The Central Bank of Nigeria (CBN) has imposed a ?250 million (approximately $190,000) fine on Paystack for operating Zap, its peer-to-peer payment app, as a wallet in breach of its regulatory approval, according to a report by TechCabal.

The apex bank flagged Zap as a deposit-taking product, a function reserved exclusively for institutions with microfinance or banking licences.

Launched in March, Zap 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. This regulatory limitation is at the heart of the CBN’s sanction, sources familiar with the matter said.

Oil price to stay lower for longer as Saudi Arabia abandons price defence for market share

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,” a company spokesperson said.

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 compliance 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. (BusinessDay)