cVRP explained: open banking's challenge to cards and direct debit, with David Parker

Open banking’s most consequential moment is happening quietly: #

For most of the last five years, UK open banking has been judged on user numbers and API uptime. Both have improved, but neither has produced the kind of consumer-facing alternative to cards that the original promise implied. As discussed in this episode with David Parker of Polymath Consulting, that may finally be changing. Commercial Variable Recurring Payments — cVRP — is the first open banking scheme designed specifically to compete with card-on-file and direct debit, with a published economic model, a defined launch sequence, and merchant traction starting to form. It will not become an overnight headline, but it has the potential to reshape how recurring payments work in the UK.

Phase 1 targets the merchants where the case is easiest: #

The scheme is launching in two phases. Phase 1 covers what David calls “safe businesses” — charities, utilities, investment accounts, and own-account transfers — with no consumer protection layer, a fixed fee of around 7p per transaction plus the user’s PISP cost, landing at roughly 10p to 12p all-in. This pricing makes the case obvious for high-volume, low-margin collectors. Utilities can lower their cost of collection. Charities can pass more of each donation through. The deliberate sequencing is to build volume in the segments where economics, not consumer protection, is the deciding factor.

Phase 2 introduces consumer protection and a structural pricing debate: #

Phase 2 expands cVRP to broader retail use cases with ad valorem pricing, likely around 15 basis points, and a consumer protection framework. This is where the conversation becomes more interesting. Not all merchants are equally exposed to chargeback risk, and the operational question of who qualifies as a “safe” merchant — eligible for the fixed Phase 1 fee structure — is now an open debate. A Waitrose loyalty card holder paying £250 a month looks structurally different from a high-risk online seller, even if both are technically retail. How that boundary gets drawn will materially affect cVRP’s cost advantage versus cards for different merchant categories.

Why cVRP structurally beats card-on-file: #

The strongest argument for cVRP is not price; it is control. A card on file gives the merchant ongoing access to the user’s card. cVRP gives the user ongoing control over what the merchant can take. A streaming service on cVRP can be capped at £35 per month, limited to 12 months, and revoked instantly from the user’s banking app. This is functionality that card networks did not build for consumers, partly because pull payments make those controls harder to implement, partly because the incentive structure favored the merchant side. cVRP inverts the model — and once users discover the controls, the user experience advantage compounds.

Why cVRP fixes the broken 25% of direct debits: #

Direct debit works well for 75% of consumers with predictable income. For the remaining 25%, particularly those paid weekly or with variable income, direct debit becomes a source of friction — payments fail, fees are charged, change windows are inflexible, and the support cost falls on the merchant. cVRP solves the underlying problem by using AIS (Account Information Service) calls to verify funds before initiating the pull. As David describes it, direct debit fires a missile in the dark; cVRP sends out a tracker first. For utility companies dealing with high-variability customer cohorts, this is operationally significant.

Integration is lighter than most merchants expect: #

A common assumption is that adding cVRP requires substantial reengineering of payment flows. The conversation pushes back on this. Funds arrive via Faster Payments, which most UK merchants already receive from. The main integration work happens at the gateway and reconciliation layers, not in the core payment infrastructure. The genuine challenge is operational rather than technical: Faster Payments can take five to ten minutes to settle, which matters for merchants dispatching goods immediately. For most online merchants, that delay is not material; for instant-dispatch operations, the workflow needs adjustment, but the integration is incremental, not foundational.

Brand recognition is the hidden adoption variable: #

A consistent theme in successful open banking deployments worldwide — Swish in Sweden, iDEAL in the Netherlands, Pix in Brazil — is the presence of a strong acceptance mark. Not a trust mark; an acceptance mark. Consumers need to recognize the brand at checkout, know what it means, and recognize that they have used it before. cVRP currently lacks this. The conversation suggests the scheme will need to develop and roll out a recognizable acceptance mark quickly if Phase 2 retail adoption is to scale. Without it, the technical capability is in place, but the consumer-side adoption curve flattens.

The scheme’s economics still need to find their floor: #

cVRP currently runs on donated support from large industry players. The CEO and board are in place, but the long-term economics depend on transaction volume. David notes that some industry voices privately question whether the scheme will still exist in three years. Others see a contactless-style adoption curve — slow start, sudden inflection. The signal worth tracking is merchant onboarding through Phase 2 and the response from major players. Amazon’s adoption of “pay from your bank” through open banking is the kind of signal that changes the trajectory.

The global picture is concentration, not fragmentation: #

A common framing in fintech commentary is that the payment landscape is becoming more fragmented. The conversation reframes this. Brazil’s Pix went from zero to dominant in three years — that is, concentration, not fragmentation. Europe’s Wero is being politically backed in a way that suggests consolidation rather than dispersion. Russia and India have effectively excluded international card schemes in favor of domestic alternatives. What is increasing globally is the number of relevant local payment methods that any global merchant must integrate. Whether that is fragmentation or concentration depends on which side of the integration the merchant is sitting on.

Stablecoins remain a B2B story: #

Asked about stablecoins as a payment alternative, David is direct: most practitioners agree they are a wholesale B2B proposition, not a B2C one. There may eventually be retail use cases, but the current center of gravity is in cross-border B2B settlement, not consumer checkout. This is a useful filter for fintech operators trying to decide where to allocate product investment. The hype around stablecoins is high; the consumer-facing volume is not.

Why listen: #

This episode is one of the clearest operator-level breakdowns of cVRP available in podcast form. For UK merchants, payment gateway providers, and fintech operators, it covers the specific Phase 1 / Phase 2 economics, the integration questions, the consumer protection debate, and the realistic adoption timeline. For non-UK listeners, it provides a useful lens on how alternative recurring payment schemes evolve — what works in Brazil, the Netherlands, and Sweden, and what the UK is and is not getting right. David Parker’s framing — crawl, walk, run — is also the most accurate description of where open banking actually sits, free of the hype that has surrounded the topic for years.