GoCardless and the Rise of Commercial VRPs for UK Businesses

Table of Contents

• 1. UK businesses see strong demand for commercial VRPs
• 2. Understanding Commercial Variable Recurring Payments (VRPs)
• 3. Current Challenges with Card Payments for UK Businesses
• 3.1 Pain Points Reported by Business Leaders
• 3.2 Time Spent Managing Card Payment Issues
• 4. Anticipated Benefits of Commercial VRPs
• 4.1 Improved Cash Flow for Businesses
• 4.2 Reduction in Operational Costs
• 5. Consumer Readiness and Interest in VRPs
• 5.1 Adoption Rates Among Different Demographics
• 5.2 Interest in Essential Services
• 6. Key Factors Influencing Adoption of Commercial VRPs
• 6.1 Access Through Existing Payment Providers
• 6.2 Need for Greater Coverage

---

UK businesses see strong demand for commercial VRPs

• UK recurring-revenue firms report persistent friction with card payments, with 73% citing ongoing pain points and an average revenue impact of 3.5% per month.
• GoCardless research suggests commercial Variable Recurring Payments (VRPs) could materially improve business performance: 89% expect better cash flow and 91% expect lower operational costs.
• Consumer appetite appears meaningful, with 38% of UK adults open to using commercial VRPs—rising to 60% among Gen Z—especially for essential bills like energy.
• Adoption hinges on: 41% of businesses want access via their existing payment provider, and 41% want broader bank coverage.

These figures are drawn from GoCardless’s reported surveys of UK recurring-revenue business leaders and UK adults, and reflect respondent sentiment rather than measured outcomes.

Understanding Commercial Variable Recurring Payments (VRPs)

Commercial Variable Recurring Payments (VRPs) are an open-banking enabled way for customers to authorise a third-party provider to initiate recurring payments directly from a bank account, with amounts and timing able to vary within agreed limits.

In practice, the payer grants consent with parameters (for example, limits and rules), and payments can then be initiated within those agreed boundaries.

Pay by Bank Consent Flow
1) Customer chooses “Pay by Bank (VRP)” at checkout or in account settings.
2) The customer is taken through their bank’s authentication flow to approve consent.
3) The consent sets boundaries (e.g., max amount per payment, frequency, overall cap, and/or rules tied to a bill).
4) Once consent is active, the provider can initiate payments when due—as long as each payment stays within the agreed limits.
5) If a payment can’t be completed (e.g., consent revoked, limits exceeded, bank not supported), it falls into an exception path: the business needs a retry, a different rail, or customer outreach.
6) The customer can manage consent over time (for example, reviewing or stopping it), so clear in-product messaging and support processes matter.
Checkpoint: before rolling out widely, confirm which customer banks are supported for the specific VRP use case and what your “fallback” payment journey is when VRP isn’t available.

They differ from:
– Card-on-file recurring payments, which rely on stored card credentials and are exposed to expiry, reissues, and chargeback processes.
– Traditional direct debit, which is typically fixed-schedule and less dynamic for variable billing use cases.

The UK rollout is phased, with early focus on “Wave 1” regulated, lower-risk sectors such as utilities (including energy and telecoms), financial services and insurance, government, charities, and rail/travel—areas where billing can be frequent, variable, and operationally costly when payments fail.

This Wave 1 framing matters because it sets expectations: initial adoption is designed to prove operational reliability in high-impact, regulated use cases before broader expansion.

Context note: public updates around commercial VRPs have emphasized live testing and phased availability, so “can we use it for our customers today?” often depends on sector, bank coverage, and provider readiness.

Current Challenges with Card Payments for UK Businesses

GoCardless’ study, Revolutionising Recurring Revenue, argues that legacy payment methods are becoming harder to justify for recurring revenue models—particularly where payment failure, fraud exposure, and manual administration erode margins and customer relationships.

Card Payment Friction Costs
– 73% of surveyed UK recurring-revenue business leaders reported ongoing pain points with card payments.
– 42% said they spend more than three hours per week managing card-payment related issues.
– The research estimates card-related friction (including fraud and admin overhead) costs businesses an average of 3.5% of monthly revenue.
These are survey-reported and modelled estimates from GoCardless’s research—useful for sizing the problem, but not the same as audited results for any one company.

Pain Points Reported by Business Leaders

Among 489 UK recurring-revenue business leaders surveyed, nearly three-quarters (73%) said they experience ongoing pain points with card payments. The same research estimates that, once fraud and administrative overhead are included, card-related friction costs businesses an average of 3.5% of monthly revenue.

For subscription-like businesses, that drag can show up as:
– failed payments and involuntary churn,
– time spent chasing customers for updated details,
– higher support volumes and reconciliation work.

Time Spent Managing Card Payment Issues

The operational burden is also explicit: 42% of respondents said they spend more than three hours per week managing card-payment related issues. For finance and operations teams, that time is often absorbed by exception handling—failed transactions, retries, customer outreach, and dispute management—rather than growth or service improvement.

Anticipated Benefits of Commercial VRPs

Against that backdrop, commercial VRPs are being positioned as a bank-led alternative designed for recurring payments—especially where amounts can change (for example, usage-based billing).

Improved Cash Flow for Businesses

In the first wave of the rollout, 89% of decision-makers believe commercial VRPs would significantly improve cash flow, according to GoCardless’ research. The logic is straightforward: fewer failed payments and more automated collection can reduce delays, smooth inflows, and improve predictability—particularly important for sectors with high volumes of monthly billing.

Reduction in Operational Costs

Cost expectations are similarly strong: 91% of decision-makers expect commercial VRPs to reduce operational costs. Savings are expected to come from fewer payment exceptions, less manual administration, and reduced exposure to card-specific overheads.

