Shago Payments, a fintech company known for providing financial technology solutions to Nigeria’s underserved and unbanked population, has taken legal action against Fidelity Bank over a contentious chargeback dispute.
The Dispute
The conflict centers around a series of chargeback claims between June and August 2023, during which ₦811 million was deducted from Shago Payments’ Fidelity Bank account without their knowledge. Shago alleges that these deductions were the result of Fidelity Bank unilaterally resolving the chargeback claims, leading to what Shago describes as “unauthorized debits.”
Escalation to Legal Action
After reporting the incident to the Economic and Financial Crimes Commission in September 2023 and engaging in several unsuccessful meetings with Fidelity Bank’s leadership, Shago Payments decided to escalate the matter to the courts. The fintech company has requested that a Federal High Court in Lagos award ₦10 billion in damages for the incident. Additionally, Shago has called for the court to restrain Fidelity Bank from making any further debits to its accounts and to hold the ₦811 million already deducted in trust until the suit is resolved.
Court’s Interim Orders
In a significant development on July 17, the court mandated Fidelity Bank to transfer the disputed ₦811 million to a court-designated account pending the determination of the suit. The court also issued an order restraining Fidelity Bank from taking further action on the alleged chargeback claims.
Shago Payments’ Growth and Impact
Founded in 2020, Shago Payments has quickly established itself as a key player in Nigeria’s fintech sector. The company has registered over 3,000 clients and processed more than ₦7 billion in transactions within its first 12 months of operation. Shago’s services are particularly focused on providing integrated financial solutions to Nigeria’s underserved and unbanked communities, helping to bridge the financial inclusion gap in the country.
Looking Ahead
The case has drawn significant attention within Nigeria’s financial sector as the legal proceedings continue. The outcome could have far-reaching implications for the handling of chargeback disputes and the responsibilities of financial institutions in Nigeria.
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