Decoding the PayPal, Paga Nigeria partnership

Paga started life very early (2009) in the Nigerian fintech space, providing agency banking services in an era of high financial exclusion, which OPay and Moniepoint’s 2019 entry compressed. However, after some “sleepy” but necessary years, Paga managed to reorient itself.

Today, they are no longer just Pagatech Limited doing agency banking with a Mobile Money (MMO) licence, but they are now Paga Remit holding an International Money Transfer (IMTO) licence. In 2019, they registered a holding company in the UK, Paga Group LTD. The group houses Paga, its consumer-facing product; Doroki, its direct-to-business offering; and Paga Engine, its Banking-as-a-Service (BaaS) platform that enables financial institutions to embed Paga-issued naira wallets and payout in Nigeria. This is particularly useful for global remittance businesses like LemFi and Verto who want to issue naira accounts to their customers and/or send funds to Nigeria.

Paga Engine has done wonders for Paga Group. In the last four years, they have grown 17x. Last year alone, they processed ₦17 trillion ($12 billion), which was a 95% YoY growth, in 169 million transactions. Their 193% growth in average transaction value (ATV) from ₦34,000 in 2021 to ₦100,000 in 2025 is what propelled their TPV growth. ATV growth signals a shift upper market. Across both Paga’s consumer business and its BaaS platform, we see that happening. “Paga’s consumer business, which targets the ‘mid to upper-end market’…is positioning itself alongside neobanks like Sparkle focusing on more affluent users”, reported TechCabal in April 2025, following an interview with CEO and Founder, ‘Tayo Oviosu.

Uniting with PayPal and understanding the conundrum

As stated above, Paga proved its remittance and last-mile termination business with LemFi, a UK-headquartered company processing over $200 million monthly from the UK-Nigeria corridor alone. Since then, others like Verto, which leverage(d) commercial banks such as FCMB, have added Paga to their Nigerian collections partner bank roster, likewise Cleva, amongst others.

In breaking the news, TechCabal reported that PayPal has re-entered the Nigerian market after 20 years. That’s not unheard of, as Wise has had a similar start-and-stop relationship with Nigeria. Wise’s recent entry is through a partnership with Flutterwave, which also holds an IMTO licence.

However, unlike Wise, PayPal Inc. did get an IMTO licence in Nigeria at some point. Condia’s analysis reveals that in 2019 and 2021, they were listed in official CBN communications listing IMTO holders. However, the latest list of 108 IMTOs makes no mention of PayPal Inc. They were also missing from the 2023 list of 71 IMTOs.

So, it’s possible that PayPal did not renew its licence after it expired as a sign of formally pulling back. Global companies do this for a myriad of reasons. The real and opportunity costs of maintaining the licence may outweigh the benefit of having a direct licence to do business in Nigeria.

Notably, for Paga and Flutterwave, this is not the first time that they have partnered with major consumer platforms to disburse funds to Nigerians. In February 2022, Twitter selected Flutterwave’s Barter and Paga as some of the payment methods for creators to receive Tips, alongside Cash App and Venmo.

Given the fact that Wise has resumed payouts to Nigeria, Nigeria has exited the FATF grey list, and transaction volumes remain resilient, PayPal might want to test the waters again, albeit carefully, through a partnership. In the official press release shared with Condia, PayPal’s Otto Williams said, “We’ve been intentional about partnering with local innovators like Paga and developing solutions that help Nigerians earn, spend and grow.” Perhaps, if all goes well, PayPal might reapply for a Nigerian IMTO licence.

In the meantime, the partnership promises to allow Nigerians to on-ramp to PayPal through Paga; it’s unclear if Paga will receive a CBN regulatory pass for it, since the IMTO licence only allows inbound payments to Nigerian stores of value. Already, there is industry chatter about how the CBN wants to regulate the issuance of naira wallets to non-residents (E.g. Nigerians in diaspora) via NRNOA, an acronym for Non-resident Nigerian Ordinary Accounts. But we do not yet know what that means for naira account providers like Paga.

PayPal Paga partnership role splits and how the IMTO in Nigeria works

IMTOs in Nigeria are allowed to partner with foreign counterparts who are licensed to originate funds in their market. So, what many established remittance players do is own the end-to-end flow by acquiring a licence in the originating market (e.g. EMI in the UK) and in the destination market (IMTO in Nigeria). For instance, Raenest has a Canadian MSB and Nigerian IMTO, which solves for Canada-Nigeria remittance.

PayPal already holds licences in nearly all the main remittance-sending markets, MTLs in several US states, UK and European EMI licences. So, their previously-held Nigerian IMTO licence would have completed the remittance-to-Nigeria flow for them, but that will now be handled by Paga Remit.

As an IMTO, Paga Remit will be responsible for partnering with a commercial bank, referred to as an Authorised Dealer Bank in the IMTO guideline, to convert the foreign exchange received from PayPal to naira and then leverage its MMO to hold the naira on Paga while leveraging its connection to the local switch to do onward disbursement, where required. As an IMTO, Paga will also handle the returns filing, KYC/AML and other compliance dealings with the Central Bank of Nigeria (CBN).

None of Paga’s Nigerian licences grants it the right to hold USD or send USD out of Nigeria. However, Paga Group has a US subsidiary, Apposit LLC, which partners with Synctera, a US BaaS provider, to issue USD virtual accounts powered by Regent Bank, a US bank. With the right level of care, compliance set-up and CBN blessing, Apposit LLC group can issue USD wallets to Nigerian nationals, which can now facilitate onramping from naira (Paga naira wallets) to PayPal via a domestic transfer from Regent Bank to PayPal’s Bank, before PayPal then assigns the money to the user’s wallet on their platform.

Raenest responds in less than 24 hours

Raenest, one of the top multi-currency account providers that has filled the PayPal void for Nigerians, responded yesterday, January 28, with an update to its pricing.

The growth-stage startup, which has processed over $2 billion for more than a million business and individual customers, announced an $11 million Series A a year ago to expand its product suite and geographically to the US.

In its pricing update, Raenest said it has increased the number of free deposits, lowered conversion rates, and capped deposit fees to just a $1 flat fee, making them the most competitively priced product in the market, according to their analysis. To respond that quickly, the company was not just reacting to the news. In November 2025, they had piloted a campaign testing customer sensitivity to free deposits, and perhaps, its impact on driving retention via higher deposits on their platform.

Beyond the online clamour about PayPal’s malpractices of withholding legitimate funds of Nigerians who tried to use them in the past, the global fintech is also known for its high deposit fees of over 2%. Raenest, Cleva and Grey launched with a fraction of that (~0.9% deposit fees), yet competition over the years has compressed that further to ~0.75% from Chipper Cash. Now, Raenest is forcing the industry’s hands to 0.5% or less, if you use the $1 ACH fee on a hypothetical $200 inflow.

PayPal’s re-entry into Nigeria will further increase competition, causing Paga to gain new app downloads and transaction growth, while newer or smaller providers might face forced closure or consolidation.

Will you try PayPal on Paga?