Paystack, a Stripe-owned African payment startup, has explained that its recently launched consumer product, Zap by Paystack, is not a remittance app. The main cause of confusion is that the app, which is designed to facilitate rapid and secure bank transfers, also allows users to fund Nigerian bank accounts using foreign cards.
The clarification follows a report suggesting that Zap requires an International Money Transfer Operator (IMTO) license and was launched without regulatory approval from the Central Bank of Nigeria (CBN). An IMTO license allows companies to legally facilitate the transfer of funds from overseas to recipients in Nigeria.
A source at the company dismissed the claim, saying it “reflects a fundamental misunderstanding of how both Apple Pay and remittance infrastructure work.”
The core distinction, according to Paystack, is that Zap facilitates card transactions locally in Nigeria, not remittances. While the process may look like an international remittance to the average user, what’s actually happening is a card payment that is processed locally by Paystack and settled in Naira.
A statement shared with Condia outlined the various steps involved in the transaction.
Here’s what happens when someone uses Apple Pay on Zap:
- The user selects Apple Pay as their payment method
- Apple Pay generates a secure tokenised card (a digital version of a debit or credit card)
- This card transaction is processed locally in Nigeria by Paystack, a licensed Switching and Processing company
- Yes — if the card is issued outside Nigeria, FX conversion may occur, but it is handled by the cardholder’s issuing bank and card scheme (e.g. Visa, Mastercard), not Paystack.
- The transaction is acquired locally in Naira and settled into a Nigerian bank account
“From Paystack’s side, the process is identical to how international cards are accepted at a restaurant POS or a Paystack-powered e-commerce checkout in Nigeria,” the company said.
Condia spoke with two fintech experts, and they confirmed the validity of Paystack’s explanation, saying it aligns with how global card payment infrastructure typically operates.
A layman’s explanation
When a user connects their foreign bank card to Apple Pay and uses it to send money to a Nigerian bank account via Zap, it seems like they’re transferring money across countries—say, from the US to Nigeria.
But what’s actually happening is a card payment. The issuing bank (Cardholder’s bank) treats the transaction as a card payment, not a bank transfer.
It’s important to note that card payments are governed by card network rules—the global systems run by Visa, Mastercard, Verve, etc. They work through licensed payment processors (like Paystack or Flutterwave) and are mostly regulated by payment laws and card industry standards. These transactions rely on tech infrastructure and private partnerships, not traditional banking rails.
So when users pay with a card—even a foreign one—the money moves through a card network, not through a bank-to-bank transfer.
As a result, when Zap uses card rails, it operates within a well-established, rule-bound system — distinct from cross-border bank transfers, which often trigger regulatory requirements like an IMTO license.
Because Paystack already supports international payment acquiring — allowing businesses to accept payments from customers worldwide via foreign-issued cards and Apple Pay, with settlements in USD or Naira — it can facilitate Zap transactions using the same infrastructure.
Paystack receives the transferred funds in Naira, as the currency exchange (FX) is managed by the issuing bank. This frees the payment giant from any obligations related to international money transfers.
By this logic, Paystack does not need a separate IMTO license to process these card-based transactions locally in Nigeria, because it is already licensed as a switching and processing provider by the CBN.
In response to the report about not receiving regulatory approval, Paystack issued the following statement:
“Zap is built entirely on existing, CBN-approved infrastructure. Since it doesn’t introduce a new category of service, it does not require a separate license. However, in line with best practices, we proactively engaged the CBN ahead of Zap’s launch, shared details of our approach, and remain in close communication with the regulator as the product evolves.”
