Variable Recurring Payments (VRP) provide a more efficient, flexible, and secure way to handle recurring payments, with instant settlements and reduced transaction fees. Compared to using Direct Debit, VRP reduces payment costs and gives your customers more control.

You may have already encountered VRP, but you might have a few questions you need answered before you jump in. Do you need sweeping or commercial VRP? How will it fit into your current systems? What open banking infrastructure provider should you choose?

In this article, we’ll explain how VRP works, the different types available, and why Yapily is well-positioned to help your business unlock the full potential of VRP.

In this article:

• What do you need to know about VRPs?
• Sweeping VRP: automate customer transfers to optimise account balances
• Commercial VRP: streamline recurring payments directly from customer bank accounts
• 3 reasons to choose Yapily for your VRPs
• How HungryPanda used cVRP to improve the payment experience and cut costs

Wondering if VRP could benefit your business? Speak to an open banking expert

What do you need to know about VRPs?

VRPs are a fairly new form of payment that enables automatic, flexible transfers from account to account on a recurring basis without the need for manual approval. Because VRPs work through open banking APIs, businesses can pull payments directly from customer accounts without needing card-on-file systems. This reduces your costs and saves your customer from having to store their card details.

Unlike Direct Debit, which requires fixed amounts and dates, VRPs offer dynamic control, allowing adjustments to payment amounts and timing based on real-time conditions.

Commercial VRP (cVRP), sometimes known as a non-sweeping VRP is a type of VRP that involves payments between different parties, such as a customer and a business. It empowers merchants to collect recurring payments directly from a customer’s bank account without requiring card details.

For example, imagine you manage multiple subscription services for your business, such as cloud storage and software tools. With a Direct Debit, the same amount of funds would be pulled every month. But with VRPs, you can adjust subscription payments dynamically. So if your customer’s usage fluctuates, your VRP can automatically adjust the payment. This saves your customer from having to set up a new Direct Debit every time their usage changes.

The other type of VRP is sweeping VRP. This allows automatic transfers between accounts owned by the same person. It is typically used for moving money between a savings account and a current account.

For example, a business might use sweeping VRP to help customers manage their money and optimise their savings. Instead of manually transferring excess funds from a current account to a savings account, sweeping VRP can automate this process based on set rules. So whenever the balance in a customer’s current account exceeds a certain limit, the extra money could be automatically moved to a savings account.

Also, unlike Direct Debit, VRPs use Strong Customer Authentication (SCA) to provide an extra layer of security for every transaction. When a customer sets up a VRP for recurring payments, SCA verifies their identity at the outset, before any funds are transferred, almost eliminating the risk of fraud.

Learn more about VRP: Introducing Yapily Variable Recurring Payments

Sweeping VRP: streamline recurring payments directly from customer bank accounts

Sweeping VRPs are great for helping people manage their money by automatically moving funds between their own accounts. This automation can make it easier for your customers to stay on top of their finances without manual effort. And by reducing this effort, your customers are less likely to churn (as paying for your product or services is so effortless).

Here are some common use cases for sweeping VRP:

• Intelligent savings: A fintech, like a savings app, can offer customers the ability to set up rules that automatically move surplus funds from a current account to a savings account, maximising interest with no manual effort.
• Smart overdrafts: A bank or financial solution can enable customers to avoid overdraft fees by automatically covering any negative balance with funds from a linked account.
• Current account switching: Personal finance platforms can help customers automatically transfer funds to accounts with better interest rates, ensuring they’re getting the best financial returns with minimal involvement.
• Debt management: A lender or credit provider might use sweeping VRP to help customers pay down debt more efficiently. Any leftover funds after a certain date (or limit) could automatically be ‘swept’ towards paying down debt (such as credit card debt or a personal loan).
• Investment top-ups: Investment platforms could offer sweeping VRP to automatically transfer excess funds from a current account into an investment portfolio. This allows customers to consistently invest any surplus cash without needing to manually make transfers, ensuring they stay on track with their financial goals.

Find out more about how sweeping VRP could benefit your business with these 4 popular sweeping use cases

Commercial VRP: streamline recurring payments directly from customer bank accounts

Commercial VRPs bypass expensive credit or debit card fees and make it easy to adjust payment amounts. For the customer, it’s far easier to spend money with you: they don’t need to enter any card numbers.

To help you visualise the benefits of cVRP, here are some strong use cases:

• Subscription services: Businesses offering subscription-based products or services can use cVRP to automatically collect recurring payments. Whether it’s for digital media, software, or gym memberships, cVRP allows businesses to easily adjust payment amounts as needed while providing a frictionless payment experience for customers—no need to update card details or worry about failed payments.
• E-commerce: Online retailers can streamline the checkout process by using cVRP to securely collect payments directly from customers’ bank accounts. This eliminates the need for entering card details, reduces the chance of abandoned carts, and bypasses expensive credit and debit card fees.
• Utility providers: Energy, water, and telecom companies can use cVRP to automate variable bill payments. Customers can have their bank accounts securely verified once, and from then on, payments are automatically collected based on actual usage, without manual intervention.
• Insurance companies: cVRP simplifies premium collection by allowing insurers to automatically adjust payments for policies, renewals, or claims. Again, customers only need to authorise the process once: reducing admin for both your business and your customers.
• Property management: Landlords or property management companies can use cVRP to collect rent or service charges. It offers flexibility for variable payments, such as adding infrequent maintenance or cleaning costs.
• Sustainable charity donations: Charities lose out on income when people cancel fixed donations: even if it’s just a short-term reduction in disposable income. VRPs could allow customers the ability to make donations only when their account balance exceeds a certain threshold. This gives greater control and transparency to the consumer and encourages long-term income for the charities.

