Payments Startup Atoa Raises $6.5M In Seed Funding

Atoa, a payments startup company based in the UK, has closed its seed funding round after raising $6.5 million. The fintech has now set itself in a position where it can compete with payment giants such as Visa and Mastercard, who are currently dominating the UK payments space.

Atoa raises $6.5M

Atoa is a payments company that provides its customers with an easy and seamless way of making payments. The platform targets medium-sized retail businesses in the UK by giving them access to a faster, cheaper and more secure alternative to accepting card payments. Atoa facilitates this through account-to-account payments.

Atoa has been advocating for businesses to minimize their reliance on card payments while urging regulators to cap the card fees charged by Mastercard for businesses. The company has now raised $6.5 million in a funding round.

The seed funding was led by Valar Ventures, which is a fund based in the UK and backed by the co-founder of PayPal, Peter Thiel. Valar Ventures has invested in several fintechs across Europe including N26, Wise and Xero. The other investors that participated in the funding round include previous investors such as Passion Capital and Leo Capital.

Competing against Visa and Mastercard

Small and medium-sized businesses across the UK have been dealing with unfavorable economic conditions, the effects of the pandemic and the increase in inflation levels. Atoa has said that despite Visa and Mastercard being used by many SMBs, the two companies have failed to offer relief to struggling businesses.

Atoa has said the two card companies have profit margins of as high as 67% for Visa and 75% for Mastercard. Atoa has also referred to the Coalition for a Digital Economy (COADEC) and the claim that the cost of payments has increased by up to 44% since 2016.

Atoa is a platform that enables users to make purchases in-store through instant bank transfers. This allows merchants to go away from crippling payment fees and to provide immediate set-up and an improved cash flow.

Consumers will not have to complete any downloads on new mobile applications. The customers can just approve the payment through their existing banking application. Across the UK, £850 billion worth of debit card transactions are processed annually.

Mastercard and Visa currently have control of over 98% of the market. On the other hand, Atoa enables businesses and consumers to bypass what Atoa could describe as obsolete payment stacks through open banking and account-to-account payments. As such, Atoa is a platform that targets merchants that allows them to save up to 70% on transactions.

The operations of Atoa are different from what most fintechs do. Atoa has argued that these outfits, instead of merely slotting themselves into the existing areas of Mastercard and Visa. Atoa is a platform that was released in June 202, and it reports 60% month-on-month payments growth processed.

The seed funding round has taken the total raised to $8.6 million. It is also planning to remain on the trajectory to target in-person payments for small and medium-sized enterprises.