Commercial Payments Bill and UKPI/cVRP potential application

Background

The King’s Speech commitment to tackle late B2B payments has led to the Commercial Payments Bill, introduced in the House of Lords on 19 May 2026, with a second reading scheduled for 9 June 2026. It is not yet law and may change during passage.

Proposed topics for inclusion:

1. The Bill would cap payment terms at 60 days for private-sector purchasers and 30 days where the purchaser is a public authority.

2. Late payments to carry mandatory interest at 8% above Bank of England base rate.

3. It targets three behaviours, i.e., paying after the agreed date, imposing long payment terms, and using weak or late disputes to delay payment.

4. The Small Business Commissioner would gain powers to investigate poor payment practices, adjudicate payment disputes outside court, and fine persistent late payers.

5. Persistent late-paying large companies may have to publish board or audit committee commentary explaining any poor performance and remedial action.

6. The Bill includes targeted action to ban construction sector retention clauses, addressing a long-standing cashflow issue in the industry.

   
   

This could materially change B2B payment behaviour in the UK. It strengthens the policy case for solutions that improve invoice approval, dispute management, supplier onboarding, e-invoicing, payables automation and embedded working capital/payment products. For payment service providers and B2B platforms, the opportunity is to provide more cashflow certainty, supplier trust and automated payables discipline.

The Bill appears to address payment behaviour rather than payment rails, i.e., payment terms, dispute timing, interest, retentions and enforcement. Could UKPI/cVRP (or an adjacent Open Banking payment construct) support B2B invoice settlement use cases once invoices are approved or no longer disputable?

Could UKPI eventually help create an auditable ‘pay on due date’ mechanism that improves cashflow certainty for MSMEs, rather than simply competing with cards and Direct Debit in consumer or biller use cases?

UKPI/cVRP

UKPI is expected to expand commercial Variable Recurring Payments (cVRP) into utility payments, financial services payments and local/central government payments, with the first live payments expected in H1 2026. The UK Payments Initiative (UKPI) should be viewed less as a response to a broken UK payment system and more as an attempt to create a scalable commercial scheme layer for Open Banking payments.

The UK already has strong real-time bank transfer capability through Faster Payments, high card penetration, a mature Direct Debit system, and increasingly frictionless mobile wallet usage. The question is not whether the UK needs faster A2A payments in general, but whether cVRPs can solve specific merchant, consumer and policy problems that are not adequately addressed by cards, Direct Debit or bank app initiated Faster Payments.

Current scale: Open Banking payments are growing, but remain small relative to incumbent methods

There were a reported 351 million Open Banking payments in 2025, up 57% year on year. That is c.1 million payments per calendar day. OBL also reported 24 billion successful API calls in 2025 and 16.5 million user connections by December 2025.

By comparison, the latest available UK market data shows the continued dominance of incumbent payment methods:

Payment method	Transactions	Transaction/day
Open Banking	351M in 2025	c.1.0M/day
Debit cards	26.1Bn in 2024	c.71M/day
Credit / Charge cards	c.5.0Bn in 2024	c.14M/day
Bacs Direct Debit	5.03Bn in 2025	c.13.8M/day
Faster Payments	5.5Bn in 2025	c.15.2M/day

The evidence therefore supports two conclusions. Open Banking payments are no longer experimental, but they are not yet mainstream relative to cards, Direct Debit or bank transfers.

The problem UKPI appears to be solving

UKPI is not primarily solving for payment speed. In the UK, consumers and businesses can already move money quickly using banking apps and Faster Payments. The more credible problem statement is that merchants, billers, government bodies, fintechs and platforms need an embedded, repeatable, consent led A2A payment method for their customers.

The challenges are about pre-populated payment initiation, consent management, variable and recurring authority, customer limits, clearer reconciliation, reduced reliance on card credentials, lower-cost acceptance in some use cases, and a commercially sustainable framework for banks and payment initiators.

In effect, UKPI is trying to turn Open Banking payments from a collection of bilateral or use case specific implementations into a more scheme like proposition with rules, economics, access expectations, operational consistency, protections and market confidence.

Where cVRP has the strongest potential fit

The most credible early use cases are not necessarily general retail checkout. They are use cases where there is already a high-intent payment event, a trusted payee, a repeat or variable payment pattern, and a merchant or biller need for better reconciliation and certainty. These include regulated utilities, regulated financial services, central and local government payments, e-money and wallet funding, loan or credit card repayments, savings movements, and potentially subscription or account-on-file commerce.

Direct Debit remains very strong for classic household bills. Cards and wallets remain very strong for everyday commerce. Therefore, cVRP needs to be positioned where its value is clear, i.e., control, flexibility, visibility, lower acceptance cost, embedded consent, fewer expired credentials, and better orchestration of variable or recurring A2A flows.

Key adoption challenges

The main adoption challenge is that the consumer/business problem is less obvious than the merchant or policy problem. Consumers and businesses already have cards, wallets, bank apps, Faster Payments and Direct Debit. For cVRP to scale, the customer experience must be visibly simple, trusted and protected, not merely cheaper for merchants.

There are also market structure challenges. The FCA/PSR have indicated that scale will require critical mass. Pricing must be competitive with other payment methods while still giving banks and other participants an investment case. Consumer protection, liability allocation, dispute handling, brand recognition, consent dashboards and interoperability will be key to whether UKPI becomes infrastructure rather than a niche Open Banking use case.

Strategic relevance to Mastercard and Visa

The Mastercard/Visa dynamic is strategically important. Mastercard is listed among the 31 organisations funding the establishment of UKPI. This suggests Mastercard sees Open Banking and A2A payments not only as a competitive risk to cards, but also as an adjacent network opportunity. Participation allows it to influence standards, economics, trust frameworks and future commercial models.

Visa, at least based on the published funder list, is outside UKPI for now. That creates a different strategic question. Whether to observe from the outside, participate later, develop alternative Open Banking/pay-by-bank propositions, or position around interoperability, merchant acceptance, risk, identity, fraud, tokenisation and value-added services. For both schemes, the issue is not simply card displacement. It is how card networks remain relevant as payment choice expands across cards, wallets, open banking, Faster Payments and potentially agentic or embedded commerce.

Conclusion

UKPI is addressing a valid strategic gap, but not because the UK lacks real-time bank payments. The UK already has those. The stronger rationale is that the market lacks a widely adopted, commercially sustainable, scheme-like framework for embedded, repeatable, consent led A2A payments. The opportunity is real, but the burden of proof is also high. UKPI will need to demonstrate that cVRP creates incremental value beyond Direct Debit, bank app transfers and cards. Also, that it can achieve sufficient account coverage and merchant acceptance, and that users understand and trust the experience.

For UKPI, the central question is, which use cases create enough value for all sides of the transaction to change behaviour? For Mastercard and Visa, the central question is how should global payment networks participate in, influence or compete with a UK A2A scheme layer that may sit adjacent to, and in selected cases substitute for, card-based payments?

Sources: Open Banking Limited, UK Finance, Pay.UK, FCA/PSR, May 2025 to April 2026 public materials.