Paystack has been fined N250 million by the Central Bank of Nigeria (CBN) for operating its peer-to-peer payment app, Zap, as a wallet without the necessary regulatory approval. The CBN has classified Zap as a deposit-taking product, a function restricted to institutions holding microfinance or banking licenses.

Launched in March, Zap enables users to send and receive money, essentially functioning as a consumer-facing digital wallet. However, Paystack's license only permits transaction facilitation, not the holding of customer funds. This regulatory action coincides with a legal dispute between Paystack and Zap Africa, a Nigerian crypto startup, alleging trademark infringement.

In Nigeria's stringent financial environment, digital wallets are regarded as deposit-taking entities, and offering these services without proper licensing raises compliance issues for the regulator. While Zap does not directly hold customer funds, it partners with Titan Trust Bank, which is authorized to accept deposits.

This penalty represents Paystack's most substantial publicly disclosed regulatory sanction since obtaining CBN approval in 2016. It underscores the increasing scrutiny of fintech companies as they shift from enterprise-focused services to consumer-facing financial offerings.

A Paystack spokesperson stated that the company is collaborating with the regulator during the review of Zap and will refrain from public comments during this process.