UK Finance Calls for New Open Banking Standards

The U.K. should develop new open banking standards, according to a new report on open banking payments issued by the trade association UK Finance.

“There are now over 2.5 million open banking payments a month compared to just 320,000 in the whole of 2018, and the recommendations in the report will help support the development of more products and services for consumers,” the group wrote.

The report, which was released on Monday (Nov. 22), offers two key recommendations. First is the “further development of open banking payment standards,” backed by industry governance and a related technical group. “This should be considered following the CMA’s decision on open banking governance and a successor body to the Open Banking Implementation Entity,” the report says.

The report also recommends a “multi-lateral industry framework” that lays out different roles, responsibilities and liabilities for various market participants. Without this voluntary framework, there could be fragmentation in the market, UK Finance says.

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The report notes the growth of open banking eCommerce payments, and that the use of variable recurring payments (VRP) could someday extend open banking to subscription payments and give customers more choice about how they pay, while also offering an alternative to card-based payments.

UK Finance says it recently supported a VRP Hackathon that illustrated use cases for such open banking payments, such as pre-authorizing expenditures to prevent kids from overspending on in-game purchases or helping small businesses collect payments faster.

“The shared vision for open banking payments is to offer customers and merchants a greater choice in how payments are made and received,” said Jana Mackintosh, managing director of payments and innovation at UK Finance. “The recent VRP hackathon demonstrated new and innovative ways open banking payments could be used to make it easier to pay tax, make gaming payments and shop online. Open banking has an exciting future, and the payments industry is working together to consider how the market could be enhanced for customers and merchants.”