The UK’s attempt to build a mainstream alternative to cards and Direct Debit has moved into market rollout, after the UK Payments Initiative launched a new scheme for recurring and automated account-to-account payments.
UK Payments Initiative Ltd, an industry-led company set up to develop commercial variable recurring payments in the UK, launched the scheme at Money20/20. The framework creates shared rules, commercial terms and operational standards for payments powered by open banking.
The scheme comes with significant industry backing. Founding shareholders include major banks Barclays, HSBC, Lloyds Banking Group, NatWest, Nationwide and Santander, alongside fintech firms including GoCardless, TrueLayer, Token.io, Plaid, Yapily, Revolut, Monzo, Starling, Modulr and Acquired.
The launch gives Pay by Bank a route beyond one-off transactions, where open banking payments have already gained traction. UKPI said more than 37 million open banking payments are now processed each month, but most remain single payments rather than recurring customer relationships.
Commercial variable recurring payments, or commercial VRPs, allow consumers to approve regular or variable payments directly from their bank account. The customer agrees the limits, including how much can be taken, how often and for how long. The model could be used for payments to government, utilities, charities, financial services and other recurring use cases.
Reaction to the launch ranged from support for a long-awaited Pay by Bank rulebook, to warnings that adoption, trust and infrastructure resilience will decide how far commercial VRPs can go.
Rulebook, rollout and the adoption test
Reaction to the launch ranged from support for a long-awaited Pay by Bank rulebook, to warnings that adoption, trust and infrastructure resilience will decide how far commercial VRPs can go.
For some providers, the rulebook is the main breakthrough. Open banking payments have been available for years, but recurring commercial payments needed common expectations around liability, disputes, consumer protection and incentives before they could move into wider use.
Pat Bermingham, CEO at Adflex, a B2B payments company, said commercial VRPs had been held back by the absence of agreed rules.
“cVRPs will do to Direct Debit what the digital-first banks have done to current accounts, giving payers more clarity and more control over what goes out on a regular basis. Despite the tech being ready for a while, cVRPs haven’t yet caught on because the industry couldn’t agree on the rules governing things like payment disputes and liability. With these issues now settled by UKPI we can expect these features to start appearing in UK banking apps over the next year. Compared to traditional payments, cVRPs are less costly for businesses too. This could be a real win-win.”
Pratiksha Pathak, head of payments at RedCompass Labs, a payments modernisation consultancy, also pointed to the importance of a shared commercial structure.
“The missing piece for account-to-account payments has always been a shared rulebook and commercial model that gives banks and merchants the confidence to invest. UKPI will address that directly, and securing buy-in from the four largest UK banks alongside challengers like Monzo and Revolut means the scheme has enough critical mass to move into the mainstream.”
First movers bring products to market
The launch also triggered a wave of product announcements from founding shareholders, suggesting commercial VRPs will move quickly from scheme design into live customer journeys.
GoCardless, a global bank payment company, launched Recurring Pay by Bank through the new scheme. The product enables businesses to collect recurring, flexible and automated bank payments, with intelligent routing to Direct Debit where open banking is unavailable.
GoCardless pointed to demand from recurring revenue businesses. Its research found that 89% believe the technology would significantly improve cash flow, while 91% expect it to reduce operational costs. The company also found that 38% of consumers would be open to trying recurring Pay by Bank, rising to 60% among Gen Z.
TrueLayer, an open banking payments company, launched Bank on File with Trading 212, IG Group, InvestEngine and East Lothian Housing Association. Trading 212, a retail investment platform, will use it for account funding and recurring investments. IG Group, an online trading and investment provider, will use it for recurring deposits. InvestEngine, an investment platform, will use it for recurring account funding, while East Lothian Housing Association will use it for rent payments.
Acquired, a payments platform focused on recurring payments, said its role as a founding shareholder gives it a multi-rail view across cards, Direct Debit, sweeping VRPs and commercial VRPs. The company said commercial VRPs could be used across sign-up, collection and failed-payment recovery, including moving customers from cards or Direct Debit when mandates are cancelled or cards expire.
Token.io, a Pay by Bank infrastructure provider and founding shareholder of UKPI, said the scheme gives Pay by Bank the consumer protection, dispute framework and commercial model needed to move into recurring and automated payments.
