Open Banking has been a subject of discussion for several years; however, in 2026 the focus is shifting from discussion to practical use.
Variable Recurring Payments (VRPs) are beginning to be utilised commercially, regulators are establishing a comprehensive long-term regulatory framework, and the retail payments infrastructure is undergoing reassessment to meet future demands. It is crucial for businesses that regularly send or receive payments to comprehend these developments.
The Numbers Behind the Shift
Before exploring Variable Recurring Payments and their significance, it’s helpful to understand the current state of Open Banking.
Over 16 million individuals and businesses now use Open Banking services, with Open Banking payments increasing by 53% annually. Variable Recurring Payments, which were primarily discussed in regulatory circles a few years ago, now account for about 16% of all Open Banking transactions.
These statistics, published by the Financial Conduct Authority in December 2025, demonstrate that Open Banking is no longer just an emerging idea but has become a well-established component of the payments ecosystem, continuing to grow rapidly.
What Are Variable Recurring Payments?
Variable Recurring Payments (VRPs) are a bank-to-bank payment method allowing businesses to automatically collect funds from a customer’s account. Unlike traditional direct debits, VRPs give customers greater control over the arrangement.
When setting up a VRP, customers approve specific limits such as a maximum per payment, a monthly cap, or a set time period. As long as payments stay within these limits, the business can collect varying amounts each time without issuing a new payment request or chasing invoices. This method is particularly useful for managing subscriptions, retainers, or any regular billing with fluctuating amounts, offering a more flexible and efficient payment collection process.
Why 2026 Is a Turning Point
Since 2018, Open Banking has been accessible, but adoption by businesses has remained slow. Initially, it was mainly utilised for consumer applications such as budgeting tools, mortgage checks, and account aggregation. However, this is beginning to change.
In 2025, 31 companies from various parts of the payments industry formed the UK Payments Initiative (UKPI) to promote the use of Variable Recurring Payments (VRPs) for businesses. The first live transactions under this initiative are expected to commence in early 2026.
The initial focus will be on sectors such as utilities, financial services, and government payments—common transactions used by millions of businesses and consumers, making them ideal starting points. Simultaneously, the regulatory structure for Open Banking is evolving. HM Treasury is expected to introduce legislation that formally empowers the Financial Conduct Authority (FCA) to regulate Open Banking. The FCA also plans to seek input on a long-term framework by late 2026 to guide the future development of Open Banking and VRPs.
What This Means for Your Business
The effect will vary based on how your business manages payments, but VRPs provide several obvious advantages.
Faster payments and improved cash flow:
VRPs operate on the Faster Payments network, meaning payments can settle within seconds rather than days. Businesses relying on BACS direct debits, which typically take about three working days, might experience quicker access to their funds.
While VRPs reduce card-related fees, payment providers may still apply processing charges. Companies should assess these costs carefully and incorporate them into pricing and cash flow strategies.
Fewer payment disruptions
Setting up a VRP is a straightforward process. Unlike card payments, there are no concerns regarding expiring or outdated card information.
If a customer receives a new card, it will not affect the existing payment arrangement. For organisations that maintain subscriptions, retainers, or recurring service charges, this can reduce the incidence of failed payments and result in a more stable revenue stream.
Easier reconciliation
Open Banking payments include structured data, simplifying the process of matching payments with invoices. When integrated with accounting software, this can decrease manual effort and reduce the chance of reconciliation mistakes.
The Regulatory Picture: What to Watch
The Payments Vision Delivery Committee, comprising HM Treasury, the Bank of England, the Financial Conduct Authority, and the Payment Systems Regulator, published its strategy for retail payments infrastructure in November 2025.
The strategy emphasises enhancing the payments system by offering more choices for consumers and businesses, promoting interoperability across different digital money types, bolstering fraud protection, ensuring fair access for payment providers, and securing long-term resilience.
To facilitate this effort, a Retail Payments Infrastructure Board, led by the Bank of England, has been formed to oversee the design of the new system. An industry-led delivery company will then handle the procurement and construction of the infrastructure.
These initiatives are long-term; most businesses won’t need to engage directly. Nevertheless, companies developing payment processes or integrating financial systems should recognise that the payments landscape will continue to develop over the next few years, and decisions made now might require adjustments as the infrastructure evolves.
How The Infinity Group Can Help
At The Infinity Group, our services extend beyond payroll. We keep clients informed about key financial and regulatory updates that could impact their business. This includes sharing insights on financial trends, industry shifts, and new tools that influence how businesses handle their finances.
Our goal is to ensure businesses remain knowledgeable and comprehend how these changes may affect their operations. Through clear updates and practical advice, we assist clients in making informed decisions and staying ready for evolving financial conditions.
Frequently Asked Questions
Are VRPs the same as direct debits?
Not quite. Both enable businesses to collect ongoing payments from customers’ accounts, but VRPs are quicker and offer more flexibility. While direct debits use the BACS system, VRPs operate via Open Banking and typically settle faster. Customers can also restrict the amounts that can be collected.
Do I need to take any action now that commercial VRPs are accessible?
Not necessarily, as VRPs are optional. However, if your business manages subscriptions, retainers, or variable invoices, it might be beneficial to consider whether they can enhance your payment process.
Is Open Banking secure for businesses?
Yes. It functions under Financial Conduct Authority regulation and employs robust bank-level authentication. Customers approve payments directly via their bank, ensuring that card details are not disclosed.
When will the new Open Banking regulatory framework be finalised?
The Financial Conduct Authority intends to consult on new long-term Open Banking regulations before the end of 2026. These regulations are anticipated to influence the future development of Open Banking and VRPs. The Infinity Group will continue to track these developments and keep clients updated.