Paystack, Zap, and The Stack Group: Probable CBN Licensing Considerations Behind The Stack Group’s New HoldCo Structure.
Probable CBN Licensing Considerations Behind The Stack Group’s New HoldCo Structure.
By Oluwadunsin Ogunsemoyin · 7 February 2026
On the 20th of January, 2026, Paystack announced that it had adopted a holding company structure.
The new HoldCo has been named The Stack Group (TSG), and there are four ventures under it. These ventures include Paystack itself, Paystack Microfinance Bank, Zap by Paystack, and The Stack Group Labs. The Stack Group is co-owned by Stripe, Shola Akinlade (one of Paystack’s co-founders), and Paystack’s employees.
This article explains the probable licensing considerations behind the new structure, as well as the practical legal implications of the structure.
Regulatory Hurdles on the Path of a Value-Driven Ambition
In pursuit of its ambition to create more value for its users, Paystack launched Zap in March 2025. Zap was designed as a consumer-facing app with one promise: speedy and secure bank transfers in Nigeria.
The launch of Zap was, however, met with regulatory sanctions. By April 2025, the CBN had slammed a ₦250 million fine on Paystack for flouting its licensing regulations.
According to the CBN, Paystack had exceeded the scope of its Switching and Processing Licence by launching Zap, which functioned as a digital wallet capable of holding customer funds.
While Media outlets explained that Zap did not hold funds directly and that it operated a partnership with a commercial bank which is licensed to hold deposits, there were no reports of the CBN reviewing its Sanction. It would appear that the sanction stood, and that Zap was indeed in violation of CBN’s regulations.
Licensing Regimes for Nigerian Fintechs
The CBN and other regulatory authorities issue different types of licences to fintech operators in Nigeria, depending on the type of service or product the fintech offers. A fintech may only carry out activities permissible under the specific licence issued to it.
These licences include the Payment Service Provider (PSP) Licence, Payment Service Bank (PSB) Licence, International Money Transfer Operator (IMTO) Licence, Payment Terminal Service Aggregator Licence, Super Agent Licence, and Microfinance Bank Licence. Alternative Lending/Digital Credit Licence for loan apps are issued by the relevant state authority and the Federal Competition and Consumer Protection Commission while Digital Crowdfunding Intermediary Licence for investment apps are issued by the SEC.
PSP licences issued by the CBN are further divided into sub-categories, including the Switching and Processing Licence, Mobile Money Operator (MMO) Licence, Payment Solution Service Provider Licence, and Payment Terminal Service Provider (PTSP) Licence.
The Switching and Processing Licence (which Paystack held) only allows fintechs to function as payment gateways linking different payment channels. Its permissible activities include card processing, transaction clearing, and acting as settlement agents.
The Mobile Money Operator (MMO) Licence, on the other hand, allows its licensees to provide services such as electronic wallets, funds transfers, and bill payments. This was the required licence for the proposed activities of Zap.
In a circular issued by the CBN’s Payments System Management Department on the 9th of December 2020, it was stated that “companies seeking to combine activities under the Switching and MMO categories are only permitted to operate under a holding company structure, with the subsidiary entities clearly delineated to prevent co-mingling.”
This means that it was impossible for Paystack, or any other fintech, to carry out both Switching and MMO activities under a single company structure. They would have to operate as a holding company with different subsidiaries holding each of the two licenses.
Microfinance Bank Licenses on the other hand permit their holders to accept various types of deposits from individuals, groups and associations. They can also act as agents for the provision of mobile banking services.
Paystack’s Solution.
If Paystack would fulfil its ambition of carrying out both Switching and MMO activities, it would have to incorporate a holding company. One of the subsidiaries would hold the Switching Licence, while another would hold the MMO Licence.
Alternatively, it could incorporate a Microfinance Bank, and obtain a Microfinance Bank License which also allows it to take deposits and provide mobile banking services.
Paystack already holds a Switching and Processing Licence. As the name implies, Paystack Microfinance Bank would hold the Microfinance Bank Licence. If Zap is incorporated, it would likely hold the MMO Licence.
Altogether, these subsidiaries, with their respective licenses make up The Stack Group.
Practical Implications of the HoldCo Structure Under the Companies and Allied Matters Act (CAMA) 2020.
Section 338 of the CAMA 2020 generally provides for the possible structures of holding and subsidiary companies in Nigeria.
Under this provision, a company is regarded to be a holding company when it is a member (shareholder) of another company and can control who sits on the board of directors in that other company. The other company is regarded as its subsidiary.
Alternatively, it could also be deemed a holding company if it owns more than half of the equity share capital in the other company.
Alternatively, If company A is the HoldCo of company B, and Company B is the HoldCo of Company C, then Company C and Company B may both be regarded as subsidiaries of Company A.
Practically, The Stack Group’s holding structure means that The Stack group must be a shareholder in Paystack, Zap and TSG Labs. Then, it could hold more than half of the nominal value of Paystack’s equity share capital.
Alternatively, The Stack Group could hold the power to control the appointment of directors in the Subsidiaries. This power can be vested by the articles of association of the subsidiaries, or by simply having the majority voting power at the general meeting of the subsidiaries.
Another practical implication is that the Directors of The Stack group could be required to prepare Group Financial Statements which relate both to the Stack Group, and its subsidiaries. (Section 336 of CAMA)
Finally, Section 165 of CAMA prohibits Paystack and the other Subsidiaries of The Stack group from holding shares in The Stack Group, except they hold such shares as trustees or personal representatives.
CBN Requirements for Financial Holding Companies.
According to the CBN Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria, (The Guidelines) A Financial Holding Company (FHC) is a company whose main purpose is to hold and manage investments in other companies that provide financial services. The FHC itself doesn’t directly provide financial services to the public; instead, it owns at least two subsidiaries that do.
One of these subsidiaries must be a commercial, merchant or specialized Bank.
In the case of the Stack Group, Paystack Payments Limited and Paystack Microfinance Bank are subsidiary companies that provide financial Services to the public. Paystack Microfinance Bank is a specialized Bank. Hence, The Stack Group appears to be a Financial Holding company given this definition.
The guidelines permit a two-tier hierarchy. This means that a Financial Holding Company can be a subsidiary to another financial holding company. In such instances, there would be two tiers of holding companies: The first would be the Parent Financial Holding Company and the second would the Intermediate Financial Holding Company.
In practical terms, if Stripe fulfills the legal requirement to be regarded as the holding company of The Stack Group, The Stack Group would be an intermediate Financial Holding Company. While Paystack and the others would be the subsidiaries.
The guidelines also provide for a board structure of 7-12 directors, and that the minimum paid up capital of the financial holding company must be more than the sum of the minimum paid up capital of all its subsidiaries.
However, a curious point to note is that one of the subsidiary ventures of The Stack Group, TSG Labs, is a Non Financial Firm. The guidelines prohibit a Financial Holding Company from investing in Non Financial Firms. This raises the question of whether The Stack Group is yet again in Violation of these Guidelines, or whether it qualifies as a Financial Holding Company.
In our next article, we will provide a legal and regulatory checklist for fintechs (and other tech companies) seeking to operate in Nigeria. In the subsequent article, we will explore possible legal ownership structures in tech companies, including how a tech company can be legally owned by different persons; just as The Stack Group is owned by Stripe, Shola Akinlade, and Paystack’s employees. We will also examine how each founder/owner can protect their respective interests in the company.
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This article is for general informational purposes only and does not constitute legal advice. For guidance specific to your circumstances, speak with a legal professional.