Nigeria’s Central Bank (CBN) has fined fintech leader Paystack ₦249 million ($155,000) and ordered the immediate shutdown of its newly launched consumer product, Zap by Paystack, for operating without regulatory approval. The move signals a tightening grip on Nigeria’s booming fintech sector, with regulators sending a clear message: no company, no matter how influential, is above compliance.

According to internal CBN sources, Paystack violated financial regulations by launching Zap — a peer-to-peer payments feature — without securing the necessary approvals. The CBN deemed the product “illegal and outside permissible activities,” prompting swift disciplinary action.

Adding fuel to the fire, regulators were reportedly incensed by Paystack’s public launch event, “An Evening with Paystack,” which one CBN insider described as “a slap in the face of the regulator.” The source, speaking anonymously. “They not only launched without approval but threw a party to celebrate it.”

Why This Matters

The fine and forced shutdown underlines the Nigerian government’s hardening stance on fintech oversight. Industry analysts warn that the CBN’s decision could set a precedent, compelling startups to seek explicit regulatory clearance before rolling out new products.

The controversy extends beyond regulatory non-compliance. Paystack’s use of the name “Zap” has also drawn legal threats from Zap Africa, a cryptocurrency startup that claims prior trademark rights. The dispute highlights the risks African tech companies face when expanding without thorough intellectual property due diligence.

Nigeria’s Corporate Affairs Commission (CAC), which appears to be acting in concert, has also issued a six-week ultimatum to all businesses operating without proper registration, warning of criminal prosecution under the Companies and Allied Matters Act (CAMA) 2020. Violators risk two years’ imprisonment and daily fines.

Paystack, acquired by Stripe in 2020 for over $200 million, has yet to issue an official statement. However, sources close to the company suggest it is engaging with regulators to resolve the dispute.

The CBN’s action reflects growing scrutiny of Nigeria’s fintech sector, which has seen rapid growth but also increasing regulatory friction. In 2021, the CBN froze accounts of Bamboo, Risevest, and Chaka for unauthorized securities trading. This was however undone in 2023. 

For startups, the lesson is clear: regulatory compliance is non-negotiable. 

“The CBN is sending a clear message: there are limits to creative freedom, especially when it comes to handling money from the Nigerian public. This was a regulatory misstep by Paystack. They could have quietly kept the product in a strictly private testing phase while completing regulatory requirements first. The CAC also appears to be acting in coordination,” a Lagos-based legal expert told Launch Base Africa on condition of anonymity.

With Paystack now in the crosshairs, Nigeria’s fintech ecosystem watches closely — knowing the next enforcement move could come for anyone.