UK Payments Initiative Launches New Open Banking Scheme As TrueLayer Rolls Out Recurring Pay By Bank Payments

Why It Matters

The initiative gives merchants a low‑cost, dispute‑protected alternative to card‑on‑file payments, potentially reshaping recurring commerce in the UK. It also signals a broader industry move toward commercially driven open‑banking models.

Key Takeaways

• UKPI launches first new UK payment scheme in 20 years
• Over 30 banks and fintechs enable recurring Pay‑by‑Bank payments
• Token.io provides infrastructure and sits on UKPI board
• TrueLayer's Bank on File adds recurring account‑to‑account payments for merchants
• Early adopters include Trading 212, IG Group, InvestEngine, and housing association

Pulse Analysis

The UK Payments Initiative (UKPI) marks the first new UK payment scheme in almost two decades, bringing together the FCA, more than 30 banks and fintech firms to create a commercial‑grade open‑banking framework. By introducing commercial variable recurring payments (cVRPs), the scheme moves Pay‑by‑Bank beyond one‑off transactions into the realm of subscriptions, utility bills and rent. UKPI also codifies dispute‑resolution, liability and consumer‑protection rules, addressing the legal uncertainty that has slowed broader adoption. Token.io, a founding shareholder, supplies the underlying infrastructure and holds a board seat, signalling strong fintech backing.

At the same time, TrueLayer has rolled out its Bank on File product, a recurring‑payment overlay that lets merchants pull funds directly from a customer’s bank account after biometric authentication in the banking app. Early adopters such as Trading 212, IG Group, InvestEngine and East Lothian Housing Association are already using the service for investment deposits and rent collection, eliminating card‑on‑file failures that affect 5‑10 % of subscriptions. By bypassing cards and direct debits, Bank on File offers real‑time visibility and instant cancellation, promising higher conversion rates and lower churn for subscription‑based businesses.

The combined launch of UKPI and Bank on File could accelerate a shift from card‑centric to account‑to‑account commerce in the UK. Analysts expect merchants to gravitate toward the lower transaction costs and stronger fraud protection of open‑banking flows, especially as consumer fatigue with credit‑card fees grows. However, widespread uptake will hinge on seamless onboarding, consistent user experience across banks, and the ability of dispute mechanisms to scale. If these hurdles are cleared, recurring Pay‑by‑Bank could become the default for billions of routine payments, reshaping revenue models for fintechs, neobanks and traditional financial institutions alike.