Nine years after revolutionising online payments in Nigeria, Paystack is making a bold shift toward consumer banking with its latest product, Zap. The fintech giant, acquired by Stripe for $200 million, is now betting on instant money transfers as the next phase of its growth.
Zap enables users to send money to any Nigerian bank account within 10 seconds. Customers can fund their Zap accounts by linking commercial bank accounts via Paystack’s direct debit infrastructure or by depositing funds into a Paystack-Titan Trust Bank account. This partnership extends Paystack’s existing collaboration with Titan Trust Bank, allowing the fintech to hold deposits.
Unlike neobanks such as OPay, PalmPay, and Moniepoint, which are excluded from Paystack Vault’s linking system, Zap users can only connect traditional commercial bank accounts. The service, however, comes with transaction fees; depositing ₦10,000 via a linked account costs ₦35, while withdrawing ₦9,900 incurs an additional ₦25 fee, making it pricier than existing alternatives. CEO Shola Akinlade has assured that pricing will evolve over time.
Zap also allows users to link debit or credit cards from any country. During a demonstration at an event titled Evening With Paystack, Akinlade showcased how funds could be transferred instantly from his Bank of America card to a Nigerian account. However, despite similarities to a remittance service, Paystack insists Zap is not yet targeting international money transfers but rather facilitating transactions for visitors within Nigeria.
Users must complete Know Your Customer (KYC) checks before accessing Zap’s features. The platform offers tiered transaction limits based on the verification level
- Tier 1: BVN verification; ₦50,000 daily transfer limit, ₦200,000 account balance cap.
- Tier 2: Requires selfie, address, and NIN; ₦200,000 daily transfer limit, ₦500,000 balance cap.
- Tier 3: Full verification, including address confirmation; ₦5 million daily transfer limit; ₦100 million balance cap.
The Shift to Bank Transfers
Bank transfers have become Paystack’s dominant transaction channel, accounting for 58% of all payments processed in 2023 double the previous year’s figure of 28%. This rapid growth has been supported by Paystack’s infrastructure investments, including its in-person Paystack Terminal and integrations with fintechs like OPay.
Zap aligns with Paystack’s ambition to build a closed financial ecosystem, ensuring seamless transactions within its network. For instance, if a Chowdeck user transfers money from their Zap account to Chowdeck’s Paystack-Titan account, the funds remain entirely within Paystack’s ecosystem, reducing friction and enhancing transaction speed. According to Akinlade, 98% of transactions via Zap are confirmed within 10 seconds.
User Experience and Market Competition
Zap’s interface prioritises simplicity, featuring a minimalistic homepage displaying the user’s balance, transaction history, and a prominent Send Money button. “Bank transfers are now a big thing but still broken in many ways,” Akinlade noted. “We designed Zap as an everyday tool; no multiple steps, just instant transfers.”
However, Paystack faces stiff competition in Nigeria’s fintech sector. Established players like PalmPay, Kuda, OPay, and Moniepoint have built strong consumer bases; Kuda boasts 7.2 million users, while OPay serves over 30 million. These rivals gained traction during the 2023 cash scarcity by offering fast and cost-effective transfers, a key factor Paystack must address if it hopes to penetrate the consumer market. It is, however, important to note that for now, you can only get an account via an invite link even if you download the app.
Akinlade remains confident in Zap’s potential, emphasising experience over price competition. “We’re not competing with other fintechs. Our audience is people who value great experiences: speed, reliability, and ease of use,” he said.
Yet, as millions of Nigerians grapple with economic challenges, Paystack may need to refine its pricing strategy to attract cost-conscious consumers. Despite this, Akinlade is unwavering in his vision: “A lot of our work is shaping Nigeria’s financial experience. Zap will only get better.”
