Paystack, a leading Nigerian fintech company co-founded by Shola Akinlade, has been fined ₦250 million by the Central Bank of Nigeria (CBN) for operating its peer-to-peer payment app, Zap, as a digital wallet without the appropriate license.
This penalty marks the company's most significant regulatory sanction since its inception in 2016
Launched in March 2024, Zap allows users to send and receive money, effectively functioning as a digital wallet. However, under Nigerian regulations, only institutions with banking or microfinance licenses are permitted to offer deposit-taking services.
Paystack holds a switching and processing license, which authorizes it to facilitate transactions but not to hold customer funds .
Although Paystack partnered with Titan Trust Bank, a CBN-regulated institution licensed to hold deposits, the central bank held Paystack accountable for the breach, asserting that the company operated beyond the scope of its license
This fine is part of a broader crackdown by the CBN on fintech companies, emphasizing compliance with Know Your Customer (KYC) protocols, fraud prevention, and licensing requirements. In recent times, other fintech firms like OPay and Moniepoint have also faced significant fines for similar compliance issues
The situation has sparked widespread discussion on social media and among industry stakeholders, highlighting the challenges fintech companies face in navigating Nigeria's complex regulatory environment. While Paystack has stated that it is working closely with the CBN to resolve the issues, the incident underscores the importance of regulatory compliance in the rapidly evolving fintech sector.
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