New research from bank payment company GoCardless reveals that outdated payment systems are significantly constraining UK businesses. According to the study, ongoing issues with legacy payment rails are costing merchants an average of 3.5 per cent of their total monthly revenue.
The report, titled Revolutionising Recurring Revenue, highlights widespread dissatisfaction with existing systems among 489 surveyed UK recurring revenue business leaders. Nearly three-quarters (73 per cent) of respondents reported experiencing ongoing pain points specifically tied to traditional card payments. Furthermore, 42 per cent stated they spend over three hours a week simply managing related issues, including fraud and administrative overhead.
The promise of commercial VRPs
To combat these friction points, the industry is increasingly looking toward the upcoming introduction of commercial Variable Recurring Payments (VRPs)—also known as Recurring Pay by Bank. This technology represents one of the most significant upgrades to the UK’s payment infrastructure in a generation, and is currently entering its ‘Wave 1’ rollout led by the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR).
The ‘Wave 1’ phase is specifically targeting regulated, low-risk sectors such as utilities, financial services, insurance, and government. Among decision-makers within this initial wave, the expectations for commercial VRPs are exceptionally high:
Within the specific financial services sector surveyed by GoCardless, the sentiment was even stronger:
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95 per cent believe commercial VRPs would help their business save money.
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92 per cent believe the technology would actively reduce the volume of late payments.
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88 per cent believe it would increase overall customer satisfaction.
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52 per cent stated they would be interested in becoming early adopters of the technology.
Consumer demand and execution
Consumer readiness appears to be aligning with corporate demand. Research conducted among 2,000 UK adults shows that 38 per cent are open to adopting commercial VRPs, a figure that jumps to 60 per cent among Gen Z respondents. Interest currently peaks around essential services, with 46 per cent willing to use commercial VRPs for energy bills, citing increased financial control and greater security.
Shaun Puckrin, chief product officer at GoCardless, emphasized that the era of settling for high-friction payments is coming to an end.
“The numbers don’t lie: the era of settling for high-friction, legacy payment methods is over,” Puckrin stated. “We’re seeing openness and demand from both sides of the checkout for a more intelligent, bank-led alternative.”
Puckrin added: “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 report concludes that early movers in the VRP space will likely gain a significant operational advantage, provided they choose the right infrastructure partners to reduce execution risk during the transition.
