Atoa closes pre-seed to give small businesses alternative debit card payments

Atoa closes pre-seed to give small businesses alternative debit card payments

UK fintech Atoa Payments is the new startup looking to give small businesses a viable alternative to debit card payments. It has raised $2.2m for its pre-seed round.

This investment was led by Leo Capital and Passion Capital. Additional contributions came from Moon Capital Ventures and angel investors such as GoCardless and Nested co-founder Matt Robinson.

Since it went live in June, Atoa Payments has experienced over 100% month-on-month growth in terms of Total Payment Volume (TPV) and number of merchant customers. Over time, the founders’ ambitions are to become a mainstream small business friendly payment method replacing payment cards.

Atoa stated that there are over four million small businesses in the UK and they lack a suitable alternative to debit card payments and are reliant on Mastercard or Visa payment rails. The FinTech company is challenging this by reducing payment fees by 70%.

It added that Mastercard and Visa have an effective duopoly in the market, allowing them to get away with margins as high as 51%. On top of this, card machine providers charge small businesses up to 1.75%, it claimed.

As a result, Atoa is offering small businesses a way to accept payments at a fraction of the costs.

To use the services, a business simply downloads the Atoa app and connects 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 by the till.

Making things simple for their customers, they do not need to download the Atoa App as any UK mobile banking app on their phone can pay a merchant that is using Atoa.

The customer simply scans the merchant’s QR code or clicks on the link sent by the merchant. They select their bank and are redirected to their existing mobile banking app to approve the payment. The merchant will receive the funds immediately.

Atoa Payments co-founder Sid Narayanan said, “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.”

In other PayTech news, Viola Credit deployed a $350m credit facility into B2B payments company Balance.

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