CMA greenlights ‘sweeping’ for bank payments

The Competition and Markets Authority (CMA) has given nine major UK banks permission to use variable recurring payments (VRPs) as the mechanism for implementing sweeping.

Sweeping is the automatic transfer of money between a customer’s own accounts, for example, moving excess funds into a separate savings account or using them to repay a loan or overdraft account.

VRPs allow customers to connect authorised payments providers to their bank account so that they can make payments on the customer’s behalf within agreed parameters.

The move follows a recommendation by the Open Banking Implementation Entity (OBIE) in January of this year.

This decision means that the largest UK current account providers will have to implement VRPs within the next six months.

These banks will also have to allow free access to third party providers who are using VRPs to enable their customers to move money from their current accounts to other accounts.

In June, research from Open Banking platform Tink found that 72 per cent of UK financial executives think that the pandemic has increased their focus on Open Banking.

“The CMA’s decision in line with OBIE’s advice, is a win for competition and innovation, which will deliver significant benefits to consumers and small businesses,” said Imran Gulamhuseinwala implementation trustee at the OBIE. “We’ve been anticipating a decision from the CMA on this for some time now and have been on standby to implement this by the end of this year.”

“The OBIE will now mandate variable recurring payments for the purpose of sweeping, which is the automatic movement of money between an account holder’s different accounts. We like to think of it as the smarter version of direct debit payments.”

“This is a major step forward in payments, giving consumers more control over their money whilst also protecting them from incurring unwanted fees.”

He added: “It will, for example, allow surplus money to be automatically transferred from a current account to a savings account to help build a savings pot or to an overdraft or loan account to help the customer keep their borrowing costs to a minimum.”

    Share Story:

Recent Stories

New Business Frontiers
FStech’s Mark Evans discusses the future of financial services with Liu Jianning of Huawei, covering the limitations that current thinking can impose, how financial institutions can embrace technology to be both agile and resilient, and making space for the organisation to focus on the job of creating innovative business models and on delivering business value for their customers.

The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

The Rise of Instant Payments
Instant payments are creating new business opportunities for banks by providing more touchpoints than ever. With these evolutions underway, Featurespace brought leading industry experts together to discuss how they are protecting customers from fraudsters in real time, utilizing innovative and disruptive solutions to reduce fraud. Click here to find out more.