UK Fintech Atoa secures $2.2m pre-seed round as it kills Visa and Mastercard fees for businesses

There are more than 4 million small businesses in the UK that have no viable alternative to debit card payments and rely on Mastercard or Visa payment gateways. To challenge this status quo, UK fintech Atoa Payments announces a $2.2 million pre-funding round to reduce payment fees by 70% and offer a new approach to making payments.

The funding round was led by Leo Capital and Passion Capital and also included renowned angel investors such as Matt Robinson (co-founder of GoCardless and Nested) along with Moon Capital Ventures. Anil Stocker, co-founder and CEO of MarketFinance also acts as a company advisor.

Mastercard and Visa payment rails have an effective duopoly in the market which enables them to get away with net margins as high as 51% at the expense of small merchants and their customers. On top of this, card machine providers charge small businesses up to 1.75%. Atoa is building a truly viable option for small businesses to accept payments at a fraction of those costs while meaningfully improving their cash flow.

Using Atoa is seamless. Businesses simply download the Atoa app and connect their bank account securely. Configuration takes less than 5 minutes, after which the merchant can accept payments via SMS, Pay-by Link or by displaying a QR code on the Atoa app or the physical QR stand next to the till. At the same time, their customers don’t need to download a separate app to pay, removing a significant point of friction that hindered merchant options until now.

Any customer with a UK mobile banking app on their phone can safely pay a merchant using Atoa. Without requiring a separate consumer app, the customer simply scans the merchant’s QR code or clicks on the link sent by the merchant, selects their bank, and is then redirected to their existing mobile banking app to authorize the payment, meaning the merchant receives the money. immediately.

Sid Narayanan, co-founder of Atoa Payments said: “We are grateful to have the support and partnership of such strong investors who validate our plans to break the card payments duopoly in the UK and improve the cash flows and finances of the country’s small merchants. At a time of record inflation and in the midst of a cost of living crisis, the UK’s small and mid-sized merchants to keep their costs down, provide great customer service and maintain profit margins. Atoa is here to empower merchants and improve their cash flow and bottom line.”

Atoa Instant Bank Pay allows small merchants to receive payments at a flat fee that is up to 70% cheaper than card machines provided by SumUp, Zettle or Square. The sellers then receive funds in their bank accounts immediately instead of having to wait 1-2 days, as is usual with card machines and debit cards. Using Atoa involves no contracts (pay as you go), no hardware fees and no risk of chargeback fraud (all payments are approved via the banking app and have strong customer authentication).

In contrast, small retailers today are locked into contracts and typically have far from transparent fees to pay, including authorization fees, hardware fees, PCI compliance fees and more that all eat into their margins. Hardware fees can be as high as £29/month.

Robert Dighero, partner at Passion Capitalsaid “Atoa has come to the UK market at the right time to take advantage of open banking and provide small and medium-sized merchants with a truly viable alternative to payment cards and card machines that can be deployed in-store within minutes. We are delighted to be working with The Atoa team after their initial fintech success and look forward to working with them as they achieve even greater heights with Atoa.”

Shwetank Verma, Partner at Leo Capital, said “Leveling the playing field for independent, small and medium-sized merchants is an obvious opportunity that benefits everyone, not least consumers. We have seen this business model succeed in India and SEA and we look forward to working with the Atoa team to help them build another successful business in a massively growing market.”

Since launching in June, the company has experienced more than 100% monthly growth in terms of both Total Payment Volume (TPV) and a number of merchant customers. Over time, the founders’ ambition is to become a mainstream-friendly payment method for small businesses that replaces payment cards.