Nigeria's Central Bank Fines Paystack, Co-founded By Shola Akinlade

The Central Bank of Nigeria fined Paystack N250 million0.19 million for allegedly operating its Zap product as a wallet without proper licensing, violating deposit-holding regulations.

Paystacks Zap app, launched in March, sparked regulatory heat and a legal dispute with crypto firm Zap Africa over trademark rights.

The fine signals growing scrutiny of Nigerian fintechs, as Paystack joins OPay and Moniepoint in facing regulatory actions over license and compliance issues.

Paystack, the Nigerian payments company co-founded by Shola Akinlade and acquired by U.S. tech giant Stripe, has been sanctioned by the Central Bank of Nigeria CBN for operating beyond the scope of its regulatory license. The N250 million 0.19 million sanction stems from the launch of Zap by Paystack, a consumer-facing peer-to-peer payments app that the central bank deemed to be functioning as a digital walleta service restricted to deposit-taking institutions.

The move is part of a broader enforcement drive by the CBN as it intensifies oversight of Nigerias fast-growing fintech sector, amid mounting concerns over fraud, illicit flows, and systemic risk. While Paystack is licensed as a switching and processing provider authorizing it to facilitate transactions between financial institutionsit is not permitted to hold customer funds.

CBN inspectors concluded that Zap, launched in March 2024, effectively operated as a digital wallet in violation of regulatory boundaries. Although Paystack has claimed the product was delivered in partnership with Titan Trust Bank a CBN-regulated institution licensed to hold deposits, the central bank nonetheless held the company directly accountable.

The Zap product marked Paystacks push into Nigerias competitive consumer payments market, long dominated by commercial banks and mobile money operators. But the launch has triggered both regulatory scrutiny and legal challenges. Nigerian crypto startup Zap Africa has sued Paystack for alleged trademark infringement over the use of the Zap name. Paystack is working closely with the regulator as they further review Zap, and out of respect for the process, we wont be making any public comments at this time, the company said in a statement.

The penalty is Paystacks most significant regulatory challenge since its landmark acquisition by Stripe in 2020, a deal reported to be worth over 200 million. Often hailed as one of Africas top fintech success stories, the company is now navigating the complexities of moving from its original business-to-business B2B model into the consumer segment.