Central Bank of Nigeria Imposes ₦250M Penalty on Paystack for Zap Wallet Breach
Nigeria's Central Bank Fines Paystack N250 Million for Operating Unlicensed Wallet
Paystack, a popular Nigerian fintech company, has been hit with a N250 million ($190,000) fine by the Central Bank of Nigeria (CBN) for operating Zap, a peer-to-peer money transfer app, as a deposit-taking product without the necessary license. This is Paystack's biggest known regulatory penalty and serves as a reminder of the risks fintechs face when entering Nigeria's tightly regulated consumer finance space.
In Nigeria, only firms with a banking or microfinance license are allowed to operate deposit-taking products. Paystack, however, currently holds a switching and processing license that does not permit holding customer funds. The CBN asserts that Zap's operation as a deposit-taking product puts Paystack in conflict with its regulations, which are assertive about compliance in the financial sector.
Zap's launch marked a bold consumer push, but it quickly ran into legal and regulatory headwinds. The app, which allows users to send and receive money, is alleged to operate like a deposit-taking product, which is against the rules in Nigeria.
This fine adds to mounting pressure on Nigeria's fintech sector. In 2024, Moniepoint and OPay were fined N1 billion each over KYC and compliance lapses. Fintechs in Nigeria are facing growing scrutiny as regulators tighten oversight in response to fraud and financial instability.
Paystack, in response to the fine, has stated that they are working closely with the regulator and will not make any public comments at this time. It is unclear whether Paystack has taken steps to rectify the issue or if they plan to appeal the fine.
Operating a consumer wallet in Nigeria requires navigating a complex but more clearly defined regulatory framework. Key requirements involve compliance with the Investment and Securities Act 2025 (ISA 2025) and related frameworks primarily overseen by the Nigerian Securities and Exchange Commission (SEC).
Operators must obtain appropriate licenses from the SEC, implement rigorous anti-money laundering (AML) and know-your-customer (KYC) procedures, maintain verifiable 1:1 fiat reserves for stablecoins, undergo regular third-party audits, provide full transparency on reserve backing, comply with data requests, and cooperate with authorities for oversight purposes.
The SEC has initiated a regulatory sandbox scheme, permitting fintech firms to test wallet and digital asset services under close supervision before full market authorization, facilitating innovation while monitoring risks. The SEC regulates digital asset aspects, while the CBN focuses on overall payment systems and currency issuance.
This reflects Nigeria’s 2025 shift to an innovation-supportive yet secure regulatory regime for digital finance. The fines imposed on Paystack and other fintech companies serve as a reminder of the importance of compliance in Nigeria's tightly regulated consumer finance space.
[1] Central Bank of Nigeria (CBN) Regulatory Framework for Digital Finance [2] Nigerian Securities and Exchange Commission (SEC) Guidelines for Digital Asset Services [3] Nigerian SEC Sandbox Scheme for Fintech Innovation [4] Investment and Securities Act 2025 (ISA 2025) [5] Federal Competition and Consumer Protection Commission (FCCPC) Rules for Digital Lending
- The fine imposed on Paystack by the Central Bank of Nigeria (CBN) serves as an illustration of the stringent regulations surrounding business, finance, and technology in Nigeria's consumer finance space, as highlighted by the Investment and Securities Act 2025 (ISA 2025) and the guidelines set by the Nigerian Securities and Exchange Commission (SEC).
- Operating a digital wallet in Nigeria's increasingly scrutinized fintech sector requires compliance with various laws and frameworks, such as the SEC's guidelines for digital asset services, the regulatory sandbox scheme, and the Federal Competition and Consumer Protection Commission (FCCPC) Rules for Digital Lending, all aimed at ensuring technology-driven businesses adhere to general-news standards regarding compliance, anti-money laundering, and data security.
