Legacy Payments Are Failing Businesses: 9 in 10 See Commercial Variable Recurring Payments as the Way Forward

In a groundbreaking report by GoCardless, titled "Revolutionising Recurring Revenue," UK businesses are revealed to be struggling with outdated payment systems that are costing them dearly. The study highlights that legacy payment methods are becoming increasingly untenable, with 9 out of 10 businesses seeing commercial variable recurring payments (VRPs) as the way forward. This shift is particularly critical for industries such as utilities, financial services, and telecommunications, which are set to benefit significantly from the introduction of VRPs.

The findings underscore a critical inflection point in the payment industry. Traditional card networks have long imposed friction and costs on subscription-based businesses, leading to commercially unsustainable situations. These costs are not merely pricing issues; they represent a systemic operational drag that impacts customer retention and cash flow. The impending arrival of VRPs and other forms of open banking payments is poised to change this dynamic entirely.

VRPs are being hailed as the most significant upgrade to the UK's payment infrastructure in a generation. By providing a more stable, bank-led rail for recurring revenue, VRPs promise to drastically cut involuntary churn and administrative overhead. For regulated industries like financial services and telecoms, which are currently in the first wave of adoption, this transition is a strategic imperative. Businesses that prioritize operational stability by adopting VRPs will separate themselves from those still reliant on legacy systems.

The GoCardless report surveyed 489 UK recurring revenue business leaders and revealed widespread dissatisfaction with existing payment rails. Nearly three-quarters (73%) of respondents reported ongoing pain points with card payments. A significant portion of businesses—42%—spend more than three hours per week managing related issues. When combined with fraud and administrative overhead, this payment method costs businesses an average of 3.5% of their monthly revenue.

This situation is particularly high-impact for regulated sectors, where the stakes are often higher. Financial services and telecommunications companies, for instance, have long relied on reliable and efficient payment systems to manage customer subscriptions. However, the inefficiencies of legacy systems have made it challenging for these industries to maintain a steady stream of recurring revenue.

The introduction of VRPs offers a solution to these challenges. By leveraging open banking payments, businesses can streamline their operations, reduce administrative burdens, and improve customer retention. This shift is not only about cutting costs but also about enhancing the overall customer experience. With VRPs, businesses can ensure that their payment systems are both efficient and secure, fostering trust and loyalty among their customers.

In conclusion, the GoCardless report paints a clear picture of the challenges faced by UK businesses due to outdated payment systems. The impending arrival of commercial variable recurring payments represents a significant opportunity for industries to modernize their operations and reduce lost revenue. For businesses in the utilities, financial services, and telecommunications sectors, adopting VRPs is not just an option—it's a strategic necessity to stay competitive in an evolving payment landscape. As the industry moves towards a more open and efficient payment ecosystem, businesses that embrace these changes will be better positioned to thrive in the long run.