Frontier Fintech GPS# 31 - May 7th 2025
Paystack gets fined over Zap, MoneyFellows raises US$13m pre-series C, Nigeria enacts Crypto laws and other stories that matter
Illustration by Mary Mogoi
Hi All, Welcome to the 31st edition of Frontier Fintech GPS where I provide key insights on the top global Fintech news items that matter to you. This newsletter will be arriving in your inboxes every Wednesday morning. The idea behind Frontier Fintech GPS is to help you navigate the endless stream of Fintech news and get smart about global Fintech as it applies to Africa. To those who are yet to subscribe, hit the subscribe button below and share with your colleagues and friends. 🚀
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🇳🇬 | CBN Fines Paystack ₦250 Million Over Zap Operations
The Central Bank of Nigeria (CBN) has fined Paystack ₦250 million ($190,000) for operating its new consumer product, Zap by Paystack, as a wallet in violation of its switching and processing licence, which does not permit holding customer funds. Launched in March, Zap, a peer-to-peer money transfer app, was flagged by the CBN as a deposit-taking product, a function reserved for institutions with microfinance or banking licences. Paystack, which partners with Titan Trust Bank to manage deposits, is working closely with the regulator to address the issue but has refrained from public comments. The fine, Paystack’s largest publicly known penalty since 2016, highlights the regulatory challenges fintechs face in Nigeria’s consumer payments market.
This one was a bit of a head scratcher. When they announced Zap, they mentioned an existing relationship with Titan Bank that enables them to hold funds. My understanding was that this therefore enabled them to get into consumer payments and offer wallet functionality. Of course, the easy thing to say is that “Fintechs should pay attention to regulation”, but this is a well worn trope that's run its course. Paystack are sophisticated operators and have been in the market for over 10 years. Their senior leaders in ops and compliance are on first name basis with everyone at the CBN and moreover, their product release process must emphasise regulatory clarity. There’s definitely more than meets the eye with this one especially when you consider the timing of the fine and its scale.
🇪🇬 | MoneyFellows Raises $13M to Expand Group Savings Model Beyond Egypt
Egyptian fintech MoneyFellows has secured $13 million in a pre-Series C funding round led by Al Mada Ventures and DPI’s Nclude Fund, with participation from Partech Africa and CommerzVentures, to expand its digitized Rotating Savings and Credit Association (ROSCA) platform beyond Egypt, starting with Morocco. The Cairo-based company, founded in 2016, digitizes traditional group savings circles, known as “gam’eya” in Egypt, allowing users to join or form savings groups via its app, matching savers and borrowers using behavioral data and credit scores. With over 8.5 million users and profitability in Egypt, MoneyFellows has doubled its user base and nearly doubled average payouts to $906 per user in the past two years. The funding will support regional expansion, platform enhancements, and new financial products, including a recently launched prepaid card with Mastercard and Banque Misr for payouts and purchases.
I wrote about the Egyptian Fintech market some time back in the context of the top five Fintech markets in Africa i.e. Nigeria, Kenya, South Africa, Egypt and Ghana. The core idea was that in bank-led Fintech markets, gaps will always emerge in payments and lending. In Egypt, both these gaps exist and are being filled by the likes of MNT Halan, Paymob and Moneyfellows. Another article about Sacco’s in Kenya discussed the idea that in finance, cooperative type lending works at small scale but breaks down at scale. MoneyFellows has built a product on this insight, by focusing on Rotating Savings and Credit Associations (ROSCAs) and not Saccos thereby building a viral credit machine. As a tailwind, as Africa urbanises, credit demand will grow and a digitised ROSCA will make sense particularly as the social bonds that form traditional ROSCAs fray.
🇳🇬 | Nigeria Enacts Law Recognizing Bitcoin as a Security
In March 2025, President Tinubu signed the Investment and Securities Act (ISA) 2025 into law, officially classifying Bitcoin and other digital assets as securities, bringing them under the oversight of the Nigerian Securities and Exchange Commission (SEC). This marks Nigeria’s first formal recognition of Bitcoin, despite its high adoption rates, as noted by Chainalysis for P2P volumes. The law requires Virtual Asset Service Providers, Digital Asset Operators, and Digital Asset Exchanges to comply with SEC regulations, aiming to enhance investor protection and curb fraudulent schemes, with penalties including fines of at least ₦20 million ($12,430) or up to 10 years imprisonment. The SEC can now access telecom and internet provider data to track illegal activities like market manipulation. This regulatory clarity is expected to foster innovation and investment in Nigeria’s digital assets ecosystem, though Bitcoin’s decentralized nature may challenge its classification as a security.
