Legacy Payments Are Failing Businesses: 9 in 10 See Commercial Variable Recurring Payments as the Way Forward

WHY THIS MATTERS: The findings from GoCardless underline a critical inflection point: the friction and cost inherent in traditional card networks for subscriptions have become commercially unsustainable, costing UK businesses an average of 3.5% of their monthly revenue. This is not simply a pricing issue; it’s a systemic operational drag impacting customer retention and cash flow. The impending arrival of commercial Variable Recurring Payments (VRPs) and other forms of open banking payments shifts this dynamic entirely. VRPs represent the most significant upgrade to the UK’s payment infrastructure in a generation, providing a more stable, bank-led rail for recurring revenue that promises to drastically cut involuntary churn and administrative overhead. For regulated industries like financial services and telecoms, which are currently in the first wave of adoption, this is a strategic imperative that separates early movers who prioritize operational stability from those stuck on legacy systems.

A new study from bank payment company GoCardless has revealed that UK businesses are being held back by outdated systems, with legacy methods becoming increasingly untenable. 

The report, Revolutionising Recurring Revenue, found that with the upcoming introduction of commercial Variable Recurring Payment (VRPs), industries such as utilities, financial services, and telcos are poised to significantly reduce lost revenue and improve customer retention. 

The research, which surveyed 489 UK recurring revenue business leaders, shows widespread dissatisfaction with existing rails. Nearly three-quarters (73%) report ongoing pain points with card payments. 42% of respondents spend more than three hours per week managing related issues and combined with fraud and admin overhead, this payment method costs businesses an average of 3.5% of their monthly revenue. 

A high-impact solution for regulated sectors 

Against this backdrop, commercial VRPs are viewed as a strategic unlock. Among decision-makers in the first wave* of the rollout, 89% believe the technology would significantly improve cash flow, while 91% expect it to reduce operational costs. 

Consumer readiness further strengthens the commercial case. Research among 2,000 UK adults shows meaningful demand, with 38% open to adopting the technology, rising to 60% among Gen Z. Interest is highest in essential services, with 46% willing to use commercial VRPs for energy bills and 35% for telecoms. 

Business leaders prioritise operational simplicity and stability  

The research findings indicate strong demand for commercial VRPs. At this juncture, execution is what matters. When asked what would encourage their adoption or increase their use of open banking payments including commercial VRPs, 41% of businesses cited the ability to access open banking payments through their existing payment provider. The same proportion (41%) pointed to greater coverage, or more banks offering open banking payments to consumers. 

Commercial VRPs represent one of the most significant upgrades to the UK’s payment infrastructure in a generation. The report emphasises that early movers will gain the advantage. In addition, choosing the right partner is essential to reducing execution risk and ensuring a smooth transition.   

Shaun Puckrin, Chief Product Officer at GoCardless, said: “The numbers don’t lie: the era of settling for high-friction, legacy payment methods is over. We’re seeing openness and demand from both sides of the checkout for a more intelligent, bank-led alternative. As a company that has specialised in bank payments for 15 years, it’s incredibly exciting to see the industry catching up and working together in the live testing phase to prove out commercial VRPs and we’re confident that our solution, Recurring Pay by Bank, makes adoption viable and highly effective today.” 

To read the full report, visit: https://gocardless.com/g/the-strategic-opportunity-of-commercial-vrps/

FF NEWS TAKE: This study moves the needle by quantifying the immense, often-overlooked cost of card payment failure, framing VRPs as a mandatory efficiency solution, not just an alternative. The market has definitively signaled that Variable Recurring Payments are the future of recurring revenue. The next phase is an aggressive focus on execution: we need to watch which major payment providers quickly roll out embedded VRP solutions to offer the ubiquitous bank coverage that businesses are clearly demanding. The competitive advantage will go to platforms that minimize complexity and integrate this bank-led capability seamlessly.