The Central Bank of Nigeria imposed a N250 million fine on Paystack Payment Limited on 1 May 2025, penalising the fintech company for launching its peer-to-peer payment product, Zap, without first obtaining mandatory regulatory approval from the central bank. The CBN simultaneously issued a stern warning to Paystack and ordered the immediate discontinuation of the unauthorised product, removing it from the market pending any future application for proper clearance.
Paystack, headquartered in Lagos and majority-owned by Stripe, launched Zap as a service enabling consumers to transfer funds directly to one another. Under Nigeria's payment system regulations, any new financial product or service requires prior CBN approval before it can be offered to customers — a requirement the regulator determined that Paystack had failed to observe before making Zap available to its user base.
PRIOR APPROVAL RULES AND THEIR ENFORCEMENT
Nigeria's payment system regulatory framework requires all licensed payment service providers to submit new products for CBN review and obtain formal clearance before going live. The rationale is to allow the central bank to assess consumer protection implications, systemic risk, and compliance with anti-money laundering and Know Your Customer requirements before a product reaches scale and potentially becomes embedded in users' financial habits.
The N250 million penalty, equivalent to approximately $155,000 at prevailing exchange rates, sits at the heavier end of fines the CBN has issued to individual payment companies for compliance lapses. The accompanying order to shut down Zap means Paystack faces both a financial consequence and an operational setback, having to withdraw a product from market and restart the regulatory approval process if it wishes to relaunch the service in future.
The CBN's action sends a clear signal to the broader Nigerian fintech industry that the prior-approval requirement is strictly enforced regardless of a company's size, investor backing, or international profile. Paystack's association with Stripe, one of the most prominent global payments companies, did not shield it from regulatory action, demonstrating that the central bank applies its rules uniformly across the payments ecosystem.
IMPLICATIONS FOR NIGERIA'S FINTECH SECTOR
Nigeria has one of Africa's most active fintech ecosystems, with dozens of licensed payment companies competing across mobile money, card processing, remittances, and consumer lending. The sector's rapid product development cycles create ongoing tension with a regulatory framework that requires advance approval for new features and services — a tension that the Paystack penalty now brings into sharper focus for every company operating under a CBN licence.
For companies operating in this environment, the incident underscores the importance of integrating regulatory compliance review into the product development pipeline from the earliest stages. Launching a product and seeking approval retrospectively — or treating the approval process as a formality after a product has already gained users — carries significant legal and reputational risk that can impede a company's growth trajectory at a critical stage.
Paystack has not publicly detailed its plans for Zap following the CBN order, nor has it indicated a timeline for submitting a fresh application if it intends to pursue regulatory approval for the product. The company will also need to demonstrate to the CBN that it has strengthened its internal compliance processes to ensure no further products are released to customers outside the required approval framework going forward.