It’s the same day, but two different fintech firms. GoCardless and Plaid have separately unleashed variable recurring payments (VRPs) in the UK.
VRPs are an additional open banking API that the nine largest UK banks have been instructed to build by the Competition and Markets Authority (CMA). They support third party providers to initiate a series of payments for a customer of variable amounts and at variable intervals.
With open banking in the UK having been popular for a while, VRPs have emerged as a lively sector for fintech firms to battle for supremacy and perhaps make more money.
GoCardless in Pillar Thriller
London-based direct bank payment solutions provider GoCardless, which recently bought Latvian open banking data provider Nordigen, says its launch today (26 July) will enable developers and financial service providers to prepare for VRPs as the CMA deadline for ‘sweeping’ approaches.
This means GoCardless’ ‘Instant Bank Pay’ feature will now support one-off and recurring transactions through open banking. Developer docs are live and a sandbox will be unveiled in the coming weeks for merchants to test their VRP readiness as banks begin to introduce the new technology to the public.
The news comes as London-based Pillar, a credit-building fintech platform, is an “early adopter” and will use the GoCardless platform for Direct Debits and VRPs. Pillar, not to be confused with a smart wallet provider of the same name and in the same city, raised a pre-seed round of £13 million earlier this year.
GoCardless says it has a bank payment network covering over 30 countries and eight currencies.
With a nod to history, GoCardless points out it has been active in the VRP space since 2019, when it took the first live transaction through a sandbox developed by the Open Banking Implementation Entity (OBIE).
In June, GoCardless was chosen by NatWest Group to provide VRPs as a new payment option for businesses and consumers, in addition to launching a ‘non-sweeping’ VRP pilot with NatWest and Charity Right.
Dead Fintechs Don’t Wear Plaid
Meanwhile, San Francisco-headquartered data network Plaid is looking for more action in the UK. It has an office in London and says it has launched its VRP today.
The fintech firm mentions Expensify – a US-based payments app for individuals and businesses. With Plaid’s VRP, Expensify can automatically pull varying repayments from its customers’ business accounts to settle card balances.
Sophie Pinto-Raetz, Product and Success, EMEA at Expensify, comments: “Plaid’s cross-Atlantic presence meant that we could unlock the value of instant payments more quickly with one provider. By partnering with Plaid for VRP, we’ll be able to introduce the Expensify Card to our UK customers much sooner than it would otherwise be available.”
Plaid sees a lot of potential in VRPs. It notes that they can be used in managing active subscriptions, and paying energy and water bills.
Plaid adds: “If VRP are extended to use cases beyond sweeping, there are no restrictions on how much a bank could charge for these payment types. At Plaid, we believe the fees banks charge for VRP payments must be capped at ten basis points to protect that low cost and make it a truly competitive alternative payment option. For small businesses, the potential savings are massive, and in the current economic climate, they’re even more critical.”
The fintech company’s policy team is also working with regulators in the EU to broaden PSD2 to include a VRP equivalent.
