A fund backed by Peter Thiel, one of the world’s most prominent technology investors, is injecting fresh funding into a British payments start-up which aims to compete with credit card giants Visa and Mastercard.

Sky News has learnt that Atoa Payments will announce on Friday that it has closed a $6.5m seed funding round.

The round is being led by Valar Ventures, which counts Mr Thiel, the PayPal co-founder, among its backers.

Valar previously took stakes in companies such as Wise, the London-listed money transfer business, and N26, the German digital bank.

Mr Thiel is well-known as a Republican-supporting billionaire who, like Tesla’s Elon Musk, has developed a reputation as a radical thinker about the future of technology.

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Atoa enables consumers to pay for high street purchases through an instant bank transfer, which obviates the need for payment intermediaries to charge additional fees.

The company is also backed by the London-based venture capital firm Passion Capital, which has invested in other UK fintechs, such as Monzo and Tide.

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Atoa said its service provides a major boost to small businesses because it allows them to “bypass obsolete payment stacks through open banking and account-to-account payments, saving merchants up to 70% on transactions”.

The company, which launched its payments platform a year ago, was co-founded by Sid Narayanan, Cian O’Dowd and Arun Rajkumar, who all previously founded KlearCard, a Singapore based fintech.

Robert Dighero, an executive at Passion Capital, said: “For businesses on the high street, every penny counts.

“Businesses need fairer solutions that improve cash flow and keep prices down for their customers.

“Open banking payments with Atoa could make a significant impact to their bottom line.”

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