Paystack terminates Fansted: What a ‘high-risk’ label really means for African startups

When Paystack terminates a startup, panic is usually the first response. Payments are oxygen. Remove them, and most early-stage companies do not survive long enough to explain what went wrong. That is the context around the news that Paystack has permanently terminated Fansted, classifying the startup as a “heightened risk profile”.

At first glance, it reads like a death sentence. In reality, it is something more familiar and more instructive in the African tech ecosystem. This is not a story about broken code or failing infrastructure, but a compliance reckoning.

Fansted, launched barely a month ago, is an African startup operating in the creator and fan economy. Disclosing the decision publicly on X, the founder and CEO, Michael Asiedu, was unusually direct. This was not a technical issue. The platform works as designed. The problem sits firmly in legal, risk, and compliance territory. Paystack no longer wanted the exposure.

That distinction matters. It is also why this is not the end of Fansted, even if it feels disruptive at the moment.

Paystack terminates Fansted over risk, not reliability

When Paystack terminated Fansted, it was making an economic calculation, not passing judgment on the company’s legitimacy. Payment service providers are structurally conservative. They absorb the first shock from disputes, chargebacks, fraud claims, and regulatory scrutiny. If a business model generates outsized risk in any of those areas, the PSP carries the downside.

According to Fansted, Paystack was effectively bearing all of that exposure. There was no shared-risk framework for disputes or chargebacks. In that scenario, termination is not personal. It is actuarial.

This pattern is common across African fintech. Startups push into new business models faster than compliance infrastructure evolves. PSPs, especially those operating at scale, optimise for predictability. Anything that introduces uncertainty eventually gets flagged and removed.

Fansted anticipated this early. Its payments stack was built to be provider-agnostic from day one. Swapping PSPs is not the challenge. The founder says integrating a new provider would take less than an hour.

The real bottleneck is compliance.

Compliance is the product nobody markets

This episode exposes an uncomfortable truth. In African tech, compliance is often treated as an afterthought. In practice, it is a core product feature.

For creator platforms, marketplaces, and fan-driven monetisation models, KYC enforcement, dispute resolution, and liability allocation are existential concerns. Many PSPs in the region are not equipped to handle nuanced transaction flows or shared-value models. They prefer clean, familiar patterns. Anything outside that norm triggers alarms.

That does not make those businesses illegal. It means the infrastructure has not caught up.

Paystack’s decision is rational within its constraints. It cannot be the sole risk bearer for a model it does not fully control. From that perspective, the termination makes economic sense, even if it feels abrupt from the outside.

This might not necessarily be the end for Fansted, but a stress test. The young startup now needs a payment service provider aligned with its business model and willing to share compliance risk, or at least manage it collaboratively. That narrows the field significantly. Such providers exist, but they move quietly. They ask harder questions. They charge more. And they take longer to onboard.

There is also a reputational shadow. A “high-risk” label follows startups through the ecosystem. Other PSPs will ask questions. Some will decline without explanation. That is the unspoken cost of building at the edges.

Still, Fansted’s posture is calm, even defiant. The founder quoted his wife: “God is the lifter of men, not Paystack.” It is a human response to a corporate decision. 

This is not a shutdown story. It is a reminder that payments are not a commodity. They are in a risky relationship. Fansted planned for provider churn. Now it has to prove that planning was real.

Paystack terminates Fansted today. What happens next will decide whether this moment becomes a footnote or a case study in resilience.

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