Two companies, one brand: Inside Paystack’s careful step into banking

After a decade of building Nigeria’s payment infrastructure, Paystack is making its most significant strategic shift yet, not by adding banking to its payments business, but by launching an entirely separate company to do it.

The move, announced today, January 14, 2025, sees the fintech company launching Paystack Microfinance Bank as an independent sister company with its own banking licence, governance structure, and roadmap.

According to TechCabal, which reported the development, the company acquired Ladder Microfinance Bank to secure the licence. The careful separation suggests Paystack is learning from both its own regulatory challenges, including a ₦250 million fine in April 2025, and the complex regulatory landscape facing fintech entities that try to be both payments processors and banks.

The structure is deliberate. While the payment arm processes trillions of naira monthly for 300,000 Nigerian businesses, Paystack MFB will operate under different regulatory oversight, different capital requirements, and different risk profiles.

Both entities sit under Stripe, the American payments giant that acquired Paystack in 2020. Maintaining separation allows each to innovate within its regulatory boundaries without exposing the other to compliance risks.

It’s a structure that contrasts sharply with how many competitors have entered the banking sector.

OPay, Moniepoint, and PalmPay built integrated platforms where payments and banking functions operate as a single product experience.

Kuda, which started as a digital bank, layered payments capabilities onto its core banking product. These companies bet on seamless integration as their competitive advantage.

Paystack is betting on something else: regulatory insulation and strategic flexibility.

The separation matters because Nigerian financial regulation treats payment service providers and deposit-taking institutions differently.

Payment companies operate under the Central Bank of Nigeria’s payment service provider licences, while microfinance banks fall under banking supervision with stricter capital requirements, lending restrictions, and operational guidelines. When a company tries to do both under one roof, it faces the compliance burden of both regulatory regimes simultaneously.

Paystack learned this lesson earlier. Nigeria’s Central Bank fined the company ₦250 million for allegedly operating Zap, its consumer payments app, as a wallet in violation of its regulatory licence.

By separating Paystack MFB from its payment business, the company creates what corporate lawyers call a “liability firewall.” If the banking arm faces regulatory action, it doesn’t automatically threaten the payment infrastructure that 300,000 businesses depend on. If the payment business encounters compliance issues, depositors’ funds in the bank remain protected under separate governance.

But separation also creates challenges. How does Paystack convince merchants who already use its payment infrastructure to also deposit their money in what is technically a different company? How do two independent entities with separate governance structures coordinate product development when the most powerful proposition would be deep integration between payments and banking?

The company’s announcement hints at the answer:

That closeness, whatever form it takes within regulatory boundaries, will determine whether Paystack’s two-company strategy succeeds or simply adds unnecessary complexity.

The banking arm faces significant competition. Traditional microfinance banks like LAPO, Accion, and Baobab already serve small businesses. Digital-first lenders like Carbon and Fairmoney offer faster approvals. And integrated players like Moniepoint, OPay, and Kuda combine payments, deposits, and lending in single platforms that many merchants already use.

Paystack’s advantage, if it has one, lies in the data flowing through its payment infrastructure. After processing transactions for 300,000 businesses, the company understands their revenue patterns, seasonal fluctuations, and cash flow dynamics in ways traditional lenders cannot match.

According to TechCabal, Paystack MFB plans to use this transactional data to underwrite credit faster and price risk more precisely than lenders relying on monthly statements or collateral.

But accessing that data across two separate companies with independent governance raises questions about data sharing, customer consent, and regulatory compliance. If payments and Paystack MFB are truly independent entities, how freely can customer transaction data flow between them? If they’re closely coordinated, how independent are they really?

The company’s initial rollout strategy suggests caution. Rather than launching broadly to its 300,000 merchant base, Paystack MFB will start with “a small group of members” and “gradually open up to more businesses and individuals.” It’s a measured approach that allows the company to test products, refine operations, and prove regulatory compliance before scaling.

That caution makes sense for a company that just paid ₦250 million for regulatory missteps. But it also cedes first-mover advantage to competitors who moved into banking faster and more aggressively.

Moniepoint, which processes even larger transaction volumes than Paystack, already operates as an integrated business bank serving millions of customers. OPay and PalmPay offer seamless payment-to-banking experiences that merchants use daily. Kuda built a retail banking customer base before Paystack even launched Zap.

Ten years ago, Paystack moved quickly, building payment infrastructure that merchants desperately needed. Today, the company is moving carefully, building banking infrastructure in a market where multiple players already offer similar products. Whether careful beats fast remains to be seen.

The two-company structure Paystack has chosen reflects a broader strategic question facing African fintechs:

Paystack has chosen separation.

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