CBN Fines Paystack ₦250 Million for Unlicensed Zap Wallet Operations

On May 1, 2025, the Central Bank of Nigeria (CBN) imposed a ₦250 million penalty on Paystack for operating its consumer-facing app Zap as a deposit-taking digital wallet in breach of its regulatory licence. This enforcement action highlights the apex bank’s intensified scrutiny of fintech firms offering wallet services without proper authorisation.

Background on Paystack, Zap and Licensing Rules

• Paystack, founded in 2015 and acquired by Stripe in 2020, holds a switching and processing licence that permits transaction facilitation but prohibits holding customer funds.

• Zap, launched in March 2025, enables peer-to-peer naira transfers via a mobile app.

• Under CBN regulations, deposit-taking activities—including holding customer funds—are reserved for microfinance or fully-licensed commercial banks. Any firm offering wallet functionality without this licence risks regulatory action.

Details of the ₦250 Million Fine

1. Regulatory Breach

   • The CBN determined that Zap’s features mirrored those of a deposit-taking instrument, which exceeds the scope of Paystack’s licence.

2. Partnership with Titan Trust Bank

   • Paystack partnered with Titan Trust Bank, a CBN-licensed institution to facilitate deposits. However, the apex bank ruled this arrangement insufficient to cover Zap’s wallet-like operations.

3. Timeline

   • The fine represents the largest publicly disclosed regulatory sanction against Paystack since its CBN approval in 2016.

Paystack’s Response

• Paystack confirmed it is working closely with the CBN to review Zap’s business model and will refrain from further public comments during this process.

• The company emphasized its commitment to full regulatory compliance as it refines Zap’s structure.

Broader Fintech Context in Nigeria

• Earlier in 2024, fintech firms including Moniepoint and OPay were each fined ₦1 billion for lapses in Know-Your-Customer (KYC) and other compliance protocols, signaling a tougher regulatory stance.

• Mobile money platforms processed over 108 billion transactions valued at $1.68 trillion in 2024, underscoring the sector’s rapid growth and the necessity for robust oversight.

Implications for Nigerian Fintech Innovation

• Consumer Protection & Stability: Enforcing licence boundaries safeguards customer funds and maintains confidence in digital financial services.

• Innovation vs. Compliance: Fintech firms must balance agile product development with strict adherence to licensing requirements to avoid operational disruptions and penalties.

• Open Banking Roll-out: With open banking slated for August 2025, regulators will continue monitoring compliance as financial data sharing expands.