As countries across Africa regulate Crypto, we’ll see more regulatory action towards recognising Crypto as a security. The challenge though is that in the long-term, they may be subject to the same types of taxes that assets across the continent are subject to e.g. Withholding taxes on sales, stamp duty and even a digital asset tax whenever the asset is exchanged. This despite the fact that Stablecoin powered cross-border payments are the biggest use cases for Crypto with USDT being the most traded crypto across numerous exchanges in the continent. The Crypto industry at large needs to drive more nuanced regulation.
🇹🇿 | Tanzania Bans Use of Foreign Currencies for Domestic Transactions
Tanzania has prohibited the use of foreign currencies for domestic transactions, mandating that all pricing and payments for goods and services within the country be conducted in Tanzanian shillings, as announced by the Bank of Tanzania (BoT) on May 2, 2025. The new regulations, effective from March 28, 2025, make it illegal to quote, advertise, or accept payments in foreign currencies like US dollars or euros, with businesses also barred from refusing Tanzanian shilling payments. Existing contracts denominated in foreign currencies must be amended within one year to comply, or they will become void unless extended by the Minister of Finance. The policy aims to stabilize the Tanzanian shilling, which depreciated by 3.6% against the dollar between April 2024 and April 2025, despite strong foreign exchange reserves of $5.6 billion. Exceptions include transactions with international organizations, embassies, and specific government contributions, while tourists must exchange foreign currencies at banks or bureaus
Tanzania has traditionally dealt with market dislocations by creating government decrees. In finance this barely works as black markets or workarounds always form. Nigeria’s parallel market development in the last four years is a prime example. What Kenya does very well is that it lets the exchange rate absorb shocks in the balance of payments, this creates short-term pain but enables a more robust financial system. I expect to see a spike in Crypto activity in Tanzania the more this policy is enforced.
🇬🇭 | Ghana to Launch Digital Asset Regulation in September 2025
Ghana’s central bank, the Bank of Ghana (BoG), will begin regulating digital assets, including cryptocurrencies, by September 2025, pending the passage of the Virtual Asset Providers Act, as announced by Governor Johnson Asiama at the African Leaders and Partners Forum in Washington during the IMF-World Bank Spring Meetings. The proposed framework requires Virtual Asset Service Providers (VASPs) to obtain licenses from the BoG, with oversight also involving the Securities and Exchange Commission, focusing on consumer protection, financial stability, cybersecurity, and preventing illicit activities. The BoG plans to establish a dedicated digital asset unit to enforce these regulations. Despite the current lack of regulation, 3.1 million Ghanaians (17% of the population) own digital assets, driven by economic challenges and the cedi’s depreciation, with USD-pegged stablecoins gaining popularity. The BoG is also advancing its central bank digital currency, the eCedi, with plans for a 2025 launch to digitize payment systems.
Whilst VASPs do pose challenges in the long-term for the stablecoin industry, what they do offer is clarity around crypto as an investible asset. We’ve seen Luno, Valr and Ovex do really well in South Africa due to institutional adoption of Crypto by SA’s deep capital markets. For banks, its important to monitor these trends with a view towards enabling crypto purchases partricularly Bitcoin and Stablecoins. Moreover, credit policies should be adjusted to enable crypto as collateral. The infrastucture exists for crypto KYC, KYB and custody for this to be scalable.
🇳🇬 | Why Nigerian Banks Face System Glitches Amid Core Banking Upgrades
System glitches at major Nigerian banks, including Wema, Keystone, and Union, have led to significant issues in Q1 2025, with unauthorized transfers totaling ₦17.3 billion ($10.7 million) and incorrect deposits, such as Guaranty Trust Bank’s October 2024 incident where ₦1.9 billion ($1.2 million) was mistakenly credited to customers. These glitches, described as system failures disrupting electronic transactions, have triggered interbank lawsuits to recover lost funds, straining relationships and eroding public trust. The Central Bank of Nigeria’s shift to real-time settlements via the upgraded Real Time Gross Settlement (RTGS) system has exposed banks with outdated core banking systems, exacerbating errors during high transaction volumes. Regulatory pressure is mounting, with banks potentially facing sanctions, while customers demand improved cybersecurity and system upgrades to prevent further disruptions.
This is a recurring trend in the Nigerian banking sector. As an outsider, what it seems is a toxic mix of leadership that lacks empathy with technology as well as IT leadership that optimises for surviving just enough to move on to the next gig. It was reported sometime back that six major banks in Nigeria spent US$ 171 million on IT with most of it going into opex. Software is a deterministic endeavour and things just don’t fail haphazardly, behind every system failure is a system gap and fixing these require patience, intellectual honesty and well incentivised IT talent. The latter has to focus on actually fixing problems and going deep rather than kicking the can down the road. Moreover, boards and EXCOs need way more tech leadership as technology becomes a primary function in banking.
