Adflex has been at the forefront of the B2B fintech revolution since its launch in 2001. It is known for its commitment to innovation and helping companies unlock the potential of digital payments. It covers a range of technologies including travel data, B2B procurement, B2C payments, supplier on-boarding, BACS, SEPA, ACH and hybrid card/BACS payment systems.
Pat Bermingham has been CEO at Adflex since the firm launched and is ideally placed to discuss the potential for B2B payments to catch up with their B2C counterparts. He argus that corporate buyers will soon expect the same simplicity as they get when buying items in their personal lives.
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Take more nuanced services like Variable Recurring Payments (VRP). VRPs are simply an evolution of the current direct debit scheme. They allow a business to make a series of payments ahead of time to better forecast spend and facilitate more informed decisions.
EPI: How are Variable Recurring Payments (VRPs) currently being used and what impact have they had on electronic payments in the UK?
Pat Bermingham, CEO, Adflex
One of the most common uses for VRPs in the UK is ‘sweeping’. It was back in Autumn last year that the Competition and Markets Authority (CMA) announced that all nine major banks under its remit had now implemented key open banking services, which included Variable Recurring Payments (VRPs) for ‘sweeping’. Sweeping lets banking customers set up automated transfers between their bank accounts, based on pre-defined instructions. This might be transferring money from a current account to a savings account to access better interest rates or moving money to avoid going into an unarranged overdraft.
Implementing sweeping was for sure an important milestone in the roll out of VRPs, but its impact hasn’t been transformative. For VRPs to reach the levels of adoption that many analyst houses are predicting, more use cases need to be rolled out beyond just sweeping, and without stating the obvious, the roll outs need to go well. The good news is that this year, the Financial Conduct Authority (FCA) is overseeing new implementations of Commercial VRPs (cVRPs).
EPI: What are cVRPs and are they different from ‘standard’ VRPs?
Bermingham:
A ‘standard’ VRP allows users to move money between their own accounts. A cVRP uses the same functionality as a VRP, but for consumer to businesses (C2B), or business to business (B2B) payments.
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By GlobalDataYou might be thinking, ‘but isn’t that very similar to Direct Debit?’. In some ways, yes: both allow users to set up automated, regular payments. However, cVRPs also enable automatic adjustments to a payment, without needing to take any manual action, so long as they’re within the initial terms agreed.
Take a monthly subscription as an example, such as an Audible subscription. With cVRPs, I could set up a term for my Audible subscription that stops payment being taken if my bank account is overdrawn. Or, Audible could in theory offer varying subscription rates based on how many books I actually listen to during a month, scaling up or down automatically based on my usage. Direct Debit cannot do these things.
As more and more businesses switch to monthly subscription models for payments, VRPs and cVRPs are far better suited for modern payment behaviours.
EPI: What are the next steps for the rollout of cVRPs in the UK?
Bermingham:
As I briefly mentioned earlier, the FCA recently assumed ownership of regulatory oversight for open banking in the UK, and so will be responsible for the upcoming cVRP rollouts. ‘Phase 1’ of this roll-out will include “lower-risk” cVRP use cases, such as local and central government payments, utility payments and charity donations. You can expect to see these rollouts begin from Q3 this year.
On 9 April 2025, Open Banking Limited (OBL) published the Commercial Model for this “Phase 1” roll out and is currently asking for feedback on the proposed model from industry stakeholders. The deadline for sharing feedback is 16 May 2025.
A cVRP multilateral agreement (MLA) is also in the final stages of development, designed to enable easier market access for participants and to provide clarity on the required functionality, pricing, dispute resolution and liability of cVRPs.
This rollout is undoubtedly a significant and critical milestone for VRPs. If it goes well, then I expect we’ll start to see cVRPs in loads of different C2B payment scenarios. There is also huge potential for cVRPs in the trillion-dollar B2B payment space, where we could witness the most concrete success story in the open banking era so far.
EPI: Are cVRPs suited to B2B payments?
Bermingham:
In a word: yes.
Many businesses today are still spending far too much time managing payments. I’ve spoken to multiple finance departments that spend up to one working week every month managing payments! That’s staggering to me when it simply doesn’t have to be like this. cVRPs are one digital solution that could open the door to huge time savings.
In the B2B space, cVRPs enable a buyer to set up several payments in one go, reducing administrative overhead. cVRPs enable you to flex the timing and amount of a recurring payment based on the level of service delivered, giving greater control and power to the buyer, while facilitating real-time settlement. This can result in healthier cashflow and better liquidity for businesses.
cVRPs also offer better visibility of incoming and outgoing payments compared to manual solutions, enabling businesses to operate with confidence, reinvesting and growing their operations in a sustainable and measured way.
A big attraction for businesses will undoubtedly be that, as an A2A payment process, cVRPs also bypass card schemes, potentially avoiding interchange fees. This would benefit businesses operating at scale, or SMEs operating with tight margins.
cVRPs also boost payment security, employing Strong Customer Authentication (SCA) – a requirement of the Second Payment Services Directive (PSD2) – at the start of the payment process, verifying identity before any funds are transferred, enhancing convenience and reducing the risk of fraud.
EPI: Will cVRPs transform B2B payments?
Bermingham:
Both yes and no. By lowering administrative demands on recurring invoices, such as payments for regular stock, IT subscriptions or licenses, or payments to the supply chain and subcontractors, cVRPs will be extremely beneficial to many firms.
But despite the benefits I just outline, a key difficulty cVRPs face is that other payment methods, like commercial cards, are already woven into business payment systems, as well as in the wallets of commercial cardholders, who stand to gain from attractive reward programs.
B2B transactions can be complex, requiring multiple layers of authorisation that VRPs aren’t equipped to handle. Commercial cards enable tracking tools and extended payment terms that can be preferable to many business buyers.
So, I believe cVRPs will likely complement, not replace, commercial (or indeed, virtual) cards. They are well-suited to recurring invoices, for regular, predictable supplier payments. But more needs to be done before we can reach this point: better technical integration, more regulatory oversight, closer collaboration between banks, TPPs (third-party providers), and learning from the lower-risk rollouts taking place this year.
Cards will remain dominant for big-ticket transactions, but if managed well, cVRPs could help lighten the load, managing regular, flexible payments and encouraging prompt payment, preferred supplier status and repeat business.
