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Nigeria’s Central Bank (CBN) has imposed a ₦250 million fine on Paystack, a leading payment processing company, in what is now the firm’s largest known regulatory penalty since its establishment in 2016. The action is part of a broader regulatory crackdown aimed at reinforcing financial system integrity through stricter enforcement of compliance measures.
The penalty stems from the launch of Paystack’s peer-to-peer money transfer platform, Zap, which the CBN determined operated in violation of existing financial regulations. Though Paystack holds a switching and processing license to facilitate electronic transactions, it is not licensed to hold customer deposits. According to the CBN, Zap effectively functioned as a digital wallet, a service category that requires a banking or microfinance license. Paystack argues that Zap was developed in collaboration with Titan Trust Bank, a licensed financial institution authorized to manage deposits. However, the CBN maintained that the product breached regulatory boundaries, holding Paystack responsible for non-compliance.
This regulatory action is part of a wider effort by Nigerian financial authorities to tighten oversight of the rapidly expanding fintech sector. The CBN is increasingly prioritizing adherence to Know Your Customer (KYC) requirements, fraud prevention protocols, and proper licensing frameworks to mitigate systemic risk. In April 2024, the CBN ordered four major fintech firms, OPay, Kuda Bank, Moniepoint, and PalmPay, to temporarily halt new customer onboarding due to deficiencies in their KYC practices. In another sweeping move, the apex bank has instructed the Nigeria Inter-Bank Settlement System (NIBSS) to begin debiting the settlement accounts of banks and fintechs involved in fraudulent transactions, starting January 2025.
The ongoing regulatory measures underscore the CBN’s resolve to protect Nigeria’s financial ecosystem from abuse while ensuring that all players in the digital finance space operate within the ambit of established legal and compliance standards.
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