There’s been hundreds of hours spent discussing the future of Open Banking and, more specifically, variable recurring payments (VRPs). From consultation papers, working group discussions and even a blueprint – it’s a topic on everyone’s mind.
But, how closely aligned are the viewpoints of those inside the industry looking to implement Open Banking versus the merchants we’re asking to adopt it?
Andy Wiggan, chief product officer at direct bank payment provider GoCardless, and Kaley Addo, head of investment operations at saving and investing app Moneybox, offer the merchant versus payment provider perspective.
Moneybox: It’s essential to build trust in Open Banking
Kaley Addo, head of investment operations at Moneybox
Open Banking is great, and we want our customers to engage with it. But it’s a challenge as the industry has a long way to go in terms of payer trust, so we have to be the ones to go the extra step and make it really clear to our customers how they’re using Open Banking and what we’re doing with the information we collect.
We’re looking at VRPs and, at the moment, you can’t have a VRP go directly into an investing product, which is a huge weakness in the market as customers who don’t understand Open Banking will question why they can’t use it in the same way as other payment mechanisms. There are a lot of rules and regulations still to come, but we want our customers to be comfortable using VRPs and instant bank payments, and right now the lack of understanding of the technology creates a barrier.
The more people that are involved in the current VRP and Open Banking discussions, the better, and industry-wide collaboration and engagement with JROC is an essential step forward. We need to be aware of all the challenges and wider use cases associated with Open Banking, so they can be captured appropriately into the rules and regulations. That’s why we should be looking into how Open Banking can play into a variety of business models and how we can all be part of the discussions happening.
GoCardless: The stakes are too high to get this wrong
Andy Wiggan, chief product officer at GoCardless
So much has been achieved in just six years – Open Banking has gone from a theoretical concept, to one in seven digitally-active consumers having used the technology first-hand. While hugely exciting, it’s also why the stakes are higher now than ever. We’re at a critical point in Open Banking’s growth and, to many, the Phase 1 rollout of VRPs for commercial use cases represents it being time to literally put your money where your mouth is.
Kaley is right – any missed opportunities could see vital steps or use cases pushed further down the line. Worse yet, it might even hinder the whole success of testing extended VRP use cases.
The good news is that we’ve been proactively representing both our own views and those of our customers. When first formed, 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 and also led a sub-group, which looked specifically at how VRPs should function. Through this, we supported drafting the ‘commercial VRP Blueprint’ which laid the foundation for the commercial VRP pilot and a set of requirements that would not only get the pilot underway, but also a list that will address gaps that allow the product to successfully scale.
We believe VRPs could help unlock the next layer of Open Banking, and it’s crucial that we speak up to represent the views and needs of real businesses in order to get it right. But the honest reality is that it’s going to be a long road to mass adoption, and the whole payment ecosystem needs to be pulling in the same direction. And yes, there are gaps in payers’ Open Banking knowledge, but we need to approach things in the right order.
First, we must prioritise ways to make the user experience as consistent and smooth as possible. This is so that, when payers are more aware and willing to use Open Banking, they won’t be met with a friction-filled journey that puts them off despite the wider benefits.
Payments don’t change overnight, and neither will the perception of them. But we need merchants like Moneybox to champion innovation and to remind providers like us why we need to be patient and persistent on our journey towards mainstream Open Banking.
Andy Wiggan is chief product officer at GoCardless, and Kaley Addo is head of investment operations at Moneybox
