of frictionless, flexible payments is here.

Ready to start exploring Bank on file for your business? Get in touch with one of our payment experts and find out how TrueLayer can support in designing and building your recurring payment use case.