Behind the Blueprint: what’s next for the future of VRPs

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As Director of Global Payment Partnerships at GoCardless, Paul and his team manage global relationships with the organisations that make payments work. His expertise was instrumental in building GoCardless' ACH payment product, enabling the company to enter the North American market successfully. Paul sits on the UK Finance Working Group on Open Banking and holds the Chartered Banker, MCIBS qualification. The Chartered Banker Diploma is the highest level qualification awarded by the Chartered Banker Institute, recognised and supported by major financial services organisations across the globe. ConnectSee full bio

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Last editedDec 20233 min read

What is the Blueprint and how will it impact payment progress in 2024 (and beyond)

The festive period is well and truly upon us and the ‘out-of-office’ message is ready. But before I log off for 2023, the Joint Regulatory Oversight Committee (JROC) has already delivered what was at the top of my Christmas wish list - endorsement of the commercial Variable Recurring Payments (VRP) Blueprint.

Let’s walk through what the Blueprint is and how it will impact payment progress in 2024 (and beyond), how GoCardless has been actively involved in representing business’ interests, and the value commercial VRPs offer to payers.

What is the Blueprint and why is it exciting?

First, some background context. VRPs are powered by open banking and can be thought of as Direct Debit but with added speed and security. They were launched in the UK last year after the top nine banks were mandated to offer them for ‘sweeping’ - when money is moved between two accounts that are owned by the same person or company. Fast forward to Summer 2023 and JROC set up a dedicated VRP Working Group, with representatives from across the full breadth of the open banking ecosystem, tasked with proposing how to move commercial VRPs forward. GoCardless was a key member of the Working Group since its inception and part of my role was to work alongside the other members and represent our views.

We didn’t waste a moment getting to work, with the Group sharing a proposed VRP Blueprint with JROC in September. Designed to act as a roadmap to broaden the use of commercial VRPs, the Blueprint prioritised three key deliverables:

Identifying use cases which should be included in a “Phase 1” roll-out
Defining the set of functional, customer protection, and commercial model requirements needed to support this roll-out
Recommending actions (and owners for these actions) to be taken forward to meet those requirements

This proposal is hugely exciting as it represents the next phase of payment evolution, something that is overdue with the recent ‘Future of Payments Report’ by Joe Garner emphasising the need for a genuine alternative to cards. Cards and their high processing fees continue to drain our already sensitive economy but, done right, commercial VRPs have the potential to step into that gap.

What was GoCardless’ role in the VRP Working Group?

We don’t believe in sitting on the sidelines, so we were a member of the main Working Group, led a sub-group looking at how VRPs should function, and were part of a small, crack team drafting the Blueprint recommendations for JROC. All of our insights were shaped by GoCardless’ customer research into which industry verticals have the highest intention to adopt commercial VRPs over the next 18-24 months. Who needs a Summer holiday when you can play an instrumental role in helping commercial VRPs to realise their potential?

What is in the commercial VRP Blueprint?

A commercial VRP pilot with three low-risk use cases - Financial Services, Utilities and ‘Government’ (public sector) - set to launch in Q3 2024.
A set of requirements to not only get the pilot underway but also a list that will address gaps that allow the product to successfully scale.
A list of owners for those requirements. These will sit across a number of stakeholders, including Pay.UK, Open Banking Limited and the regulator, to drive this roadmap forward.

My three key takeaways from the Working Group and creating the Blueprint

It was a privilege to be part of the process and work with so many great people, equally as passionate about payments as I am. But every experience can be learnt from, and not every conversation was an easy one.

My three key takeaways from the experience are:

Let's avoid repeat mistakes - There are lessons to be learnt from the past, and not just from the sweeping process, which had lots of positives. There are some great learnings from the launch of faster payments and wider payment schemes that can be called on to add value to VRP.

The industry is pushing in the same direction - When it came to the functional discussions there felt a lot of cohesion from all participants. Often there feels a conflict around the industry and the banks however, from my personal experience the banks provided insightful and balanced contributions. I’m sure there will be areas of disagreement but the overall sentiment feels aligned.

We can move faster - This experience felt like a whirlwind but it also demonstrated an ability to move at speed. VRPs have the opportunity to be a real alternative to the status quo. However, unless we maintain a velocity then it also has the potential to become another ‘what could have been’ story.

I believe that our efforts in the Group have been worth it and I’m extremely pleased to have seen JROC’s response to the Blueprint, and within the originally promised timelines as well - a rare occurrence in the world of payments!

I’ll be using my Christmas break to rest up as it’s clear that 2024 is going to be a busy year with a lot of positive momentum for open banking and VRPs, bringing businesses across the UK one step closer to accessing a way to collect and move money in a way that’s more cost-effective, more secure and better suited to today’s environment.