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Atoa helps UK merchants reduce card processing fees • TechCrunch


Visa and Mastercard payments are convenient for customers, but can cost merchants expensive processing fees. Atoa Payments wants to provide a cheaper but still easy-to-use alternative for customers. The London-based fintech announced today that it has raised $2.2 million in pre-seed funding.

The round was led by Leo Capital and Passion Capital, with participation from angel investors including GoCardless and Nested co-founder Matt Robinson, Moon Capital Ventures and MarketFinance co-founder Anil Stocker.

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 Singaporean fintech Validus in 2021.

Their barber, which initially accepted card payments, started asking for cash payments or bank transfers because they wanted to reduce their card processing fees, which were around 1.6%. Narayanan and O’Dowd became accustomed to alternative card payments after living in Singapore and saw an opportunity to use the UK’s open banking payments stack to create a Visa and Mastercard alternative, Narayanan told TechCrunch.

The Mastercard and Visa payment rails can cost small merchants and their customers net markups of 51%, with card machine fees around 1.75%, Narayanan said. Atoa, on the other hand, charges a fixed percentage chargeable to the merchant every month, which is up to 70% lower than debit cards. There are also no hardware rentals, service fees, or PCI compliance attestation fees.

To use Atoa, merchants download an app that connects to their bank accounts. Customers do not need to download the Atoa app to use the service. Instead, they can use Atoa as long as they have a UK mobile banking app. According to Narayanan, the majority of adults, around 80% in the UK, already have a mobile banking app on their phone, removing the main source of friction. Merchants send a payment link by SMS, PayBay or offer a QR code to scan.

To entice more customers to use Atoa, the startup also plans to add rewards and loyalty benefits, like digital scratch cards that can get them cash rewards into their existing UK bank accounts.

Once customers have paid with Atoa, merchants receive payment instantly via Instant Bank Pay. They also get funds in their bank account immediately, instead of waiting up to 1-2 business days.

Atoa says that since going live in June, it has seen more than 100% monthly growth in total payment volume (POS) and merchant customers. Its most direct competitors are card machine providers like SumUp, Zettle, Square and Barclaycard, Narayanan said. Atoa differentiates itself by offering lower fees and allowing merchants to receive funds faster than the three days typically required by card machine providers. It also charges lower fees than players mediated by Visa and Mastercard.

In a statement on its investment, Passion Capital partner Robert Dighero said: “Atoa has come to the UK market at the right time to take advantage of open banking and provide small and medium traders with a truly viable alternative to payment cards and card machines that can be deployed in-store in minutes. We are thrilled to work with the Atoa team after their first success in fintech and look forward to partnering with them as they reach even greater heights with Atoa.


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