UK Finance has teamed up with law firm Addleshaw Goddard to create a set of model clauses that bank account providers and PSPs can use with variable recurring payments (VRPs).
VRPs are a form of payment instructions that allow customers to authorize registered payment service providers to issue payments from their bank account on an ongoing basis, although the timing or amount may vary within agreed limits.
Financial regulators in the UK have agreed plans to introduce non-sweep VRPs in Phase 1 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 and conditions that can be used in agreements between account providers and PSPs.
They say the model clauses will help boost competition, increase efficiency by saving some of the transaction costs for bilateral negotiations between payment providers and ensure bank customers have a consistent experience.
The use of the open source model clauses is “completely voluntary”, says UK Finance, but the organization encourages the industry to use them where possible.
Jana Mackintosh, MD, Payments, Innovation and Resilience. UK Finance said: “The thought leadership and model clauses we have developed with various types of businesses, including banks, fintech companies and schemes, are a significant milestone in the evolution of variable recurring payments and a stepping stone towards a wider multilateral agreement. “
