CBN Imposes N250 Million Fine On Paystack Over Zap Wallet Operations

The sum of N250 million fine has been imposed on Paystack for operating Zap, its peer-to-peer payment app, as a wallet in breach of its regulatory approval.

The fine was imposed by the Central Bank of Nigeria (CBN), who also flagged the payment app as a deposit-taking product, a function reserved exclusively for institutions with microfinance or banking licences,

Zap, which was launched in March, allows users to send and receive money, positioning itself as a consumer-facing digital wallet.

However, Paystack only holds a switching and processing licence, which permits it to facilitate transactions but not to hold customer funds.

The penalty comes amid a legal dispute between Paystack and Zap Africa, a Nigerian crypto startup, which has accused the fintech of trademark infringement.

In Nigeria’s highly regulated financial services space, digital wallets are considered deposit-taking entities, and offering such services without the requisite licence raises Acompliance concerns for the regulator.

Although Zap reportedly does not directly hold customer funds, it operates in partnership with Titan Trust Bank, which is authorised to accept deposits.

This is Paystack’s most significant publicly disclosed regulatory sanction since it received CBN approval in 2016. It reveals the growing scrutiny facing fintech firms as they transition from enterprise-focused offerings to consumer-facing financial services.

When contacted, the company spokesperson said: “Paystack is working closely with the regulator as they further review Zap, and out of respect for the process, we won’t be making any public comments at this time.”