Atoa, a London-based fintech startup, has secured approval from the Financial Conduct Authority (FCA) to operate as an Authorised Payment Institution, allowing it to launch open banking payment services in the UK.
Founded in 2022 by Sid Narayanan, the company has raised $9 million to provide a low-cost, tech-driven alternative to traditional card payments, targeting sectors like retail and hospitality.
With its FCA authorization, Atoa can offer payment initiation services, virtual accounts via ClearBank, and real-time transaction data tools. By leveraging direct bank-to-bank transfers, Atoa claims to cut processing costs by 50%, eliminating the need for card networks that typically charge merchants 1-3% per transaction.
CEO Sid Narayanan hailed the approval as a transformative milestone, emphasizing the company’s goal to scale its impact and provide businesses with advanced payment solutions, including QR code and SMS-based payments.
Atoa enters a competitive open banking market, where it will compete with established players like GoCardless, TrueLayer, and Yapily.
So, what’s this all about? Why should you care? Let’s break it down, chat about what it means, and see where Atoa fits into the wild world of digital payments.
Atoa is the brainchild of Sid Narayanan, who used to crunch numbers as a banker at Standard Chartered before diving into the tech scene. He’s no stranger to startups either, back in Singapore, he founded Greyloft, a property tech firm.
Atoa’s mission is to shake up how businesses handle payments by tapping into something called “open banking.” Basically, it’s a way to pay straight from your bank account using fancy tech, skipping the usual credit card middleman.
They say it’s 50% cheaper than those traditional card payments. That’s a bold claim, and now, with the FCA’s stamp of approval, they’re ready to roll it out across places like shops, restaurants, salons, car dealerships, and even office services.
The FCA nod isn’t just a pat on the back, it’s a golden ticket. It means Atoa can legally offer payment services like starting transactions for customers, setting up virtual accounts (think digital wallets tied to a real bank account), and giving businesses real-time data on their cash flow.
They’re teaming up with ClearBank, a behind-the-scenes banking partner, to make this happen. Sid himself called it a “game-changing moment,” telling Asset Servicing Times, “From day one, our goal has been to help businesses break free from the high costs and inefficiencies of traditional payment methods like debit cards and manual bank transfers.” He’s pumped, and honestly, who wouldn’t be?
Since launching, they’ve pulled in $9 million total. The big chunk came in June 2023, when they nabbed $6.5 million in a funding round led by Valar Ventures, a firm co-founded by PayPal’s Peter Thiel, no less.
Other backers include Passion Capital and Moon Capital Ventures, names that carry weight in the startup world. That’s according to UKTN, which has been tracking Atoa’s rise.
Nine million bucks might not sound like much compared to tech giants, but for a three-year-old company, it’s fuel to grow fast, think hiring, tech upgrades, and getting the word out.
Why open banking?
So, why’s Atoa betting on open banking? It’s all about cutting costs and speeding things up. Traditional card payments, like when you swipe your Visa at the store, come with fees that merchants hate.
Processing those can eat up 1-3% of every sale, sometimes more with fancy card machines. Atoa says their system slashes that by half, and they’ve got customers backing it up.
Take Jason Drury from Ponko in Cambridge, he told Atoa’s website he’s saving £6,000 a month on fees. That’s real money for a small business!
Open banking’s been around since the UK rolled out rules in 2018 under something called PSD2, which forced banks to share data (with permission) to spark competition.
It lets companies like Atoa connect directly to your bank account for payments, think QR codes, SMS links, or app taps instead of plastic cards.
Research backs up the buzz: the Open Banking Impact Report says 13% of digitally savvy Brits were using it by January 2024, up from 11% before, and 18% of small businesses are on board.
That’s millions of people, and the Payments Association predicts open banking transactions could hit $330 billion by 2027, up from $57 billion in 2023. That’s a massive pie, and Atoa wants a slice.
The UK’s open banking scene is packed with players like GoCardless, TrueLayer, and Yapily. GoCardless reckons there are 295 registered providers out there, all fighting for attention.
GoCardless, for instance, specializes in direct debits for subscriptions, while TrueLayer’s big on connecting apps to banks. Atoa’s angle, cheap, instant payments with no contracts or chargebacks (those pesky refunds card companies deal with), might stand out, but it’s a tough crowd.
“It’s a competitive space, no doubt,” says fintech analyst Sarah Jenkins from London’s FinTech Hub. “Newbies like Atoa need to prove they’re not just cheaper but reliable and easy to use, especially for bigger businesses who don’t switch systems lightly.”
For businesses, Atoa could be a lifeline. Imagine a café owner who’s tired of losing £100 a week to card fees, switching to Atoa might save them thousands a year.
Customers might not notice much difference, just scan a QR code instead of swiping, but behind the scenes, it’s a shift. Sid’s got big plans too.
He told Asset Servicing Times, “We’re now in a position to serve larger businesses with even more advanced payment capabilities.” That could mean bigger chains or even online giants jumping in if Atoa scales up.
Security’s a biggie, open banking relies on sharing bank data, and while it’s got strong safeguards (like app approvals), any slip-up could spook users.
Plus, convincing businesses to ditch their trusty card machines takes trust and time. “The potential’s huge, but execution’s everything,” Jenkins adds. “Atoa’s got the funding and the vision, now they need to deliver.”
Open banking’s reshaping how we pay, pushed by regulators and tech wizards alike. If Atoa succeeds, it could nudge more businesses away from cards, maybe even pressure giants like Visa and Mastercard to lower fees.
For the UK, a fintech hotspot, it’s another sign of innovation brewing, London’s already home to over 1,600 fintech firms, per Forbes. And with that $9 million war chest, Atoa’s got a shot to grow beyond the UK someday.
So, is Atoa a game-changer or just another face in the crowd?
Too early to call, but they’re off to a solid start.
Keep an eye on this one, folks, it’s a front-row seat to the future of money, and it’s moving fast.
