Open Banking Payments in 2026: Why Variable Recurring Payments Matter

Summary

Open banking payments are moving from simple one-time bank transfers to more flexible recurring payment models. Variable Recurring Payments, or VRPs, allow customers to authorise payments from their bank account within agreed limits. For businesses, this can mean fewer failed payments, faster settlement, better cash flow, and more control for users.

Prepared by ilink, a fintech and blockchain development company that helps businesses build secure payment systems, digital banking products, and financial infrastructure.

Introduction

Recurring payments are part of everyday business.

Companies use them for subscriptions, SaaS products, utilities, insurance, memberships, loan repayments, marketplace services, and B2B invoices. 

But many traditional payment methods still create friction: Cards expire. Payments fail. Direct Debit can feel slow and rigid. Users may not always understand what they authorised. Businesses often need better visibility, faster settlement, and more reliable recurring revenue flows.

This is where open banking payments are becoming more important. In 2026, Variable Recurring Payments are one of the most important developments in open banking. The FCA described the launch of the UK Payments Initiative in June 2026 as a major step for open banking and commercial Variable Recurring Payments.

For businesses, VRPs are not just another payment method. They can become a more flexible way to collect recurring or variable payments directly from customer bank accounts.

What Are Open Banking Payments?

Open banking payments allow customers to pay directly from their bank account through secure API connections between banks and authorised payment providers.

Instead of entering card details, the user confirms the payment through their banking app or bank authentication flow. The money then moves through bank payment rails.

Open banking first became widely known for account data sharing. Over time, it has expanded into payment initiation, account-to-account payments, and now more advanced recurring payment models.

This matters because businesses are looking for payment flows that are faster, clearer, and less dependent on card infrastructure.

What Are Variable Recurring Payments?

Variable Recurring Payments are open banking payment instructions that allow an authorised provider to initiate multiple payments from a customer’s bank account within agreed limits.

Open Banking Limited describes VRPs as a payment instruction that lets customers safely connect authorised payment providers to their bank account so payments can be made on their behalf within agreed limits.

The customer gives consent once and sets rules for future payments.

These rules may include:

1. Maximum payment amount;
2. Payment frequency;
3. Payment period;
4. Destination account;
5. Expiry date;
6. Cancellation options.

After that, payments can happen automatically as long as they stay within the agreed parameters.

This makes VRPs useful for businesses where payment amounts can change from month to month but still need to be predictable, secure, and transparent for the customer.

Why VRPs Matter in 2026

Variable Recurring Payments matter now because open banking payments are moving into real commercial use.

The FCA’s 2025 open banking progress update said VRPs already accounted for 16% of all open banking transactions and allow consumers and businesses to set up flexible, automated payments with more control than traditional Direct Debit.

Open Banking Limited also called the UK’s first commercial VRP scheme an important industry milestone and noted that VRPs are becoming a scalable payment model for consumers and businesses.

For businesses, this shift is important because recurring payments are often directly connected to revenue stability. If payments fail, subscriptions can be interrupted, customer support costs rise, and cash flow becomes less predictable.

VRPs can help solve these problems by making recurring payments more flexible and more connected to real customer consent.

VRPs vs Direct Debit, Cards, and Standing Orders

Variable Recurring Payments are often compared with cards, Direct Debit, and standing orders, but they solve a slightly different problem.

Cards are widely used for subscriptions and online payments, but they can fail when a card expires, is replaced, or is blocked by the issuer. For businesses, this creates failed payments, revenue interruptions, and extra recovery work.

Direct Debit is reliable for many regular bills, but it can feel less flexible for modern digital products where payment amounts change often. It also does not always provide the same real-time payment experience that users expect from fintech apps.

Standing orders give customers control, but they are usually better suited to fixed recurring amounts. They are less useful for usage-based services, variable subscriptions, or businesses that need more flexible payment logic.

One-off open banking payments are useful for single bank transfers, but they are not designed for repeated payment collection.

Variable Recurring Payments combine several useful elements in one model. They allow payments to happen directly from a bank account, support changing amounts within agreed limits, and give customers more visibility over what they have authorized.

For businesses, this makes VRPs especially useful when payment amounts can vary but the customer still needs control and transparency.

Why Businesses Should Care About Variable Recurring Payments

For businesses, Variable Recurring Payments can improve payment operations in several practical ways.

1. Fewer failed payments. Card payments can fail because of expired cards, replaced cards, insufficient details, or issuer declines. VRPs reduce dependency on stored card credentials because payments are connected directly to the bank account.
2. Better cash flow. Open banking payments can support faster settlement than some traditional payment methods. For businesses, faster access to funds can improve cash planning and reduce delays.
3. More flexible billing. Many modern businesses do not charge the same amount every month. Usage-based SaaS, utilities, financial services, insurance, and marketplaces often need variable payment amounts. VRPs are designed for this kind of model.
4. More customer control. Customers can set consent rules, limits, and cancellation options. This can make recurring payments feel more transparent and easier to manage.
5. Lower operational friction. When recurring payments are clearer and more reliable, businesses can reduce failed payment recovery, manual follow-ups, and support tickets.
6. Better payment experience. A smooth VRP flow can make recurring payments feel simple. Users do not need to re-enter card details or manually approve every payment, as long as the payment stays within the agreed rules.

