Atoa helps UK merchants cut down on card processing fees
Visa payments and Mastercard payments are easy for customers but can incur high processing fees for merchants. Atoa payments wants customers to have an alternative that is cheaper and still easy to use. Today, the London-based fintech announced that it had raised $2.2 million in preseed funding.
The round was led and participated in by Passion Capital and Leo Capital. Other angel investors included Matt Robinson, Moon Capital Ventures, and Anil Stocker, MarketFinance cofounder.
Atoa co-founder Sid Narayanan told TechCrunch that he and co-founder Cian O’Dowd developed the idea for Atoa after selling their previous startup, expense management platform KlearCard, to Singapore fintech Validus in 2021.
Their barber accepted card payments at first but started asking for cash payments and bank transfers to lower his card processing fees of around 1.6%. Narayanan and O’Dowd had been using card alternative payments while living in Singapore and saw an opportunity to make a Visa or Mastercard alternative. Narayanan spoke to TechCrunch.
Mastercard and Visa payment rails can cost small merchants and their customers net margins of 51%, with card machine fees of about 1. 75%, Narayanan said. Atoa charges merchants a fixed percentage fee that is 70% less than debit cards. It does not charge hardware rentals, service fees, or PCI attestation compliance charges.
Merchants can download an app to connect to their bank accounts in order to use Atoa. Customers don’t have to download Atoa’s app to use the service. Instead, customers can use Atoa provided they have a U.K.-based mobile banking app. Narayanan says that the majority of adults (or about 80%) in the U.K. have a mobile banking application on their phones, which removes the main source of friction. Merchants can send a link to pay by SMS, PayBay, or offer a QR code that can be scanned.
To encourage more customers to use Atoa the startup plans to offer rewards and loyalty benefits like digital scratch cards that will allow them to get cash rewards into their U.K bank accounts.
Merchants can receive payment immediately through Instant Bank Payment after customers have paid with Atoa. They can also receive funds immediately in their bank account, rather than waiting up to 1 to 2 days.
Atoa claims that since its launch in June, it has seen more than 100% monthly total payment volume growth (TPV), and merchant customers. Narayanan stated that card machine providers such as SumUp, Zettle and Square are its most direct competitors. Atoa is different because it charges lower fees and allows merchants to receive funds faster than the usual three days required by card machine provider. It charges lower fees than players who are interacted by Mastercard and Visa.
Passion Capital partner Robert Dighero stated that Atoa was a great fintech company and that they are excited to continue working with them. After their first fintech success, we are delighted to partner with Atoa and look forward to working with them in the future.
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