Open banking payments are scaling quickly. Financial Conduct Authority data shows there are now 16 million users in the UK, with payments up 53% year-on-year. The technology is moving from concept to commercial application, beyond account aggregation and one-off payments, towards practical recurring and flexible use cases.
Traditional recurring payment models are still built around fixed schedules and fixed amounts, which often fail to reflect how people are paid or manage their money. Commercial Variable Recurring Payments (cVRPs) are, therefore, emerging as a foundation for the next phase of account-to-account payments, enabling variable amounts, customer-set caps, and explicit consent.
That opportunity is now underpinned by a more practical market framework. Since early June, the UK Payments Initiative (UKPI) has moved commercial VRP into live operation through a multi-lateral agreement, shared rulebook and common commercial model, reducing the need for providers to negotiate bank by bank. Importantly, Wave 1 is deliberately focused on lower-risk, regulated or trusted sectors, including energy, utilities, telecoms, government and regulated financial services. For energy and utilities providers, this makes cVRP less of a future concept and more of an actionable route to give customers greater payment choice while improving collections, consent management and debt prevention.
With energy debt rising, the timing matters. Energy UK forecasts that household energy debt could reach £7bn by the end of the year, up from Ofgem’s reported £4.5bn in Q1. As bills remain under pressure, suppliers need to support debt prevention and reduce the risk of escalation, rather than relying mainly on recovery once arrears have built up.
Where current payment models fall short
Customers typically have three choices for bill payments: direct debit, standard credit or prepayment. Each has strengths, but none fully reflects the financial reality faced by many households.
Direct debit works well for many households, but its rigidity can be a weakness. If a customer has £90 available and a £100 bill is due, the system takes nothing rather than a partial payment. The result can be arrears, stress and disengagement. Although 72% of households use direct debit for energy bills, it can be poorly suited to those with uneven cashflow, including the large proportion of the UK workforce that is not salaried.
Standard credit gives flexibility in theory, because customers pay when billed. In practice, large bills can arrive at the wrong point in a customer’s income cycle, and be deferred or ignored. It also carries a cost premium: households paying this way face around £131 more a year than those paying by direct debit, and many consumers are unaware of that gap. Energy UK estimates that standard credit accounts for around half of debt.
Prepayment can help customers monitor spending, but when funds run out, so does access to energy. That makes it an imperfect substitute for households needing flexibility rather than disconnection risk.
The gap is clear: customers need a flexible, variable payment alternative that reflects modern income patterns while helping providers reduce preventable debt.
Commercial Variable Recurring Payments, and why they present an opportunity
cVRPs offer a more adaptable alternative: consent-based payments with variable amounts, customer-defined caps and greater user control. They can support intelligent flexible payments where timing or amount needs to vary, or allow customers to break payments into smaller amounts that better match their financial situation.
For people with inconsistent monthly income, cVRPs can combine the convenience of direct debit with greater flexibility. Through open banking, they can also underpin secure, permissioned insight to support better timing, clearer prompts and more responsive payment journeys.
Successful cVRP utilisation
cVRPs are a hugely promising payment technology for both customers and businesses but making them work in practice depends on disciplined deployment across four key pillars:
- A simple, trustworthy customer consent journey: Customers must understand what they are agreeing to, their payment limits, when they will be prompted, and how to change or cancel the arrangement. If the journey is unclear, adoption will be weak, and bills are more likely to remain unpaid.
- Smarter prompting and timing: Payments should be requested when they are most manageable for the customer, rather than on a fixed collection date. Open banking can help identify better moments to prompt payment.
- Strong controls, exception handling and service operations: Providers must plan for ignored prompts, disputes, failed or partial payments, and integration with customer service and back-office systems.
- Data-led intervention and vulnerability identification: Payment insight can help providers identify temporary friction, financial distress, or emerging vulnerability earlier, then offer suitable options, or route customers to support more quickly.
When these pillars are in place and underpinned by the benefits of cVRP, intelligent flexible payments can create value for both sides. Customers gain more suitable options, and a stronger sense of control. Providers can reduce payment failures, improve cashflow, and lower servicing and recovery costs, which are ultimately reflected in consumer bills. Moneyline has reported that customers using this capability for credit repayments experienced a 10% reduction in arrears compared with those using direct debit.
The opportunity is now
As cVRPs move from principle to deployment, they can change how recurring payments are managed. The question is whether organisations, particularly in sectors such as energy with high levels of recurring billing and debt risk, can deploy them in a way that is trusted, operationally resilient and designed around customer need. If they can, the industry has an opportunity to shift from debt recovery to debt prevention in an intelligent and flexible way.