CBN Fines Paystack N250m For Launching Zap Without Approval

 By Adedapo Adesanya

The Central Bank of Nigeria (CBN) has reportedly slammed a fine of N250 million on Paystack for operating its personal banking product, Zap, without its approval.

According to TechCabal, Paystack didn’t follow due diligence and operated the product without the appropriate regulatory licence.

Zap was launched in March to solve challenges around bank transfers. However, there were whispers that Zap did not get its independent licence and was covered by Paystack’s licence.

Paystack holds a switching and processing licence, which permits it to route financial transactions between banks and other institutions, but not to hold customer funds.

Business Post reports that if a product launches without the proper license, the apex bank has the right to shutdown its operations or impose a fine, and since it appears that Paystack didn’t get the appropriate authorisation, the banking sector regulator in Nigeria had to wield the big stick.

Customers can fund their Zap account by linking their Nigerian bank accounts to Zap using Paystack’s direct debit infrastructure or depositing money directly into a Paystack-Titan account.

The app is limited to only commercial bank accounts which can be linked through Paystack Vault. So, account numbers like like OPay, PalmPay, and Moniepoint are excluded from the list of supported institutions.

Users can also link debit or credit cards from any country to the Zap app.

This may also present another rationale for the fine since Zap can carry out international transfers, particularly to the United Kingdom, even though it doesn’t have a International Money Transfer Operator Licences (IMTOs) from the CBN or even registered with the UK’s Financial Conduct Authority (FCA), which regulates financial services in the UK, as per checks.

Since its launch, Zap, has faced challenges including claims of trademark infringement as Nigerian crypto startup Zap Africa accused Paystack of stealing its name.

The matter is currently still undergoing legal battles between both entities.

Right now, the question that people will be asking is: how could a prestigious firm like Paystack fail to do the necessary things?