This fine follows the launch of Paystack’s peer-to-peer transfer app, Zap, which has raised concerns over regulatory compliance.
The CBN claims that Zap functions like a wallet, a category reserved for companies with banking or microfinance licenses.
While Paystack holds a switching and processing license, allowing it to facilitate transactions between financial institutions, it is not authorized to hold customer funds.
CBN inspectors determined that Zap, launched in March 2024, effectively operated as a digital wallet in violation of regulatory guidelines.
Although Paystack maintains that Zap was developed in partnership with Titan Trust Bank—a CBN-regulated institution licensed to hold deposits—the central bank held Paystack accountable for the breach.
This fine is part of a broader crackdown by Nigerian authorities on fintechs, focusing on know-your-customer (KYC) compliance, fraud prevention, and operating licenses.
CBN Intensifies Scrutiny of Fintech Industry
The Central Bank of Nigeria (CBN) has ramped up its regulatory scrutiny of fintech companies, emphasizing compliance with Know Your Customer (KYC) protocols, fraud prevention, and licensing requirements.
In an effort to bolster transaction monitoring and ensure stringent KYC adherence, the CBN instructed the Nigeria Inter-Bank Settlement System (NIBSS) to begin debiting the settlement accounts of banks and fintechs found to have processed fraudulent transactions, effective from January 2025.
Furthermore, in April 2024, the CBN directed four major fintech companies—OPay, Kuda Bank, Moniepoint, and PalmPay—to suspend new customer onboarding due to inadequate KYC procedures.
This move is part of the CBN’s broader initiative to safeguard Nigeria’s financial system and combat fraudulent activity.
