The UK has been operational with real-time payments for over a decade, so it is valuable to consider how instant payments are evolving. The U.S. market is very different in its complexity and its market-driven rather than government-driven approach, but there are still lessons to be learned. An opinion column in Finextra looks at the use of real-time payments to complete variable recurring payments, which apparently needs to be turned into the acronym VRP. It has not launched in the UK yet, as some of the details still need to be finalized, such as who takes liability when a transaction goes bad. It is an interesting topic, however, as it does offer a more secure transaction and reduces some of the complexities of card-on-file. Here is an excerpt from the article:
VRPs is a real game-changer, as it allows long-lived consent to licensed third parties to initiate payments on the customer’s behalf with a specific instruction set. Moreover, moving funds from one account to another happens instantly, with no human intervention.
VRPs are offering a much more flexible way of subscribing to a service directly from your bank account via an instant payment. It is easier to set up both by the merchant and by the end-customer. Once set-up, VRPs can be used for any kind of services, like:
• Moving funds from your current account to a savings or investment third-party application (sweeping – a specific VRP use case enabling transfers between your own accounts);
• Subscribing for a service using VRPs for several months to try it out, ensuring you do not end up in a subscription trap;
• Instructing the car parking vendor to automatically withdraw for the parking slot an amount of no more than 20 GBP at all times;
• Paying for utility expenses, delivery services;
• And so many more cases that are easy to apply in daily lives, including B2B and B2G payments!
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
