MoCaFi, a Black-owned financial services platform, is teaming up with BNY Mellon on a fintech platform for people to receive digital payments, skirting alternative lenders who can demand pricy transaction fees.

“We wouldn’t be doing this without the partnership,” Carl Slabicki, co-head of global payments for BNY Mellon, told American Banker. “One of the challenges that we have always had is how we can help clients interact with people that are outside of the system.”

News of the agreement comes as banks and fintech companies are increasingly collaborating to increase speed to market or add depth to new financial products, filling gaps that frequently exist in the industry.

MoCaFi will interact with BNY Mellon’s Vaia platform, which enables government organizations and commercial users to disperse funds for financial aid, employee payroll, and disaster relief, according to American Banker.

The partnership will also offer an FDIC-insured account, a debit card, and a credit reporting service that customers can access through the MoCaFi platform.

Founded by CEO Wole Coaxum in 2016, MoCaFi raised $33 million in Series B funding in May, with Commerce Ventures as the lead investor. The business has operations in over a dozen locations, and according to MoCaFi, its collaboration with BNY Mellon will allow it to reach more neighbourhoods, according to American Banker.

MoCaFi is aiming to fill a crucial role, spurred by gaps felt during the pandemic, where people without a bank account struggled to find locations to process digital payments.

“When paying someone without a bank account, typically the (cheque) goes through the mail and it’s hard to get funds to people, especially if it’s a time of crisis,” Slabicki told American Banker. “They usually go to a (cheque-cashing) place where there are high fees.”

BNY Mellon and MoCaFi will offer no-fee ATM access at a time when cheque-cashing services range between two and 10 per cent, according to American Banker.

MoCaFi collaborates with governmental bodies, financial institutions, and other parties to support payments and other financial services. That covers prepaid cards, banking software that lets users create a credit profile, a program to help people become homeowners, budgeting tools, and other products.

Meanwhile, BNY Mellon is an investment company. It provides investment management and services that help individuals and institutions invest, conduct business, and transact in markets worldwide.