Consumer Readiness and Interest in VRPs

Commercial VRPs will only scale if customers are willing to adopt them. GoCardless’ consumer research suggests a sizeable minority is already receptive—especially younger adults and those paying essential bills.

Interpreting Consumer Adoption Signals
How to read the consumer numbers:
– “Open to adopting” (38% overall; 60% Gen Z) is a signal of willingness, not guaranteed conversion—real uptake typically depends on how familiar “Pay by Bank” feels in the moment and whether the bank flow is smooth.
– Higher interest in essential, variable bills (46% energy; 35% telecoms) aligns with Wave 1 sectors where customers already expect monthly changes and where payment failure quickly becomes a service issue.
– For older or less digitally confident segments, clarity on control (limits, ability to stop, visibility in banking apps) often matters as much as price.

Adoption Rates Among Different Demographics

In a survey of 2,000 UK adults, 38% said they would be open to adopting commercial VRPs. Openness rises sharply among younger consumers, reaching 60% among Gen Z—a cohort that is both subscription-heavy and accustomed to app-based financial journeys.

Interest in Essential Services

Interest is highest where recurring payments are unavoidable and often variable:
– 46% said they would use commercial VRPs for energy bills
– 35% said they would use them for telecoms

That matters for Wave 1 sectors, where the early commercial case is strongest and where payment failure can quickly become a customer service issue.

Key Factors Influencing Adoption of Commercial VRPs

The research suggests enthusiasm is real—but adoption will be shaped by practicalities: how easily businesses can switch on the capability, and how many consumers can use it through their banks.

VRP Adoption Decision Lens
A practical adoption lens (based on the survey drivers):
1) Coverage: What share of your customers’ banks support the VRP journey you need today?
2) Distribution: Can you enable VRPs through your existing payment provider (a priority for 41% of businesses), or will it require a new vendor and new contracts?
3) Customer journey: Where will you place VRP in checkout/billing, and what’s the “explain it in one sentence” message that reduces drop-off?
4) Operations: What happens when consent is revoked, limits are hit, or a bank can’t complete the flow—who owns the queue and what’s the fallback rail?
If you can’t answer #1 and #4 clearly, pilot first with a segment (e.g., Wave 1 customers) before defaulting everyone to VRP.

Access Through Existing Payment Providers

When asked what would encourage increased use of open banking payments (including commercial VRPs), 41% of businesses pointed to the ability to access them through their existing payment provider. In other words, distribution and integration matter as much as the underlying payment rail.

Need for Greater Coverage

Another 41% cited greater coverage—more banks offering open banking payments to consumers—as a key driver. For recurring revenue businesses, partial coverage can mean running parallel systems, which dilutes savings and complicates customer journeys.

The Role of GoCardless in the VRP Landscape

GoCardless is positioning itself as a long-time bank payments specialist ready to operationalise commercial VRPs as they move from testing into broader availability. Shaun Puckrin, GoCardless chief product officer, framed the shift as a turning point: “The numbers don’t lie: the era of settling for high-friction, legacy payment methods is over.”

The company says its product, Recurring Pay by Bank, is designed to make adoption “viable and highly effective today,” as the industry works through live testing and phased rollout. For businesses, the pitch is less about novelty and more about execution: reducing payment failure, improving retention, and lowering the cost of collecting recurring revenue.

GoCardless Support and Dependencies
What GoCardless can help with vs what may still be a dependency:
– Can help: enabling bank-payment journeys for recurring revenue, handling provider-side integration, and operationalising “Pay by Bank” as an alternative to cards for eligible customers.
– Still a dependency: commercial VRP availability and coverage by bank/sector as rollout progresses; your ability to run a clean fallback when a customer’s bank can’t support the needed VRP flow.
– Practical trade-off: the more you rely on VRP for variable billing, the more important consent design becomes (limits/rules) so you reduce exceptions rather than create new ones.
Additional context from Shaun Puckrin, chief product officer at GoCardless: “As a company that has specialised in bank payments for 15 years, it’s incredibly exciting to see the industry catching up and working together in the live testing phase to prove out commercial VRPs and we’re confident that our solution, Recurring Pay by Bank, makes adoption viable and highly effective today.”

The Future of Payments: Embracing Change with GoCardless

Understanding the Shift Towards VRPs

Commercial VRPs are emerging as one of the most consequential upgrades to the UK’s payment infrastructure in years—aimed at recurring payments where flexibility, automation, and reliability are critical. The early focus on regulated sectors reflects a deliberate attempt to prove the model in high-impact, lower-risk environments before expanding further.

The Role of Technology in Payment Evolution

Open banking rails enable bank-to-bank payment initiation with modern consent and authentication flows. For recurring billing, that creates the potential for fewer “breaks” in the payment relationship—particularly compared with cards, where expiry and reissuance are routine sources of churn and support costs.

Strategic Implications for UK Businesses

For UK firms in Wave 1 sectors—utilities, financial services, insurance, government, charities, and travel—the strategic question is timing. GoCardless’ research argues that early movers could gain an advantage through improved cash flow, lower operational overhead, and better customer retention, while laggards continue to absorb the hidden tax of card-payment friction.

This perspective is informed by Martin Weidemann’s work building and operating payment and recurring-revenue systems in regulated, multi-stakeholder environments, where integration effort, exception handling, and dispute/chargeback dynamics often determine whether a new payment rail delivers real operational savings.

This article reflects publicly available information at the time of writing on survey-reported findings and product positioning for commercial VRPs in the UK, where phased rollout means availability varies by sector and bank coverage. Percentages represent respondent sentiment in cited surveys and may not predict outcomes for every business. Scheme details, coverage, and implementation approaches may change as the ecosystem evolves, so updates may be needed.