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London, In the dynamic world of digital payments and open banking, UK-based startup Token.io has recently closed an impressive $40 million funding round. Co-led by Cota Capital and TempoCap, with participation from Element Ventures, MissionOG, PostFinance, and previous investors Octopus Ventures, Opera Tech Ventures, and SBI Investments, this injection of capital will fuel the expansion of Token.io’s unique push in payments technology, particularly focusing on account-to-account payments and accessing accounts for transactions through a single API, further penetrating the UK and European markets.

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As open banking gains momentum in the financial sector, traditional incumbents are embracing new technologies, including APIs, to unlock their systems for modern integrations. This shift has given rise to a wave of innovative payment methods, each vying to become as ubiquitous as cash or card payments. Token.io is at the forefront of this revolution, aiming to streamline account-to-account payments and provide a seamless API-driven experience for users across Europe.

CEO Todd Clyde confirmed that the funding round had resulted in a higher valuation than the company’s previous financing but did not disclose the exact figure. Token.io’s impressive customer base includes major players like BNP Paribas, HSBC, Mastercard, Nuvei, Paysafe, Ecommpay, Rewire, Coingate, Raypd, Sonae Universo, Volt, Vyne, and others, some of whom use Token as a white-label service.

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Token.io’s rapid growth is evident from its significant payment volumes, which surged 20-fold last year. Presently, Token.io accounts for an impressive 21% of all account-to-account payments in the UK and Europe, a figure projected to rise as more customers activate their Token integrations.

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While the concept of account-to-account payments is not entirely novel, it has historically been a complex and costly process, not suited for everyday transactions. Token.io has transformed this landscape by developing its API and establishing integrations with various banks, making account-to-account payments quick and effortless, akin to using a debit card or cash.

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“There’s been an inflection point,” said Clyde. “Open banking solves the barriers of account-to-account payments, and it will allow these to go mainstream. We are seeing 10% to 20% month over month growth in volumes in the U.K.”

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Despite the remarkable growth, account-to-account payments currently account for just one-tenth of 1% of all payments in the UK and Europe. However, Clyde remains optimistic that this figure will rise to 10% within the next three years.

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Token.io’s harmonized API allows it to offer access to account holders across thousands of banks in 16 countries in Europe, a significant achievement given the varying banking standards across the region.

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Kevin Jacques, a partner at Cota Capital, who led its investment in Token.io, emphasized that Strong Customer Authentication regulations will be a driving force behind the market’s growth. These regulations require multi-factor authentication to enhance the security of digital payments. Account-to-account payments, being directly linked to customer accounts, will enable payment processors to speed up processing, thereby encouraging more adoption by retailers and consumers.

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As Token.io continues its expansion, it also plans to explore additional services to complement basic account-to-account payments and cater to a broader range of use cases. While Token.io is unlikely to build credit and financing services, it may collaborate with disruptive players in that domain to provide alternatives.

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The successful closure of this funding round amidst challenging market conditions underscores the strength and potential of Token.io as a business. With a deep pool of payments expertise in its team, Token.io is poised to drive dynamic change in the payments market, further leveraging the power of open banking innovations. As the financial landscape continues to evolve, Token.io is well-positioned to lead the way in revolutionizing payment technology for the benefit of businesses and consumers alike.