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Where Variable Recurring Payments Can Be Used

VRPs are especially useful for businesses that need recurring, flexible, or usage-based payments.

Common use cases include:

1. SaaS subscriptions;
2. Utility bills;
3. Insurance payments;
4. Loan repayments;
5. Wealth management and savings transfers;
6. Membership platforms;
7. Marketplace fees;
8. B2B recurring invoices;
9. Usage-based billing;
10. Financial service payments.

For example, a SaaS platform may charge customers based on usage. A utility provider may collect different amounts each month. A finance app may move funds automatically between accounts. A marketplace may need flexible recurring fees from sellers. In each case, the customer needs control, and the business needs reliable payment collection.

Why VRPs Improve Customer Experience

Good payment UX is not only about speed. Users also want control, transparency, and trust. They want to understand what they are authorizing, how much can be taken, when payments can happen, and how they can cancel consent.

VRPs can improve customer experience because they make the payment agreement clearer. The user does not simply hand over card details and hope everything works. They approve a recurring payment setup with defined rules.

A good VRP flow should explain:

1. Who will receive the payment;
2. How much can be charged;
3. How often payments can happen;
4. When the permission expires;
5. How the user can cancel or change consent.

This is why VRPs are not only a payment infrastructure topic. They are also a fintech UX topic. If the flow is confusing, users may not trust it. If the flow is clear, businesses can offer a payment experience that feels safer and easier than traditional recurring methods.

What Businesses Need Before Implementing VRPs

Adding Variable Recurring Payments is not only about connecting an API. A business needs to think about the full payment journey, from user consent to reconciliation and reporting.

Before implementation, companies should consider:

1. Which open banking provider or bank connection will be used;
2. How customer consent will be collected and managed;
3. What limits users can set;
4. How failed payments will be handled;
5. How refunds and disputes will work;
6. How payments will appear in the user interface;
7. How finance teams will reconcile transactions;
8. How reporting and analytics will work;
9. How security and compliance will be managed;
10. How VRPs will work alongside cards, Direct Debit, and other payment methods.

This is where product design and backend architecture become important. A weak implementation can make VRPs feel risky or confusing. A strong implementation can turn them into a clear business advantage.

Challenges of Variable Recurring Payments

Variable Recurring Payments have strong potential, but businesses should approach them realistically.

Customer awareness is still developing. Many users understand cards and Direct Debit better than open banking payment flows. This means businesses need to explain VRPs clearly.

Availability may also depend on market, bank support, and commercial rollout. The UK is moving ahead with commercial VRPs, but adoption will still take time across different sectors.

Another challenge is user experience. If consent screens are too technical, users may hesitate. If cancellation rules are unclear, trust can fall. If failed payment handling is poorly designed, support teams may face more questions.

VRPs should not be treated as a full replacement for every payment method. In many cases, they will work best as part of a broader payment strategy that includes cards, Direct Debit, digital wallets, account-to-account payments, and payment orchestration.

The Future of Open Banking Payments

Open banking is moving from data access to real payment infrastructure.

Variable Recurring Payments are part of this shift because they make account-to-account payments more flexible and useful for commercial products.

In the future, businesses may combine VRPs with payment orchestration, instant payments, fraud monitoring, digital wallets, embedded finance, and automated reconciliation.

The direction is clear: recurring payments are becoming more programmable, more transparent, and more user-controlled.

Businesses that prepare early can build payment products that are easier to scale and better suited to modern customer expectations.

FAQ

What are some examples of open banking?

Open banking is used in account-to-account payments, budgeting apps, credit scoring, personal finance dashboards, automated savings, subscription payments, and business finance tools. For example, a user can pay directly from a bank account without entering card details, or a business can connect bank data to accounting software for faster reconciliation.

What is open banking in simple terms?

Open banking means that banks can securely share customer-approved financial data or payment access with authorised third-party providers. In simple terms, it allows users to connect their bank account to trusted apps or services to make payments, manage money, or use financial tools more easily.

What is open banking vs traditional banking?

Traditional banking usually keeps financial data and payment services inside the bank’s own system. Open banking allows authorised fintech companies and payment providers to connect to bank accounts through secure APIs, with customer permission, making it easier to build faster payments, financial apps, and personalised services.

Which banks do not support open banking?

There is no single global list of banks that do not support open banking because support depends on the country, regulation, and each bank’s technical readiness. In regulated markets such as the UK and EU, many major banks support open banking, while smaller banks, credit unions, or banks in less developed open banking markets may offer limited or no support.