Moneyhub responds to OBIE’s Variable Recurring Payments (VRP) and Sweeping Consultation

Variable Recurring Payments allow customers to safely connect authorised Payments Initiation Service Providers (PISPs) to their bank account so that they can make payments on the customer’s behalf, within agreed parameters – offering more control and transparency than than Direct Debits or card payments. Sweeping is the automated movement of funds for a customer between two accounts in their name, usually to help the customer avoid charges, or benefit from better interest rates and deals – making their money work harder for them.

Dan Scholey, COO at Moneyhub comments: “From the very beginning when we first started lobbying for Open Banking legislation, we saw Variable Recurring Payments and Sweeping as core requirements to help both businesses and people improve financial wellness.

“Through our work in the FCA sandbox over the last year, we have proven the demand for VRP and in particular Sweeping. More secure, faster and user friendly than Cards or Direct Debits, the only obstacle remaining is fair and open access by all the organisations, such as banks covered by PSD2. We call upon anyone who has payments in their business model to lend your support to driving through this much needed change.”

A key takeaway from Moneyhub’s response is the use cases for VRPs exceed the limited cases provided by the legacy payments systems it replaces. Dan Scholey explains: “There are many more business and consumer-centric use cases that VRP will open up. It is therefore critical not to limit the thinking to existing use cases, where the Card and Direct Debit technology has limited innovation and use.”

“Furthermore, VRP should be mandated – but not be profit-generating – for the CMA9 and beyond, similar to the way BT Wholesale is regulated. When it comes to security, speed and price, VRPs are a cheaper, more secure replacement for Direct Debits and card payments. VRPs are an enabler for Sweeping, so where Direct Debit is designed for payments into an organisation’s bank account, Sweeping is moving money between a customer’s own accounts. If this is not mandated, adoption of VRP will be limited and will not introduce an innovative payment experience. The lack of a mandate will hinder the creation of new types of financial services for users.”

“Sweeping should not be confined to Current Accounts and Credit Cards. Loans, Savings and Mortgages, Investments and Pensions are all examples of accounts that should be able to benefit from Sweeping. We are moving to a world of Open Finance – and therefore all new innovative payments solutions should support this.”

Source: MoneyHub