The Ultimate Guide to Variable Recurring Payments for UK Businesses

What You Will Discover

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Introduction

If your business collects recurring payments from customers in the UK, you know the challenges of direct debits – high costs, failed payments, and a clunky customer experience. Fortunately, a new payment solution solves all these problems: Variable Recurring Payments (VRPs).

In this guide, we’ll explain what VRPs are, how they work, and how they can benefit your business. We’ll also show you how to quickly get started with VRPs using Finexer’s open banking platform.

What are Variable Recurring Payments?

Variable Recurring Payments (VRPs) are a new way to collect recurring payments using open banking APIs. They allow customers to safely connect their bank account to a business and authorise them to take payments on a recurring basis within agreed-upon limits.

Unlike direct debits, VRPs use live bank account data to validate each payment against the customer’s actual balance. This reduces payment failures and ensures payment on time. Customers have complete transparency and control, with the ability to set payment limits and cancel anytime.

Advantages of VRPs over Direct Debits

VRPs offer several advantages over traditional direct debits for collecting recurring payments in the UK:

Feature	Finexer’s VRPs	Direct Debits
Setup & Verification	Fully digital, instant setup via open banking	Paper forms, manual verification, 3-5 days to set up
Success Rates	Higher success rates due to real-time account balance checks	Lower, payments can fail due to insufficient funds
Costs	Lower transaction fees, no setup or admin fees	Higher transaction fees + setup & admin fees
Control	Customer sets payment limits, can cancel anytime	Less transparency & control for customers
Speed	Payments settle instantly	Payments take 3-5 days to clear

With VRPs, businesses can onboard new customers instantly without cumbersome paperwork or delays. Payments are more reliable, settling immediately and reducing failures. The costs are significantly lower—up to 70% cheaper than direct debits. Customers have complete control over their payments, enhancing trust.

How Do VRPs Work?

Here’s a simple overview of how Variable Recurring Payments work:

1. Authorisation: The customer authorises the business to take recurring payments from their bank account via an open banking consent flow. They authenticate directly with their bank to approve the VRP mandate.
2. Payment Setup: The customer sets maximum payment amounts and frequency limits on the VRP instruction, protecting them from unauthorised overpayments.
3. Payments: On each payment date, the business submits a payment request via their open banking provider. The provider instantly validates the request against the customer’s balance and the VRP payment limits.
4. Settlement: If the payment is approved, funds are instantly debited from the customer’s account and settled into the business’s account. If it fails, the business is notified in real time.
5. Control: The customer can view, modify or cancel their VRP instruction anytime through online/mobile banking. The business can manage mandates via its open banking provider.

Using live account information, VRPs prevent payments from failing due to outdated account details or lack of funds. This ensures reliable, predictable cash flow for the business.

📚 Learn more about Finexer’s VRP

Implementing VRPs with Finexer

Finexer is a leading open banking platform that makes it easy for any UK business to start collecting Variable Recurring Payments. With Finexer’s simple API and dashboard, you can start taking VRPs in less than a day. Here’s how it works:

1. Integrate Finexer: Add Finexer’s secure “Pay with Bank” button or payment API to your website, app, or invoices. Finexer provides simple drop-in components and detailed documentation.
2. Customer Authorisation: When customers are ready to pay, they select their bank, authenticate via their bank’s app or online banking portal, and authorise the VRP with specified limits. Finexer handles this consent flow seamlessly.
3. Collect Payments: On the payment schedule you define, Finexer automatically submits payment requests, validates them against VRP limits, and settles the funds instantly into your account.
4. Manage & Reconcile: Finexer’s web dashboard allows you to view and manage all your VRP mandates, payment statuses, and reporting. You can also integrate real-time payment data into your systems via Finexer’s webhooks and APIs.

Finexer offers simple, transparent pricing with no setup fees, monthly fees, or hidden costs – just low, flat transaction fees that are 50-70% cheaper than direct debits and cards.

Getting Started with VRPs

To start collecting Variable Recurring Payments with Finexer, create your free account. Once signed up, you can access API keys, testing environments, and integration guides.

Finexer’s expert support team can guide you through every step of the VRP integration process. If you have any technical questions or need guidance, just contact the team—they’ll be happy to help.

Start Collecting VRPs Today

Variable Recurring Payments are a faster, cheaper and more reliable way for UK businesses to collect recurring payments from customers. With VRPs and open banking platforms like Finexer, you can reduce costs, prevent failed payments and drastically improve your cash flow.

Implementing VRPs is quick and easy. Create your Finexer account now, or Talk to our Sales team to automate payments. Leave clunky direct debits behind and join the open banking revolution with VRPs!