UK FinTech Atoa secures $2.2m in funding to tackle Visa and Mastercard fees

PayTech startup Atoa has announced a $2.2 million pre-seed funding round led by Leo Capital and Passion Capital.

This also included angel investors such as Matt Robinson (co-founder of GoCardless and Nested) alongside Moon  Capital Ventures.

Anil Stocker, Co-Founder and CEO of MarketFinance also serves as a company advisor.

Atoa, which went live in June, argues that 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 claims that it is building an alternative for small businesses to accept payments at a fraction of those costs and to improve their cash flow meaningfully at the same time.

Businesses download the firm’s app and connect their merchant bank account. Set up takes less than five minutes, after which the merchant can accept payments via SMS, Pay-by Link or by displaying a QR code on their Atoa app or physical QR stand next to their till.

At the same time, their customers do not need to download a separate app to pay. Anyone with a UK mobile banking app on their phone can pay via Atoa. They scan the merchant’s QR code or clicks on the link sent by the merchant, select their bank and then are redirected to their existing mobile bank app to approve the payment.

Sid Narayanan, Co-Founder, Atoa Payments, says: “We are grateful to have the support and partnership of such strong investors validating our plans to break the card payment duopoly in the UK and to improve cash flows and economics for 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 medium merchants are struggling to contain their costs, provide great service to the customers, and maintain profit margins. Atoa is here to empower merchants and to improve their cash flow and bottom line.”

Robert Dighero, Partner at Passion Capital, comments “Atoa has come to the UK market at the right time to leverage Open Banking and bring to small and medium sized merchants a truly viable alternative to payment cards and card machines that can be deployed in-store within minutes.”

“We’re delighted to work with the Atoa team after their first FinTech success and look forward to partnering with them as they achieve even greater heights with Atoa.”

Shwetank Verma, Partner at Leo Capital, says: “Leveling the playing field for independent, small and medium sized merchants is an obvious opportunity which benefits everyone, not least of which consumers.”

“We have seen this business model succeed in India and SEA and we’re looking forward to working with the Atoa team to help them build another successful business in a massively growing market.”