The Central Bank of Nigeria (CBN) has imposed a ₦250 million ($190,000) fine on leading fintech firm, Paystack, for allegedly launching its new peer-to-peer transfer product, Zap, without obtaining the necessary licence. According to reports by TechCabal, Zap, introduced in March, functions as a digital wallet—an activity that legally requires a microfinance or banking licence, which Paystack does not possess.
Currently, Paystack holds a switching and processing licence, allowing it to route transactions but not to hold customer funds. The CBN’s punitive action highlights the growing regulatory pressure on Nigeria’s burgeoning fintech sector, which has expanded rapidly in recent years and now faces increasing scrutiny from financial authorities.
The fine comes amid broader regulatory reforms aimed at curbing unlicensed financial operations. In December 2023, the Nigeria Inter-Bank Settlement System (NIBSS) instructed banks to remove non-deposit-taking institutions from their transfer platforms. These institutions, like Paystack, serve as payment gateways but are not authorised to hold user funds, sparking concern among regulators.
In 2024, the CBN halted at least six fintech firms, including Moniepoint and OPay, from opening new bank accounts as part of efforts to enhance financial system integrity and align with international standards set by bodies like the Financial Action Task Force (FATF). The case of Paystack underscores the regulatory tightrope fintechs must walk, balancing innovation with strict compliance to avoid sanctions and ensure uninterrupted service delivery.
CBN Slams Paystack with ₦250m Fine Over Unlicensed Product Launch
The Central Bank of Nigeria (CBN) has imposed a ₦250 million ($190,000) fine on leading fintech firm, Paystack, for allegedly launching its new peer-to-peer transfer product, Zap, without obtaining the necessary licence. According to reports by TechCabal, Zap, introduced in March, functions as a digital wallet—an activity that legally requires a microfinance or banking licence, which Paystack does not possess.
Currently, Paystack holds a switching and processing licence, allowing it to route transactions but not to hold customer funds. The CBN’s punitive action highlights the growing regulatory pressure on Nigeria’s burgeoning fintech sector, which has expanded rapidly in recent years and now faces increasing scrutiny from financial authorities.
The fine comes amid broader regulatory reforms aimed at curbing unlicensed financial operations. In December 2023, the Nigeria Inter-Bank Settlement System (NIBSS) instructed banks to remove non-deposit-taking institutions from their transfer platforms. These institutions, like Paystack, serve as payment gateways but are not authorised to hold user funds, sparking concern among regulators.
In 2024, the CBN halted at least six fintech firms, including Moniepoint and OPay, from opening new bank accounts as part of efforts to enhance financial system integrity and align with international standards set by bodies like the Financial Action Task Force (FATF). The case of Paystack underscores the regulatory tightrope fintechs must walk, balancing innovation with strict compliance to avoid sanctions and ensure uninterrupted service delivery.