Exclusive: CBN imposes ₦250 million fine on Paystack over licensing breach By Ganiu Oloruntade Apr 30, 2025 Image Source: Paystack.
In a recent turn of events, Nigeria’s Central Bank has taken regulatory action against one of the country’s leading fintech companies, Paystack. The apex bank has levied a hefty fine of ₦250 million ($190,000) on Paystack for allegedly breaching its licensing terms with the operation of its newly launched consumer product, Zap by Paystack.
**The Licensing Breach**
At the heart of this issue is the contention that Zap by Paystack was being operated as a wallet in contravention of the regulatory license held by Paystack. According to sources familiar with the matter, the Central Bank asserts that Zap functions as a deposit-taking product—an activity reserved for financial institutions holding either microfinance or banking licenses. However, Paystack only possesses a switching and processing license, which prohibits it from holding customer funds.
*
“Paystack is working closely with the regulator as they further review Zap, and out of respect for the process, we won’t be making any public comments at this time,”
* shared a spokesperson from Paystack with TechCabal.
**Understanding Wallet Operations**
Within Nigeria’s tightly regulated financial services sector, a
“wallet”
typically refers to a digital account that not only stores customer funds but also facilitates payments, transfers, and often provides financial management tools. Thus, operating a wallet without the appropriate license raises significant concerns for regulators like the CBN who are keen on overseeing licensed activities within defined boundaries.
Despite these claims against them regarding user fund storage practices related to Zap operations without direct storage mechanisms in place—instead partnering with Titan Trust Bank which does hold deposit licenses—the controversy surrounding trademark disputes between Nigerian crypto startup Zap Africa and Paystack complicates matters further.
**Implications and Regulatory Scrutiny**
This significant fine imposed by CBN marks one of the most substantial publicly known penalties faced by Paystack since obtaining approval from CBN back in 2016. It serves as a stark reminder of the risks faced by fintech companies venturing into consumer-facing products while primarily specializing in business-to-business transactions.
The launch of Zap was initially seen as an ambitious move by Stripe-owned company aimed at penetrating Nigeria’s rapidly expanding consumer payments market. However, legal entanglements such as trademark infringement accusations have clouded its rollout—a situation exacerbated by ongoing disputes still awaiting resolution.
This enforcement action against Paystack occurs amidst elevated regulatory scrutiny targeting Nigerian fintech firms. Over recent times, several players in this space have encountered increased oversight concerning aspects like customer onboarding processes and Know Your Customer (KYC) compliance measures—a response to rising apprehensions around fraud occurrences and ensuring financial stability across Nigeria’s financial landscape.
Leave feedback about this