UK firms back bank-led recurring payments over cards

GoCardless has published research indicating that most UK recurring-revenue businesses view commercial Variable Recurring Payments as their preferred alternative to legacy payment methods. The findings indicate strong interest among businesses in sectors expected to be included in the initial rollout.

The study surveyed 489 UK business leaders at companies that accept recurring payments and found broad frustration with existing systems, especially cards. Nearly three-quarters, or 73%, reported ongoing pain points with card payments, while 42% said they spend more than three hours each week dealing with related issues.

According to the research, card-related administration, fraud and other overheads cost merchants an average of 3.5% of monthly revenue. GoCardless presents commercial VRPs that use open banking infrastructure for recurring payments as a possible solution for industries such as utilities, financial services, and telecommunications.

Card friction

The figures highlight the operational burden on businesses that rely on recurring billing. Time spent resolving failed payments, handling card expiry and managing fraud checks can affect revenue collection and customer retention, particularly in sectors where regular billing is central to the business model.

Among decision-makers in the first phase of the commercial VRP rollout, 89% said the technology would significantly improve cash flow. Another 91% expected it to reduce operational costs.

The initial phase is focused on regulated and lower-risk sectors, including utilities, financial services, insurance, government, charities, and rail and travel. A later phase is expected to extend to broader eCommerce, retail and digital subscription markets.

The survey also found that 49% intend to be early adopters of commercial VRPs. This suggests many companies are willing to move quickly if the product is available through familiar payment channels and supported by banks.

Adoption conditions

The findings also point to practical concerns around execution. When asked what would encourage adoption or greater use of open banking payments, 41% of businesses cited access through their existing payment provider, while the same share pointed to wider consumer bank coverage.

This suggests demand may depend less on awareness than on delivery. Businesses appear to want a route into commercial VRPs that does not require major changes to their payment operations, along with confidence that enough banks will support the payment method.

A separate survey of 2,000 UK adults suggested there is also consumer interest, particularly among younger users. Overall, 38% of respondents said they were open to using the technology, rising to 60% among Gen Z.

Interest was strongest for essential household services. Some 46% said they would be willing to use commercial VRPs for energy bills, while 35% said the same for telecoms payments.

Industry shift

The research comes as regulators and industry participants work through a phased introduction of commercial VRPs in the UK. Supporters see the model as a way for consumers to authorise recurring bank-to-bank payments with more flexibility than traditional direct debit arrangements, although the rollout remains limited to selected sectors at this stage.

For providers of recurring services, the appeal lies in reducing failed collections and reliance on card networks. For consumers, the pitch is direct account-based payments for regular bills and subscriptions, though broad uptake will depend on trust, bank participation and ease of use.

Shaun Puckrin outlined GoCardless’s view of the market in a statement accompanying the findings.

“The numbers don’t lie: the era of settling for high-friction, legacy payment methods is over. We’re seeing openness and demand from both sides of the checkout for a more intelligent, bank-led alternative. 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,” said Shaun Puckrin, Chief Product Officer, GoCardless.