Modulr Adds Commercial Variable Recurring Payments to Its Collections Hub

What commercial VRP changes

Traditional open banking payments have generally focused on individual account-to-account transactions that require the customer to approve each payment separately.

Commercial Variable Recurring Payments, or cVRP, extend that model to ongoing payment relationships.

A customer provides a standing authorization that defines the conditions under which a business can initiate future payments. The amount may vary from one collection to another, without requiring the customer to repeat the full authorization process for every transaction.

Modulr states that payments initiated through its cVRP service settle through Faster Payments and return real-time confirmation.

cVRP is different from a fixed subscription

A fixed subscription normally charges the same amount according to a predefined schedule.

Commercial VRP is designed for situations where the amount or collection date may change, subject to the permissions agreed with the customer.

Possible use cases include:

• Loan and credit repayments
• Variable account balances
• Wage advance repayments
• Utility or service charges
• Donations
• Other recurring account-to-account collections

The FCA describes the UK Payments Initiative as an important step in expanding open banking into commercial recurring payments and giving consumers more choice over how and when they pay for ongoing goods and services.

How Modulr is packaging the service

Modulr is providing cVRP through its Collections Hub, which combines Direct Debit and open banking payment options within one platform.

The company says existing use cases include lending businesses and earned wage access providers. These organizations can collect variable amounts while giving customers greater visibility and control over the repayment process.

The combination is important because cVRP does not automatically replace every existing collection method.

Businesses may still need several options:

• Direct Debit for established recurring collection journeys
• Card-on-file payments for card-based subscriptions and international reach
• Open banking payments for account-to-account transfers
• cVRP for eligible variable recurring collection scenarios

The operational challenge is to manage these methods without creating fragmented payment status, reconciliation and customer support processes.

The role of the UK Payments Initiative

The UK Payments Initiative provides an industry-led framework for commercial VRP.

The scheme is intended to support common rules, operational standards and commercial arrangements, helping recurring open banking payments move beyond separate agreements between individual banks and payment providers.

The FCA publicly supported the initiative on June 2 and said it expects commercial open banking schemes to increase payment competition and innovation. It also plans to consult on a longer-term regulatory framework for open banking and open finance by the end of 2026, subject to the relevant legislation.

What businesses should assess

Companies considering cVRP should evaluate more than the payment initiation API.

Important questions include:

Customer consent

What limits apply to the amount, frequency, duration and permitted use of the standing authorization?

Scheme and bank coverage

Which banks, account types, industries and transaction scenarios are currently supported?

Payment status

How quickly does the business receive confirmation, and how are rejected or unavailable payments represented?

Fallback methods

Can customers move to Direct Debit, card payment or another method when cVRP is unavailable?

Refunds and disputes

How are customer complaints, refunds, unauthorized transactions and operational errors handled?

Reconciliation

Can each payment be linked back to the correct customer, invoice, subscription or account balance?

What it means for recurring payment strategies

Commercial VRP gives UK businesses another way to design recurring collection journeys.

Its strongest value may appear in cases where amounts change frequently and businesses need faster payment confirmation than traditional collection methods normally provide.

However, adoption will depend on scheme participation, account coverage, customer consent design and the operational processes surrounding the payment itself.

For international businesses, cVRP should therefore be evaluated as one component of a wider payment-method strategy rather than a universal replacement for cards or Direct Debit.