Your gym membership, your Spotify family plan, and increasingly your online supermarket shop are quietly moving off Direct Debit and onto something called a Variable Recurring Payment. Barclays, NatWest and Monzo have all switched on VRP rails for retail checkout in the past year, and the number of merchants offering it as a payment option at the till has gone from a handful of energy suppliers to several hundred household names. If you haven't noticed the shift yet, you will the next time a checkout page offers "Pay by bank" alongside the usual card logos. Direct Debit has run UK bill payments since 1968, backed by the Direct Debit Guarantee that refunds you instantly if a company takes the wrong amount. VRPs work differently: you give a specific merchant permission, through your own banking app, to pull payments within limits you set — a maximum amount, a maximum frequency, an expiry date. The permission lives inside Open Banking rails regulated by the Financial Conduct Authority, not inside the older Bacs system that clears Direct Debits. That distinction matters more than it sounds, because it changes who can see what, how fast a payment settles, and what happens when something goes wrong.
Why banks are pushing this now
The honest answer is cost. A Direct Debit collection costs a merchant somewhere in the region of 20–30p in Bacs and processing fees, according to figures Pay.UK has published for its VRP pilot programme. A card payment can cost a merchant 1.5–2.9% of the transaction value once you add interchange, scheme fees and the processor's cut — on a £45 subscription box, that's over a pound gone before the merchant sees a penny. Open Banking VRPs settle for a flat fee that Pay.UK's pilot participants have quoted at under 10p per transaction, and the money moves account-to-account in real time rather than sitting in the two-to-three-day Bacs cycle.
NatWest's commercial banking arm confirmed in its 2026 first-half results that VRP volumes on its rails had grown roughly fourfold year-on-year, driven mainly by subscription and utility billing rather than one-off retail purchases. That's the pattern worth watching: VRPs are winning on recurring payments first, because that's where the Direct Debit fee overhead really bites a merchant with thousands of monthly collections.
What changes for you at checkout
Practically, using a VRP feels closer to a bank transfer than a card payment. You select "Pay by bank", get redirected into your banking app (or it opens automatically if you're on your phone), you see exactly what you're agreeing to — merchant name, amount, frequency, cap — and you approve with Face ID or your PIN. No card number to type, no CVV, no 3D Secure pop-up that times out just as you're trying to read the text message. For a certain kind of shopper this alone is worth switching for; typing a 16-digit number into a phone browser at 11pm is nobody's idea of a good time.
Where it gets genuinely useful is control. With a Direct Debit, cancelling means contacting the merchant, and plenty of gyms and subscription boxes have made that process deliberately slow. With a VRP, you can usually revoke the permission from inside your own banking app — no phone call, no "are you sure" retention script, no waiting on hold. Monzo and Starling both surface active VRP permissions in a single settings screen, listed by merchant, so you can see every company with standing access to your account in one place rather than hunting through months of bank statements for that one subscription you forgot about.
The catch nobody puts in the marketing copy
Here's the trade-off worth sitting with for a second: VRPs sit outside the Direct Debit Guarantee. If a Direct Debit takes the wrong amount, your bank refunds you immediately and disputes it with the merchant afterwards — no questions asked, no proof required. VRPs are covered instead by the Open Banking dispute-resolution framework and, for unauthorised payments, by the Payment Services Regulations 2017, which gives you a right to a refund but not the same same-day, no-questions guarantee. In practice this has mostly worked fine, but "mostly" is doing some work in that sentence, and a scheme that's barely three years old hasn't yet been tested by a genuinely messy merchant insolvency the way Direct Debit has.
Set your VRP limits properly and this stops being a real worry for day-to-day use. Cap the amount close to what you actually expect to pay — if your gym is £39.99 a month, don't leave the ceiling at £200 "just in case", because that ceiling is exactly the amount a compromised merchant account could try to take. Review the merchant list in your banking app every few months, the same way you'd review card subscriptions, and revoke anything you don't recognise on sight. This is not complicated advice, but it is advice most people won't follow unless the app nags them — which, to their credit, most of the major banks now do with a quarterly "you have 14 active permissions" push notification.
Which banks actually support it, and where the gaps are
Coverage on the sending side — your bank letting you pay a merchant this way — is now close to universal among the big current-account providers: Barclays, NatWest, Lloyds, HSBC, Monzo, Starling and Revolut all support outbound VRP payments as of mid-2026. The gaps are on the receiving side. Smaller merchants, particularly independent retailers and hospitality businesses, are often still stuck because their payment processor hasn't built VRP support into its checkout integration, and building that integration properly is not a weekend job for a small dev team.
- Utility and telecoms billing — the most mature use case, with British Gas, Octopus Energy and most major broadband providers now offering VRP as an alternative to Direct Debit
- Subscription services — streaming, gyms, meal kits — growing fast but patchy, and it genuinely depends on which payment processor the merchant uses behind the scenes
- Retail checkout for one-off purchases — this is the newest and smallest category, and honestly still feels like a beta product on most sites that offer it
Sweeping — the ability to automatically move money between your own accounts, say from a current account into a savings pot when your balance crosses a threshold — is the other big VRP category, and it's the one I'd actually recommend using today if your bank supports it. Chase UK and Monzo both offer sweeping into savings via VRP permissions, and unlike merchant payments there's no counterparty risk at all, because the money never leaves accounts you own.
Should you switch your bills over
For utilities and subscriptions from large, established companies, switch when you're offered the option — the real-time settlement and the one-tap cancellation are worth more in practice than the marginal guarantee gap costs you in risk. For anything from a smaller or newer merchant, stick with card or Direct Debit until VRP coverage has had a few more years to bed in and the dispute-resolution track record is longer than three years of mostly-quiet running. That's not hedging; it's the actual line I'd draw, and it maps to where the FCA's own Open Banking oversight has focused its scrutiny so far — established billers first, long-tail retail last.
The bigger picture is that Direct Debit isn't going anywhere soon — too much of the UK's financial infrastructure, from mortgage payments to council tax, is built on Bacs rails that aren't being ripped out this decade. What's actually happening is narrower and more useful: VRPs are quietly taking over the specific job Direct Debit has always done worst, which is giving you a clean, visible, revocable record of who has permission to take money from your account, and letting you cut that permission off the moment you want to.