This is Follow the Money, our weekly series that unpacks the earnings, business, and scaling strategies of African fintechs, financial institutions, companies, and governments. A new edition drops every Monday.
Over the past decade, the playbook for Nigerian fintechs has been remarkably consistent: build payment products, acquire merchants, scale transaction volumes, obtain microfinance bank licences, expand into lending, and eventually launch savings products.
The result is an industry in which some of the country’s largest financial technology companies now operate across multiple layers of the financial system. They issue wallets, acquire merchants, process transactions, provide payment terminals, lend to businesses and, increasingly, operate regulated financial institutions.
This strategy has helped drive rapid growth of Nigeria’s electronic payment industry, which processed ₦1.2 quadrillion ($880.51 billion) worth of transactions in 2025, according to the Central Bank of Nigeria (CBN).
Now, the CBN wants to rewrite the rules that enabled that expansion.
Between March and June, the regulator issued or exposed for consultation a series of policy documents covering market concentration, financial holding companies, operational ring-fencing, ownership disclosure, and anti-money laundering systems.
Viewed individually, the proposals address distinct regulatory concerns. Taken together, however, they reveal a regulator’s intent on steering Nigeria’s payments ecosystem into a more mature phase.
At the heart of the reform is a germane question: how should large payment companies be structured, and how much market power should any single operator be allowed to accumulate?
Nigeria is not alone in asking it. India’s Reserve Bank imposed limits on market concentration in the Unified Payments Interface after PhonePe and Google Pay came to dominate digital payments. In Europe, the second Payment Services Directive (PSD2) sought to weaken incumbents’ control of payment infrastructure by requiring banks to open access to third-party providers.
One group can no longer operate as a single business
Nigeria’s payment companies are increasingly becoming banks.
After building large payment infrastructure businesses, many are acquiring microfinance banks to move beyond transaction fees into lending, deposits, and other banking services. Flutterwave secured a microfinance bank licence in April following its acquisition of open banking startup Mono, while Paystack acquired Ladder Microfinance Bank in January. These deals allow fintechs to deepen customers relationship and generate revenue from multiple financial products instead of relying primarily on payment fees.
As a result, many of these companies are evolving into financial groups, with several regulated businesses operating under one corporate umbrella.
Paystack, the Nigerian fintech acquired by Stripe, restructured its operations under a new holding company, The Stack Group (TSG), in January. TSG now houses Paystack, its consumer payments app Zap, Paystack Microfinance Bank (MFB), and a venture studio.
TSG is jointly owned by Paystack’s chief executive officer, Shola Akinlade, Stripe, and existing Paystack employees known as Stacks.
The structure creates powerful operational advantages. Customer data generated from payments can improve lending decisions. Banking products help retain customers within the ecosystem. Subsidiaries can also share infrastructure, technology, and management, lowering the cost of expansion.
The CBN now wants to draw clearer boundaries around that model.
Its draft ring-fencing framework introduces stricter separation between related entities, covering governance, customer funds, intra-group transactions, data sharing, and recovery planning.
“The guidelines seeks to establish clear operational and functional boundaries among closely linked entities within the financial system as well as address regulatory arbitrage arising from the commingling of activities across different licence categories,” a part of the CBN’s guideline read.
The ring-fencing rules also tighten ownership requirements, capital standards, and oversight of shared services.
“Each regulated entity shall meet capital adequacy and liquidity standards individually, regardless of group-level resources,” the guideline read.
Instead of operating like different departments within the same organisation, each regulated subsidiary would be required to maintain its own governance, capital, risk management framework, and regulatory accountability. This raises the cost of operating multiple regulated businesses and erodes some of the efficiencies that made licence accumulation attractive in the first place.
Growth through acquisitions will still be possible. But integrating and running those businesses as part of a single group will become significantly more expensive.
Scale is no longer enough
Every successful fintech begins with a competitive edge. Moniepoint built its business by serving small businesses and developing payment infrastructure for merchants. In 2025, it processed more than ₦412 trillion ($294.03 billion) in transactions and, since 2023, has steadily expanded into retail banking.
By first serving merchants, fintechs created a gateway to consumers, generating network effects that allowed them to expand simultaneously across consumer payments, merchant acquiring, banking, and lending.
The CBN now wants to limit how far the strategy can go. Under a market structure circular issued in June, any institution that controls more than 25% of consumer issuing cannot simultaneously control more than 15% of merchant acquiring. The same restriction applies in reverse. Firms will also be required to submit monthly market-share reports and comply with the new thresholds by the end of 2026.
The objective extends beyond promoting competition. It is about preventing a single company from dominating both sides of Nigeria’s payments market: where consumers keep their money and where merchants receive it. A business with significant market power on both sides can reinforce its own ecosystem, making it more difficult for rivals to compete while increasing the systemic consequences if its infrastructure fails.
For fintechs, this changes the economics of scale. Rather than expanding into every adjacent segment of the payments value chain, companies may have to decide where they want to lead. Future growth is likely to depend less on controlling every layer of the ecosystem and more on improving profitability and efficiency within a chosen segment.
Governance is the new moat
For years, fintechs distinguished themselves by building products that were faster, simpler and more convenient than those offered by traditional banks. The CBN now expects those same companies to operate less like technology startups and more like mature financial institutions.
Under its new anti-money laundering (AML) framework, the CBN is signalling that compliance is no longer simply a matter of deploying the right software or purchasing an AI-powered monitoring tool. Instead, fintechs must demonstrate that they can identify suspicious activity, explain how compliance decisions are made, integrate risk management across the organisation, and maintain clear accountability throughout the process.
The regulator’s new AML standards make clear that compliance will be assessed on governance, integration, explainability, and demonstrable effectiveness. For fintechs, that means greater investment in compliance teams, risk management, internal audit functions, and enterprise systems capable of meeting increasingly demanding regulatory expectations.
Together, the CBN’s recent circulars signal the end of an era in which fintechs could expand rapidly by layering new licences and products onto existing businesses with relatively little regulatory friction. As the industry matures, governance must now be baked into how fintechs think and build, and growth will now increasingly be measured by how resilient a fintech’s system becomes.
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