The UK needs a better model for recurring payments
Recurring payments underpin a huge part of the modern economy. Utility bills, subscriptions, memberships, account top-ups and digital services all rely on payments that happen automatically in the background.
Yet much of the infrastructure behind them was designed for a different era.
Today most recurring payments rely on direct debits or card-on-file payments. Both have served the market well, but they also come with limitations. Direct debits can be slow and inflexible, while card-based payments often offer limited transparency for consumers and can be expensive for businesses.
This is why the industry has been developing variable recurring payments, using existing open banking technology.
At UK Payments Initiative we are working with industry partners to create a commercial framework that enables this capability to scale across the UK payments ecosystem.
The concept is straightforward. Instead of giving a company open-ended access to take payments from an account, a customer can grant permission within defined limits. For example, allowing payments up to a certain value within a set timeframe.
It is a simple change, but an important distinction from both direct debits and card-on-file.
It introduces clearer control and visibility for consumers while maintaining the convenience of automated and one-click payments. For businesses it offers faster confirmation of payments and infrastructure that is designed for the digital, real-time economy.
This matters because the nature of commerce is changing.
We are moving steadily towards an economy where more services are delivered continuously rather than through one-off transactions. At the same time, digital platforms and automated services are increasingly able to act on behalf of customers.
In that environment, payment systems need to support flexible and controlled ways of moving money. A model based on clear permissions and defined limits is far better suited to that future.
The National Payments Vision
There is also a broader infrastructure point. Payments are a critical part of the UK’s economic infrastructure. When payment systems fail, the consequences are immediate.
The UK’s National Payments Vision (NPV) sets out an ambitious goal: building a trusted, world‑leading payments ecosystem powered by resilient infrastructure and clear regulatory foundations.
UK Payments Initiative is introducing a new way to collect repeat payments, within consumer-defined limits, giving businesses and banks a modern, interoperable alternative to legacy collection methods. This boosts resilience by providing a new network for payments to run through and rely on.
Ensuring that infrastructure evolves alongside the digital economy is essential if the UK is to remain a leader in payments innovation.
Next steps
UK Payments Initiative is now entering the next phase of development, focusing on application to real-world recurring payment use cases including:
- Regulated financial services – paying into your pension, mortgage or investments
- Utilities – paying your electricity, gas, water or phone bill
- Local and central government
- Charities – making donations or payments
- Rail – buying a ticket
Further down the line, UK Payments Initiative will be looking at applications in e‑commerce and even physical point‑of‑sale. Watch this space for future announcements!
