New payment methods pose £1.5bn cost savings opportunity for UK businesses
Plaid, an open banking network and payments platform powering digital finance, has found that UK businesses could save over £1.5bn annually in payment processing fees with the help of a new form of open banking payments, Variable Recurring Payments (VRP).
As part of its efforts to help firms realise the benefits, Plaid has launched its own VRP product to make online payments work better for people in the UK and enable future recurring transfers between accounts of the same owner with one authorisation.
Used in place of existing options like direct debits and card-on-file, VRP allow businesses to authorise future payments directly from a bank account with one authorisation, giving them access to instant settlement and the option to customise customers’ payment experience, such as one-click purchases, while also minimising fees.
The Competition and Markets Authority (CMA) has mandated VRP for use cases where money is automatically moved between bank accounts held in one person’s name, also known as sweeping or me-to-me payments.
For example, moving excess funds from a low-interest current account to a high-interest savings account or topping up a current account with a low balance to avoid hefty overdraft fees. As part of the current mandate, banks must also allow open banking companies like Plaid to access APIs for sweeping at no cost.
Expensify, a payments super-app that helps individuals and businesses around the world simplify the way they manage money, is among the first customers for Plaid’s VRP product. With Plaid’s VRP, Expensify can automatically pull varying repayments from their customers’ business accounts to settle card balances.
Sophie Pinto-Raetz, who is leading the charge to launch the Expensify Card in the UK, commented: “When we set out to launch the Expensify Card in the UK, we chose to partner with Plaid because VRP are the best way to securely and quickly move money in the UK.
“Our aim is to bring the Expensify Card to the UK as quickly as possible, while maintaining the same industry-leading standards as our US version of the card: a direct and seamless integration with the Expensify app, easy options to automate card payment, and transparency throughout the entire expense and pre accounting process.
“Plaid’s cross-Atlantic presence meant that we could unlock the value of instant payments more quickly with one provider. By partnering with Plaid for VRP, we’ll be able to introduce the Expensify Card to our UK customers much sooner than it would otherwise be available.”
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