A British payments start-up which is muscling in on the turf occupied by bigger rivals such as SumUp has secured £6m in backing from a host of prominent venture capitalists.

Sky News understands that Lopay, which was founded by industry executive Richard Carter, has amassed the substantial seed funding from BackedVC, Portage, The Venture Collective and a number of angel investors.

The funding round will be announced publicly on Thursday.

Lopay, which has signed up more than 20,000 small businesses, enables SMEs to take card payments from customers more cheaply than the costs charged by more established payment providers.

In total, Lopay says it has taken nearly 10m customer payments since being founded last year.

It claims its fees are less than a third of those charged by PayPal and half of SumUp and Zettle’s – three of the industry’s biggest names – while giving customers the option of receiving cleared funds in their accounts immediately after each transaction.

The company estimates its pricing has saved merchants more than £1m in aggregate fees since its launch, and anticipates processing another £500m in payments during the next year, saving its customers more than £2.5m.

Elon Musk asks to see ‘list of violations’ after EU tells him to tackle spread of disinformation about Israel-Hamas conflict on X

Heathrow says passenger numbers above pre-pandemic levels for first time

Luton Airport fire: All flights suspended after massive blaze causes terminal car park to partially collapse

“Lopay’s mission has resonated with thousands of small businesses and sole traders who are being squeezed simultaneously by high inflation and fragile customer demand,” Mr Carter, a former executive at Ecrebo, a point-of-sale marketing platform, said.

“Against that backdrop, the big beasts of the card payment industry have been poor champions of small business.

“Their high fees mean too many small firms are paying up to 300% more than they need to – or waiting up to three business days – to receive card payments from their customers.”

Be the first to get Breaking News

Install the Sky News app for free

The £6m fundraising is large by comparison with most seed funding rounds, and comes amid a more challenging environment for early-stage companies to secure new capital.

Juliette Souliman, a principal at Portage, said Lopay was “breaking new ground in the archaic mobile POS payment industry, saving thousands of small businesses time and money as they navigate the post-pandemic business landscape”.

Related posts:

Growth slowdown proves government has mountain to climb in COVID recovery 9/11 anniversary: The touching charity day legacy in memory of 658 staff killed All countries on red list to be removed as ‘less effective’ in slowing Omicron Surging inflation could dwarf other issues in the political landscape as households feel the strain PlayStation maker Sony in shares slump after Microsoft’s Activision Blizzard swoop Oil prices fall as Shanghai lockdown prompts expectations of a fall in demand Macron’s re-election, another jump in house prices, and businesses supporting Ukraine Former Cameron aide Silva’s Second Home races to avert collapse Ministers further dilute audit reform plans after private sector backlash Rising cost of living hits maritime communities like Plymouth hard Threat of Go-Ahead bus disruption as company manages ‘cyber security incident’ Wasps rugby club likely to ‘enter administration in coming days’