Todd Clyde, CEO at Token.io, said: “This is the first new UK payment scheme in nearly 20 years – and it exists because merchants, billers, and consumers have outgrown what traditional payment methods can offer. The UK Payments Initiative gives Pay by Bank the enhanced functionality, consumer protection, and dispute frameworks needed to scale from millions of one-off transactions to the billions of recurring, automated payments that underpin everyday commerce. Equally important, it provides a viable commercial model for banks and other ecosystem participants.”
Card habits will not disappear quickly
Several commentators said UKPI gives commercial VRPs a stronger foundation, but also pointed to the difficulty of changing payment habits.
Andrew Ducker, senior payments consultant at Icon Solutions, a payments technology and consultancy firm, said UKPI could help open banking move from a regulatory-led model to a commercial one, but the real test will be whether consumers and merchants adopt it at scale.
“The key question now is not whether the infrastructure exists, but whether it will translate into meaningful adoption at scale. Open banking has long been characterised by strong intent, but an uneven consumer pull, particularly in the face of highly embedded card payment experiences. VRPs have the potential to change that dynamic, particularly in areas such as household bills, subscriptions and frequent payments to the same merchant. However, success will depend on whether they can deliver genuinely superior customer propositions, not just alternative rails.”
Pathak also warned that changing consumer behaviour could take time, even if the commercial case is clear for merchants.
“Routing payments through UKPI bypasses card rails entirely, eliminating interchange fees and delivering instant settlement rather than the typical one-to-three-day card cycle. But getting consumers to change behaviour will be a huge challenge. Contactless launched in 2007 and did not become the preferred payment method until 2018. UKPI will likely not have that kind of runway, which means the scheme will need to quickly deliver the overlay services that build real trust, such as dispute resolution, recurring payments and refunds.”
Resilience moves into the foreground
The other major theme was infrastructure. Payments firms pointed out that a shared rulebook and bank backing only take the scheme so far if account-to-account payments cannot match the reliability consumers and merchants expect from cards.
Mark Fieldhouse, chief revenue officer at Form3, a cloud-native account-to-account payments platform, said the scheme has significant weight because of the banks and fintechs behind it, but warned that reliability will decide whether it can challenge established card networks.
“A scheme rulebook and a commercial model are necessary foundations, but what will determine whether this will genuinely challenge card network dominance is whether the underlying rails can deliver the reliability and scale that Visa and Mastercard have spent decades building.
“Securing buy-in from the four largest UK banks alongside challengers like Monzo and Revolut gives this scheme significant weight. But buy-in is just the beginning. Account-to-account payments are only as resilient as the infrastructure beneath them, and payments infrastructure must be built on the assumption that it simply cannot fail.”
Radi El Haj, CEO of RS2, a cloud-native payments technology provider, also said execution will determine whether UKPI can become a serious alternative to global card networks.
“However, launching a scheme is only the starting point. Building an alternative capable of competing with global card networks at scale is a far more complex challenge. Success will depend not simply on governance frameworks or rulebooks, but on whether the model can deliver interoperability, resilience, consumer protection and merchant-grade performance consistently across every payment use case.”
El Haj added that account-to-account payments have shown potential in markets including Brazil and India, but wider adoption requires infrastructure capable of supporting real-time orchestration, simple user experiences and operational reliability.
Sovereignty enters the payments debate
Some reactions placed UKPI in the wider debate over domestic payment infrastructure, as banks and policymakers look for alternatives to international card networks.
Pathak said UKPI forms part of a broader European move towards payment sovereignty, alongside initiatives such as Wero, the account-to-account payment system backed by the European Payments Initiative.
“Banks across Europe are increasingly aware that depending on US-owned network infrastructure carries strategic risk, and UKPI is part of a broader shift towards payment sovereignty alongside initiatives like Wero. The window to establish A2A as a genuine alternative to cards is open right now. The question is whether the industry moves fast enough to make the most of it.”
For UKPI, the immediate task is turning a shared framework into regular use across bills, subscriptions, account funding, rent payments and other repeat transactions. The industry backing is now visible. The next phase will show whether banks, fintechs and merchants can turn commercial VRPs into a payment habit.
