Atoa Payments raises $2.2m to challenge Visa and Mastercard

By Gloria Methri

Atoa Payments, a UK start-up using open banking to offer payment services to merchants, has raised $2.2 million in a pre-seed funding round.

The funding was led by Leo Capital and Passion Capital with participation from angel investors such as GoCardless co-founder Matt Robinson and Moon Capital Ventures.

Atoa states 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. Aiming to take on the card giants, the start-up has invited small businesses to use the Atoa app to connect their merchant bank accounts.

The setup takes about five-minute, after which merchants can accept payments via SMS, Pay-by Link, or QR code. Customers do not need to download a separate app. They can simply scan the QR code or click on the link sent by the merchant, select their bank, and are then redirected to their bank app to approve the payment.

Sid Narayanan, Co-Founder of Atoa Payments said, “At a time of record inflation and amid a cost-of-living crisis, 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.”

Atoa claims that its Instant Bank Pay system slashes the cost of accepting payments by 70% and ensures instant payment rather than having to wait for one to two days for debit cards. Atoa also eliminates the binding contracts and charges no hardware fees or chargeback fraud risk. All payments are approved via the bank app and have Strong Customer Authentication.