Atoa helps UK merchants cut down on card processing fees

Visa and Mastercard can cost merchants a lot of money. It is easy for customers to use a cheaper alternative. Pre-seed funding has been raised by the London-based tech company.

The round was led by Leo Capital andPassion Capital with participation from angel investors like GoCardless and Nested.

Sid Narayanan and Cian O'Dowd sold their previous startup, KlearCard, to Singapore-based Validus in 2021.

The barber began asking for cash payments or bank transfers because he wanted to reduce his card processing fees. After living in Singapore, Narayanan and O'Dowd decided to use the U.K.'s open banking payments stack to create a Visa and Mastercard alternative.

Narayanan said that Mastercard and Visa payment rails can cost small merchants and their customers net margins of more than 50%. Atoa charges a fixed percentage fee for each month that is up to 70% cheaper than a debit card. Hardware rentals and service fees are not included.

Merchants can connect to their bank accounts with an app. Customers don't have to download the app to use the service. They can use Atoa if they have a UK mobile banking app. The majority of adults in the U.K. already have a mobile banking app on their phone. Merchants can send a link for payment to you by text or by scanning a barcode.

The startup plans to add rewards and loyalty benefits to encourage more customers to use Atoa.

Merchants can get payment instantly through Instant Bank Pay. They don't have to wait for up to 2 days for funds to be deposited into their bank account.

Since it went live in June, it has gotten more than 100% month-on-month total payment volume growth. Card machine providers are its most direct competitors. Merchants can receive funds more quickly if they are able to receive funds in less than three days. It charges less fees than playersintermediated by Visa and Mastercard.

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. We are looking forward to working with the Atoa team as they achieve even greater heights with Atoa.

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