🇰🇪 | Kenyan Banks Reject CBK’s Proposed Loan Pricing Model
Kenyan commercial banks, through the Kenya Bankers Association (KBA), have rejected the Central Bank of Kenya’s (CBK) proposed loan pricing model, which would set the Central Bank Rate (CBR) as the benchmark for credit pricing with a fixed premium “K,” arguing it resembles interest rate caps removed in 2019. The KBA favors the interbank rate as a market-driven benchmark, warning that the CBK’s model could distort the credit market, limit banks’ ability to assess borrower risks, and reduce lending to small and medium enterprises (SMEs), despite a pledge to disburse KES150 billion annually to SMEs. The CBK claims the model would enhance transparency and align lending with monetary policy, but banks argue it risks stifling credit growth in an economy where businesses struggle to access capital. The KBA remains open to dialogue but opposes the framework, citing potential economic stagnation.
I wrote about this in some form a couple of weeks back. In my past life, I was an economist, a rather smart one at that. This perpetual issue of managing interest rates in Kenya was actually the subject of my masters dissertation. The issue is simply that financial markets in Kenya are not competitive at least for consumer and SME banking. At the corporate level, top tier corporates can borrow at below the risk free rates at times and their interest rates quickly adjust to market conditions particularly changes in either the T-bill rates or the interbank rates. These customers e.g. Safaricom often don’t pledge security and therefore there’s little to any collateral gridlock. Fixing monetary transmission in Kenya and Africa at large is more about focusing on the esoteric issues that gum up credit markets such as all asset debentures, lack of credit information and government crowding out the private sector.
🌍 | Airtel Africa Partners with Starlink to Enhance Connectivity in 14 Markets
Airtel Africa has signed an agreement with SpaceX to offer Starlink’s low Earth orbit (LEO) satellite internet services across its 14 African markets, pending regulatory approvals, to enhance connectivity for enterprises, businesses, schools, and health centers in rural areas. Starlink is currently licensed in nine of these markets—Nigeria, Kenya, Zambia, Malawi, Rwanda, Niger, Chad, Madagascar, and the Democratic Republic of Congo—and has applied for licenses in the remaining five: Tanzania, Uganda, Gabon, the Republic of the Congo, and the Seychelles. The partnership will leverage Starlink’s satellite capabilities for cellular backhaul to extend Airtel’s mobile network coverage to remote regions and utilize Airtel’s ground infrastructure to support Starlink’s operations. Both companies aim to promote digital inclusion across Africa through this collaboration.
This is a smart move by Airtel. Ultimately, SpaceX is inevitable as it continues to deploy more satellites. SpaceX as a service is therefore a bit like AI, this is the worst it will ever be. It offers ubiquity and potentially a long-term cost advantage. In the face of such facts, it makes sense to partner with SpaceX and be the one to distribute their services rather than to fight them. For Fintech, this accelerates internet availability particularly in some countries that have low 4G network coverage enabling digital financial services to scale.
🇬🇧🇩🇪 | Revolut Enters Mobile Telecom Market in UK and Germany
Neobank Revolut is launching a mobile service in the UK and Germany, offering unlimited calls, texts, and data with a 20GB roaming allowance in Europe and the US, aiming to disrupt traditional telecom providers with transparent pricing and eSIM flexibility. Other FinTechs, like Nubank with its “Nucel” service in Brazil, are also entering the telecom market, reflecting a broader trend where digital banks leverage mobile penetration to blur lines between financial and telecom services. This move aligns with Revolut’s eSIM product success and follows a growing convergence of FinTech and telecom, driven by partnerships and consumer demand for integrated digital experiences. The PYMNTS Intelligence report highlights pervasive digital banking and telecom infrastructure, with mobile phones enabling cross-sector innovation
Fintechs always have good visibility on how much their clients spend on either data or airtime and moreover, data is a binding constraint on the utilisation of these apps. It makes commercial sense then to integrate telecom capabilities with digital banking or payments. This is the core idea behind M-Pesa after all.
🌍 | Ripple’s $5B Bid for Circle Rejected Amid Stablecoin Expansion Strategy
Ripple Labs offered to acquire Circle, the issuer of the USDC stablecoin, for $4–5 billion, but Circle rejected the bid, deeming it undervaluing the company. The takeover attempt, reported by Bloomberg, reflects Ripple’s strategy to expand its stablecoin and cross-border payment capabilities, especially after launching its own stablecoin, RLUSD, in December 2024. Circle, preparing for a 2025 IPO, has been strengthening its position with partnerships like Binance and Thunes to boost USDC adoption and launching the Circle Payments Network for cross-border settlements. The rejection highlights Circle’s confidence in its independent growth, while Ripple continues to pursue acquisitions, such as Hidden Road for $1.25 billion, to bolster its digital asset infrastructure.
This transaction is a bit weird. Circle has been planning an IPO for sometime now and out of nowhere Ripple offered to acquire them. No sooner had they offered to buy them, had the transaction been rejected. The cynic in me thinks that this was a ploy to set a lower bound to their valuation by signalling to the market that “other serious players” are willing to acquire us at X.