UK Finance creates model clauses for commercial VRP rollout

UK Finance, in association with law firm Addleshaw Goddard, has released a report that sets out model clauses for variable recurring payments (VRPs) with the aim to support the development of VRPs for commercial applications in the UK.

The two organisations, along with 12 UK Finance members, including six banks and five fintechs, have developed a set of proposed standard arrangements which could inform a multi-lateral agreement or bi-lateral contracts.

All of the model clauses in the report are open source and can be used entirely voluntarily, although UK Finance is encouraging all stakeholders in the Open Banking ecosystem to consider their use “where possible”, and for the industry “to take this opportunity to collaborate and drive the adoption and utility of VRPs”.

The model contractual terms contained in the report can be used in arrangements between account providers and PSPs that are building and developing these propositions.

The Joint Regulatory Oversight Committee, which is made up of the Financial Conduct Authority, Payment Systems Regulator, Competition and Markets Authority, and HM Treasury, has previously announced it is targeting a Phase 1 rollout of non-sweeping VRPs by the third quarter of 2024, after identifying VRPs as a key test case for premium APIs.

The report from UK Finance and Addleshaw Goddard also addresses the main issues and processes that are needed to develop VRPs for commercial applications, and sets out recommendations for how those issues can be addressed through contractual arrangements.

Jana Mackintosh of UK Finance

Jana Mackintosh, managing director for payments, innovation and resilience at UK Finance, said: “The thought leadership and model clauses we have developed with different types of firms, including banks, fintech and schemes, are a significant milestone in the progression of Variable Recurring Payments and a stepping-stone to a wider multilateral agreement.

“We look forward to working with the Joint Regulatory Oversight Committee and all stakeholders in the Open Banking ecosystem to maximise the opportunities Variable Recurring Payments have to offer, and in particular, expand Variable Recurring Payments through a commercially-driven model that has customers at its heart with carefully targeted regulatory support.”

Charles Damen, Token.io’s chief product officer and co-chair of the cVRP Model Contract Clause Working Group, said that commercial VRPs support “a vast array of use cases”, from ‘one-click’ and recurring ecommerce payments, to payments for utilities, government and financial services.

”The model clauses report will accelerate the rollout of commercial VRPs in the market in the short term via bilateral arrangements with banks, as well as contributing to the foundation for a broader multilateral agreement in the medium term,” he added.