Atoa Payments, a UK startup utilizing open banking to provide merchants with an alternative to debit card payments, has successfully 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, including GoCardless co-founder Matt Robinson.
Atoa highlights the dominance of Mastercard and Visa in the payments market, which allows them to maintain net margins as high as 51%, often at the expense of small merchants and their customers. The startup aims to bypass these card giants by inviting businesses to download the Atoa app and connect their merchant bank accounts. After a quick five-minute setup, merchants can accept payments through SMS, Pay-by Link, or QR code.
Customers do not need to download any separate app; they simply scan the QR code or click on the link, select their bank, and are redirected to their bank’s app to approve the payment. Atoa claims that this system can reduce payment acceptance costs by up to 70% and provides instant payment—unlike the standard one to two days for debit card transactions.
Sid Narayanan, co-founder of Atoa, stated, “At a time of record inflation and during a cost-of-living crisis, the UK’s small and medium merchants are struggling to manage their expenses, deliver excellent service to their customers, and sustain profit margins. Atoa is here to empower merchants and enhance their cash flow and bottom line.”