Atoa helps UK merchants cut down on card processing fees

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Visa and Mastercard funds are handy for purchasers, however can value merchants excessive processing fees. Atoa Payments needs to supply a less expensive various that’s nonetheless straightforward for purchasers to make use of. The London-based fintech introduced right this moment that it has raised $2.2 million in pre-seed funding.

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

Atoa co-founder Sid Narayanan advised TechCrunch that he and co-founder Cian O’Dowd developed the concept for Atoa after promoting their earlier startup, expense administration platform KlearCard, to Singapore fintech Validus in 2021.

Their barber, who initially accepted card funds, began asking for money funds or financial institution transfers as a result of he needed to cut back his card processing fees, which had been round 1.6%. Narayanan and O’Dowd had been used to card various funds after dwelling in Singapore, and noticed a chance to make use of the U.Ok.’s open banking funds stack to construct a Visa and Mastercard various, Narayanan advised TechCrunch.

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Mastercard and Visa fee rails can value small merchants and their clients web margins of 51%, with card machine fees of about 1.75%, Narayanan stated. Atoa, on the opposite hand, costs a set proportion price billable to service provider every months that’s as much as 70% decrease than debit playing cards. It additionally doesn’t have {hardware} leases, service fees or PCI attestation of compliance costs.

To use Atoa, merchants obtain an app that connects to their financial institution accounts. Customers don’t have to obtain Atoa’s app to make use of the service. Instead, they will use Atoa so long as they’ve a U.Ok. cell banking app. According to Narayanan, the vast majority of adults, or about 80% within the U.Ok., have already got a cell banking app on their cellphone, eradicating the principle supply of friction. Merchants ship a hyperlink for fee by SMS, PayBay or supply a QR code to scan.

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To incentivize extra clients to make use of Atoa, the startup additionally plans so as to add rewards and loyalty advantages, like digital scratch playing cards that may allow them to get money rewards into their current U.Ok. financial institution accounts.

Once clients pay with Atoa, merchants to obtain fee immediately by means of Instant Bank Pay. They additionally get funds of their checking account instantly, as a substitute of ready for as much as 1 to 2 enterprise days.

Atoa says because it went reside in June, it’s gotten greater than 100% month-on-month complete fee quantity (TPV) development and service provider clients. Its most direct opponents embody card machine suppliers like SumUp, Zettle, Square and Barclaycard, Narayanan stated. Atoa differentiates by providing decrease fees and enabling merchants to obtain funds extra rapidly than the three days usually required by card machine suppliers. It additionally costs decrease fees than gamers which might be intermediated by Visa and Mastercard.

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In a press release about its funding, Passion Capital companion Robert Dighero stated, “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 that can be deployed in-store within minutes. We’re delighted to work with the Atoa team after their first fintech success and look forward to partnering with them as they achieve even greater heights with Atoa.”

Atoa helps UK merchants cut down on card processing fees by Catherine Shu initially revealed on TechCrunch

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