The recent launch of the UK Payments Initiative Ltd (UKPI) scheme is an important development for the UK payments market. It creates an industry-led framework for variable recurring payments (VRPs), helping to move open banking beyond one-off account-to-account payments and towards more scalable recurring payment use cases. This is particularly relevant for financial services and fintech firms exploring alternatives to cards and direct debit for ongoing customer payment journeys.

UKPI has been established to develop and operate a commercial scheme for VRPs in the UK. The scheme is intended to support secure, scalable account-to-account payments under a shared rulebook, commercial model and operational standards. According to the FCA, VRPs already account for around 16% of open banking payments, and the regulator expects the framework for open banking to continue developing during 2026 as legislation and consultation on a longer-term regulatory model progress.

For firms in financial services and fintech, the scheme could expand the practical use of pay-by-bank models for recurring and variable payments. Potential applications include loan repayments, savings contributions, investment top-ups, insurance premium collections, subscription-based financial products and other flexible customer payment arrangements. If adopted at scale, VRPs may offer a lower-friction and potentially lower-cost alternative to some existing card-on-file and direct debit models.

The proposition is also relevant from a customer experience and compliance perspective. VRPs are designed to give customers more control over payment permissions, including limits on amount, frequency and duration. That could support better customer outcomes and transparency, while also requiring firms to think carefully about consent design, disclosures, dispute handling and operational resilience.

Key points

• The scheme is designed to support recurring and automated account-to-account payments powered by open banking.
• Initial use cases are expected to include financial services, government, utilities and charities.
• The framework includes a shared rulebook, commercial model and operational standards intended to support wider market adoption.
• Consumer safeguards and dispute processes are intended to be built into the model from the outset.
• The FCA has indicated that it will consult on a longer-term regulatory framework for open banking by the end of 2026, subject to legislation.

What firms should be doing now

• Assess where recurring customer payment journeys could benefit from an account-to-account alternative.
• Review product, legal and compliance frameworks for customer consent, disclosures, complaints and disputes.
• Monitor the development of the UKPI scheme, including eligibility, technical standards and commercial terms.
• Track the FCA's wider open banking and open finance reforms, as these may shape the long-term regulatory framework for these services.
• Consider whether participation or partnership opportunities could support product innovation or reduce payment friction.

The launch of the UKPI scheme may create new opportunities for financial services and fintech firms to redesign payment journeys, reduce reliance on traditional payment methods and offer customers more flexible payment options. The key question now is how quickly the model can achieve the scale, coverage and trust needed for mainstream adoption.