UK Finance has teamed up with law firm Addleshaw Goddard to put together a set of model clauses that bank account providers and PSPs can use in variable recurring payments (VRPs).
VRPs are a form of payments instruction that allows customers to authorise registered payment service providers to initiate payments from their bank account on an ongoing basis, where the timing or the amount might vary, within agreed limits.
Financial regulators in the UK have agreed plans for a Phase 1 roll out of non-sweeping VRPs by the third quarter of 2024.
To support the development of VRPs for commercial applications, UK Finance and Addleshaw Goddard have put together a set of model contractual terms that can be used in arrangements between account providers and PSPs.
The model clauses, they say, will help with driving competition, increasing efficiencies by removing some of the transaction cost of bilateral negotiations between payment providers, and ensuring banking customers have a consistent experience.
Use of the open source model clauses is “entirely voluntary”, says UK Finance, but the organisation is encouraging the industry to use them where possible.
Jana Mackintosh, MD, payments, innovation and resilience. UK Finance, says: “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.”