UK fintechs slam regulator over ‘uncertainty’ of open banking payments

More than 20 fintech firms have criticized the UK competition regulator for its lack of clarity in defining and implementing an open banking mechanism for recurring payments.

An open letter – signed by companies including Volt, GoCardless and Plum – asks the Competition and Markets Authority (CMA) to define variable recurring payments, an alternative to direct debit or a continuous payment authority.

Variable Recurring Payments (VRP) is a form of payment instruction that allows customers to connect payment service providers to their bank accounts, allowing providers to make a series of payments on their behalf.

The letter, sent on Monday, expresses industry concerns over CMA delays in “defining and timing the implementation of variable recurring payments for sweeping.”

The companies, as well as industry body Innovate Finance, explained that without clear communication on implementation timelines, fintechs risk losing customers by not allowing them to benefit from the VRP.

Maria Palmieri, head of public policy at Yapily, one of the signatories, expressed her concerns to UKTN: “The failure of regulators to act quickly, particularly on VRP and the path to open finance, will create a barrier to innovation for open banking providers and their customers.”

Open bank payment: “Uncertainty will prevail”

The letter also expressed concern over the delay in publishing the CMA’s plans for the future of the Open Banking Implementing Entity (OBIE).

OBIE was established in 2017 by the CMA, following a report by the department on the UK banking market. The report recommends the implementation of an open banking system, which has helped new banks and fintechs to compete in the market.

The letter described a “lack of clear direction” which means “uncertainty will prevail”. This, the letter adds, could put the UK at risk of losing its position as the world leader in open banking.

Ralph Rogge, CEO of Crezco – another company that signed the letter – said UKTN: “We have built a great ship” but “the ship fulfills only a fraction of its original purpose”.

He added, “The open banking project needs clear and strong leadership to realize its full potential, which is currently lacking.”

The letter ended with a “call to urgently accelerate progress on these two issues” to provide “certainty on the future direction of open banking.”

An OBIE spokesperson said UKTN“The CMA, regulators and policymakers will soon be making key decisions on the future of open banking, open finance and other smart data initiatives.

“We must maintain the UK’s position as a leader and leverage open banking assets, infrastructure and technology to help provide open funding and drive growth in other sectors.”

The CMA responded to the letter by issuing a clarification of the Setting VRP for scanning.

The uncertainty of recurring payments in open banking is the latest clash between fintech companies and UK regulators.

Earlier this week, fintechs, banks and payment providers expressed concern that UK merchants are unprepared for the tougher online shopping security checks that have come into force.

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