What Is Variable Recurring Payments (VRP)?
Variable Recurring Payments (VRP) is a new regulation introduced in the UK by the Payment Services Directive 2 (PSD2) and it has been mandatory for the UK’s biggest nine banks (CMA9) to provide since July 1st 2022.
It is a method of payment that allows consumers to authorise third parties to initiate payments from their bank account on an ongoing basis. VRP payments are instant and money can be automatically transferred between accounts, such as moving excess funds into an account where it can generate interest or repay an overdraft or loan.
VRP is the last piece of the Open Banking puzzle and VRP for Sweeping (“me-to-me payments”) must be provided for free by the account servicing bank.
Why is VRP revolutionary?
VRP is revolutionary as it gives customers more freedom and flexibility in managing their finances by allowing them to customise their recurring payments. This means that customers can create and manage their own payment plans and make changes in the amount and frequency of their payments in an efficient and secure manner.
How is VRP different from PSD2?
This method of payment is different from PSD2 which was in place before as it allows for more control over payments and for customers to customise their payments according to their needs and preferences.
VRP can settle funds in seconds, which is much faster than cards and direct debits which can take up to five days. Payments are authenticated directly with the bank using strong customer authentication (SCA), which helps to prevent fraud and unauthorised transactions. Additionally, the need to store card details is eliminated, giving customers the peace of mind that their finances are being managed in a secure way.
What opportunity does VRP provide for Dreams Technology’s clients?
VRP enables Dreams Technology to offer our engagement banking products by utilising existing bank APIs, making integration quicker and easier. This makes our capabilities available even for banks that don’t offer current accounts. Moreover, the ability to sweep money from external accounts enhances our offering, allowing banks to make use of our engagement banking products and lower the acquisition threshold for new customers, as well as expand the savings potential of existing customers.
VRP is designed to empower customers. Through Dreams Technologies’ engaging UX, banks can move beyond the transactional mechanics and into a meaningful, supportive and trusted experience that meets customers’ needs and goals.
Benefits of integrating with Dreams Technology via VRP
Give your customers a reason to save more with your bank
Maximise your returns with VRP and reach a bigger share of your customers’ wallets by leveraging our behavioural science-backed solutions. Our emotionally engaging tools motivate customers to increase their savings, enabling them to quickly and easily transfer money from other banks into your own.
Lower barriers to customer acquisition and make it easier to access your services
Thanks to VRP, customers no longer have to worry about the hassle of transferring money from one bank account to another—they can easily access and utilise their funds.
Via VRP, Dreams Technology lets potential customers who bank elsewhere try your services without the need of abandoning their primary bank. Additionally, the platform’s social feature encourages organic acquisition through word-of-mouth referrals from family and friends.
Integrate with ease
Dreams Technology leverages your existing Open Banking VRP APIs, eliminating the need for setting up custom APIs for money transfers in order to support the Dreams experience. This allows you to offer your customers an entirely new service in a matter of weeks, with minimal impact on your IT team.
Provide a great saving experience even if you don’t offer current accounts
The Dreams experience helps people save for their dreams by transferring money from their existing current account into a dedicated savings account. By setting aside funds in a separate, dedicated savings account and earmarking them for a specific purpose, the likelihood of being tempted to spend on unnecessary and impulsive purchases is substantially reduced.
The VRP functionality enables your bank to provide the Dreams experience, even if your customers don’t have a current account at your bank – by simply connecting to their current account at a 3rd party bank to serve as the source account.
How does it work?
Ensure that consent is obtained when it makes sense for the user
We request consent from the customer when it makes sense to do so – when they express their intent to make their first deposit by starting a Savehack. This ensures that the customer is empowered to select where they want to move money from and agrees to enable the friction-free movement of money on an ongoing basis.
Utilise VRP to provide swift and efficient assistance in the face of the increasing cost-of-living crisis
Our sophisticated methodology is based on the latest insights from psychology, neuroscience and behavioural science, and it has been proven to effectively boost customers’ financial wellbeing and confidence in their financial management capabilities.
By helping users to transform their spending habits into saving habits, the Dreams Technology platform provides a powerful solution to the cost-of-living crisis. It helps users to save on average 160€ more per month and reduce their financial anxiety. In fact, 59% of users report feeling less worried about their finances after just 2 months of using Dreams Technology.
By utilising your existing VRP capabilities to quickly integrate with Dreams Technology, you can equip your customers with the tools they need to effectively manage the cost-of-living crisis in a matter of weeks.