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

In a groundbreaking study by GoCardless, the future of commercial payments in the UK is taking a significant turn. The findings reveal that legacy payment systems are failing businesses, with 9 out of 10 UK businesses seeing commercial variable recurring payments (VRPs) as the way forward. This shift is not just about cost savings but represents a systemic overhaul of the payment infrastructure, with far-reaching implications for industries such as utilities, financial services, and telecommunications.

The report, titled "Revolutionising Recurring Revenue," highlights the critical inflection point businesses are facing. Traditional card networks for subscriptions have become commercially unsustainable, costing UK businesses an average of 3.5% of their monthly revenue. This is not merely a pricing issue; it's a systemic operational drag that is impacting customer retention and cash flow. The impending arrival of commercial VRPs and other forms of open banking payments is set to shift this dynamic entirely.

VRPs represent the most significant upgrade to the UK's payment infrastructure in a generation. These payments promise to provide a more stable, bank-led rail for recurring revenue, drastically cutting involuntary churn and administrative overhead. For regulated industries like financial services and telecoms, which are currently in the first wave of adoption, this is a strategic imperative that separates early movers who prioritize operational stability from those stuck on legacy systems.

The research, which surveyed 489 UK recurring revenue business leaders, shows widespread dissatisfaction with existing payment rails. Nearly three-quarters (73%) report ongoing pain points with card payments. Forty-two percent of respondents spend more than three hours per week managing related issues. Combined with fraud and admin overhead, this payment method costs businesses an average of 3.5% of their monthly revenue.

The study underscores the high-impact solution that VRPs offer for regulated sectors. Businesses in these industries are particularly vulnerable to the inefficiencies of legacy systems, as they often deal with large volumes of transactions and stringent regulatory requirements. The transition to VRPs could significantly reduce the administrative burden and improve the reliability of recurring payments, leading to better customer satisfaction and retention.

The move towards VRPs is not without its challenges. Businesses will need to invest in new systems and processes to adapt to the changes. However, the potential benefits far outweigh the costs. By embracing this new payment method, businesses can streamline their operations, reduce costs, and enhance customer experiences.

In conclusion, the GoCardless study serves as a wake-up call for businesses in the UK. Legacy payment systems are no longer viable, and the shift to commercial variable recurring payments is not optional. For industries such as utilities, financial services, and telecommunications, adopting VRPs early will be crucial in maintaining competitiveness and operational stability. As the payment landscape evolves, businesses must adapt quickly to avoid being left behind in the digital age.