On 26 June 2023, the Joint Regulatory Oversight Committee (JROC), which is co-chaired by the FCA and the Payment Systems Regulator (PSR), published a joint paper on principles for commercial frameworks for premium application programming interfaces (APIs). The paper sets out five high-level principles for banks and registered third parties to follow when agreeing a premium API commercial model.

Premium APIs are intended to allow new open banking products and services to be offered. These include variable recurring payments (VRPs), which present a range of benefits for both businesses and consumers, such as potential cost savings, greater flexibility and control over payments.

In April 2023, the JROC highlighted that promoting additional services, including through premium APIs, would be key for the next phase of open banking in the UK. As such, this paper outlines the characteristics of a safe and sustainable commercial model for premium APIs.

The following five principles set out the JROC’s expectations of fees charged by all account-servicing payment service providers (ASPSPs) to third-party providers (TPPs) to provide premium APIs. Fees and charges should:

  • Broadly reflect relevant long-run costs of providing premium APIs.
  • Incentivise investment and innovation in premium APIs.
  • Incentivise take-up of open banking by consumers and businesses and use of network effects.
  • Treat TPPs fairly.
  • Be transparent.

Earlier in June 2023, the JROC also announced the launch of two new working groups – the VRP working group, chaired by the PSR, and the future entity working group chaired by the FCA.

The JROC expects this joint paper to support the VRP working group in developing a safe and sustainable commercial model for non-sweeping VRPs as a pilot and test new premium APIs.