Dive deeper into the advantages of VRPs over Direct Debits

3 reasons to choose Yapily for your VRPs

Yapily is a leading open banking infrastructure provider that connects businesses to thousands of banks across Europe, enabling easy access to financial data and payments. By partnering with us, your business can leverage the power of open banking VRPs to transform your payment systems and deliver a frictionless customer experience.

Here are 3 reasons to work with Yapily to implement VRPs:

1. Save on transaction costs and get more control over your payment process with one of the only providers of commercial VRP

Yapily was one of the first to introduce commercial VRP to Europe in 2024, in partnership with HungryPanda. Today, we’re still one of the only providers of cVRP in Europe.

(Curious about how using cVRP helped Hungry Panda reduce costs and improve their cash flow? Scroll down to learn the full details.)

By staying at the forefront of payment innovation, Yapily is able to offer your business a more advanced, secure, and cost-effective solution for managing recurring payments. With cVRP,** customers only need to authorise payments once**, allowing businesses to bypass traditional card payments, and reducing both processing fees and the risk of chargebacks. \

So, this means that VRPs are a cheaper payment method for you to offer, and also save your customers valuable time. This allows them to spend more energy enjoying your product rather than spending their effort setting up payments.

2. Expand effortlessly in Europe, with nearly 2,000 connections

Yapily gives you access to almost 2,000 banks across 19 key European countries, including the UK, France, Germany, and the Netherlands.

With high coverage, you won’t need to worry about juggling multiple partnerships – although, you do have the freedom to use specialised providers in certain regions if you’d prefer.

Our secure API is enterprise-ready: with industry-leading uptimes and low latency, it can easily handle high loads without slowing down. Our API is ISO 27001 certified, meaning enterprise-grade security for your data.

And because we’re registered with the FCA and European equivalents, you don’t need to spend time and money getting your own PISP license: you can use ours as a third-party provider (TPP).

Our API is trusted by innovative businesses like Pleo, which transformed its payment process through our open banking infrastructure (by using sweeping VRP). By partnering with Yapily, Pleo enabled €7.3m to be paid into users’ accounts across the UK, Netherlands, and France. What’s more, 80% of Pleo users then used open banking for their next account top-up.

Get more detail on our work with Pleo: How Pleo & Yapily are changing businesses spend management

3. Maintain control over the payment process with Yapily’s white-label infrastructure

When you use a provider that doesn’t offer white-label services, you risk losing control over your customer journey. This break in branding between your business and the payment process can lead to friction, reducing trust and ultimately impacting conversion rates. A disjointed checkout experience may confuse customers, increasing the likelihood of cart abandonment and lowering overall satisfaction.

As a leading infrastructure provider, we give you the tools to fully customise your payment process, so you can maintain brand consistency across every interaction. This reinforces customer trust and can even improve your conversions (by reducing cart abandonment rates).

For businesses looking to expand quickly, Yapily offers hosted payment pages for cVRP, allowing you to maintain brand control while adapting to new regions with ease.

If you have your own PISP licence, you can take full advantage of Yapily’s complete white-label solution, where the entire payment process is branded under your name. Alternatively, if you prefer to use Yapily’s licence, we provide a compliant solution with minimal branding, keeping your payment experience professional and cohesive.

How HungryPanda used cVRP to improve the payment experience and cut costs

In February 2024, Ant International and Yapily launched Europe’s first commercial Variable Recurring Payments (cVRP) for e-commerce with HungryPanda, a food delivery platform. This new payment option allows HungryPanda customers in the UK to easily make recurring payments straight from their bank accounts, all thanks to Open Banking – no cards necessary.

Here’s how cVRP helped improve HungryPanda’s payment process:

• Streamlined payments: With cVRP, customers only need to authorise payments once, eliminating the need for repeated approvals. This created a smoother, quicker, and hassle-free payment experience.
• Reduced transaction costs: By bypassing traditional debit and credit card payments, HungryPanda cuts processing fees while also avoiding the risk and complexity of chargebacks, leading to significant cost savings.
• Accelerated cash flow: Payments are processed instantly through Yapily’s open banking platform, ensuring a real time transfer of money. This improved cash flow management and allowed HungryPanda to operate more efficiently.
• Scalable solution for growth: Built to handle frequent transactions, cVRP enabled HungryPanda to effortlessly scale its payment operations as its user base grew, without added complexity or delays.

As more businesses look to streamline their payment processes, Yapily’s cVRP offers a flexible, cost-saving solution that can transform how companies manage recurring transactions—helping them scale while delivering a better user experience.

Learn more about how Hungry Panda implemented cVRPs here: Ant International and Yapily Launch Europe’s First Commercial Variable Recurring Payments for e-Commerce, in Partnership with HungryPanda

Get ahead with VRP by working with Yapily

In many ways, VRPs are a great example of what open banking is all about. With legacy technology and processes still holding back many financial service providers and corporations, VRPs are a striking comparison of what is now available to open banking users.

The simplicity of set-up, their flexibility and lower costs will ensure that VRPs will quickly become part of everyday life. Since we’re still at the beginning stages of VRPs, now is a good time to experiment and see how they fit into your payment processes.

Get in touch with us today to learn how VRPs can benefit your business and explore our pricing options