Atoa Payments is a UK startup that uses open banking to give merchants an option to debit card payments. Valar Ventures, which is backed by Peter Thiel, led a $6.5 million seed funding round that Atoa Payments used to raise the money.
The round comes after Leo Capital and Passion Capital led a $2.2 million pre-seed round in November.
Atoa says that Mastercard and Visa have an effective duopoly in the market, which lets them get away with net margins as high as 51% at the cost of small merchants and their customers.
The new company wants to avoid the big card companies by asking businesses to download the Atoa app and link their merchant bank accounts. Merchants can accept payments by SMS, Pay-by-Link, or QR code after setting up for five minutes.
Customers don’t have to download a different app. Instead, they scan the QR code or click on the link, choose their bank, and are taken to their bank app to approve the payment.
Atoa says that its method cuts the cost of accepting payments by up to 70% and makes sure that payment is made right away, instead of taking one to two days like it does with debit cards.
Cian O’Dowd, COO, Atoa, tells The Irish Times:
“Most fintechs these days are not fundamentally disrupting the market but are instead merely slotting themselves into the existing rails of Visa and Mastercard. They give us nice user interfaces and fancy metal debit cards but the high merchant fees, excessive bureaucracy and outdated infrastructure remains.
Open banking payments, such as Atoa, represent a major shift in the global payments sector.”
