Britain’s banks just launched a rival to direct debit

A payments scheme that lets people authorise recurring bill payments straight from their bank account, with no card and no traditional direct debit, went live in Britain on Tuesday (2 June), backed by every major high street bank alongside a roster of fintech firms.

UK Payments Initiative Ltd, the company created to run it, used the Money2020 conference in London to announce that its rulebook had been finalised between participating institutions and that the scheme was moving into market rollout after live proving.

The first places consumers will encounter it are utilities, government, charities and financial services.

The technology underneath has a less inviting name than the launch language suggests. It is commercial Variable Recurring Payments, or cVRP, which lets an authorised provider collect varying amounts from your account within limits you set in advance, and is being positioned as a modern alternative to both the direct debit and the card kept on file.

It is not new in principle. VRP already accounts for around 16% of all open banking payments, roughly 5.5 million transactions a month, but until now it has mostly been confined to moving money between a person’s own accounts. The scheme launched on Tuesday is what extends it to paying third parties.

The pitch is control. With a direct debit, you hand a company standing permission to pull money and rely on it to stop when asked. Under the new model, you set who can collect, how much they can take and for how long, and the permission lives with you rather than the biller.

Richard Koch, Managing Director of the UK Payments Initiative, called it “a defining moment for the next evolution of payments in the United Kingdom,” and framed it around giving people more control while reducing friction for businesses.

For anyone who has spent twenty minutes trying to cancel a gym membership, the appeal should be obvious.

What’s the catch?

The part the launch glosses over is what you give up in exchange. The direct debit’s quiet strength is the Direct Debit Guarantee, the promise that if a payment is taken in error you get an immediate, no-questions refund from your bank. The new scheme does not carry it.

UKPI’s announcement points instead to “safeguards and dispute processes,” and the detail behind that phrase matters, because the liability model for cVRP, who pays when a payment is taken in error or disputed, is still being settled.

Consumers remain covered by the Consumer Rights Act and by strong customer authentication at the point of approval, but the automatic refund reflex that makes the direct debit feel safe is not yet a like-for-like feature here.

There is also the question of when any of this reaches you. The regulators had originally expected the first live payments under the scheme in the first quarter of 2026, so a June launch is already running behind that marker. And it arrives in waves.

The opening cohort is weighted towards regulated utilities, government services and charitable donations, with broader e-commerce to follow, which means most people will not see a “pay by bank” option replacing their card or direct debit for some months yet. “Announced at a conference” and “available in your banking app” are not the same date.

The Financial Conduct Authority’s open finance roadmap, published in April, names the UK Payments Initiative as the scheme operator and treats this commercial VRP rollout as the first concrete delivery in a smart-data programme that runs to 2030.

The government’s National Payments Vision sets the ambition for Britain to lead the world in open finance, and the scheme is explicitly built to feed it.

In other words, the scheme launched on Tuesday is less a single product than the first working brick of a much larger plan to rebuild how money moves around the economy.

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