Lack of VRP progress frustrating 76% of payment providers
Today, Nuapay, EML Payments’ Open Banking and account-to-account (A2A) payments business, announces the results of research into payment service providers (PSPs) and independent software vendors’ (ISVs) views on Open Banking adoption and potential barriers.
UK payment providers reported that they expect over half (51%) of their payment flows to convert to Open Banking in the next three years, with ISVs anticipating an even higher amount (57%). Additionally, one in ten ISVs expect more than three quarters (76%) of their payment flows to convert within this timeframe. This growth is expected to accelerate over the next three years by over half of UK PSPs (51%) and ISVs (57%).
Annemarie Graham, Director of Strategic Partnerships, Nuapay, comments: “The growth anticipated from PSPs highlights the amazing momentum behind Open Banking. Expecting over half of payment flows to come from Open Banking in three years is huge. The PSPs that don’t ride this wave will certainly get left behind.”
With businesses noting Open Banking’s potential, many are exploring the innovative use cases delivered by the technology. Variable Recurring Payments (VRPs) and Request to Pay (RtP) are proving to be two of the most exciting use cases of Open Banking.
VRPs present a much-improved way for billers and merchants to collect monies due, with a minimal administrative burden on themselves or their customers. RtP provides a secure messaging framework through which merchants can request payments from customers in the form of a simple message. More than three-quarters (76%) of PSPs and (78%) of ISVs are planning to integrate VRPs or RtP into their offering in the future.
However, PSPs see a lack of education and an agreed framework as key obstacles to the wider rollout of VRPs and RtP. 63% believe that the business benefits of VRPs need to be made clearer, and 57% believe that a better regulatory structure is required to make RtP a possibility.
Many of these pain points have existed for a long time. 76% of PSPs and ISVs feel frustrated that there’s still no industry framework for VRP, even though PSD2 was implemented over five years ago.
Brian Hanrahan, CEO, Nuapay, adds: “It’s fantastic to see so much optimism from PSPs and ISVs regarding the growth of Open Banking, with our findings highlighting that they expect even faster growth in the coming three years.
“VRPs have the potential to fuel this next stage of adoption. However, the industry needs a standardised framework for this to happen. In the meantime, we have created an alternative solution, Authenticated Mandates, that PSPs/ISVs can use now, that interweaves Open Banking with Direct Debits.”