Paystack’s decision to terminate services for Fansted on January 23, 2026, sent ripples through our startup ecosystem. While the specifics of the termination remain largely undisclosed, the incident underscores a critical reality for African entrepreneurs: navigating the complexities of risk assessment by global payment processors. For us, reliable payment infrastructure is not merely convenient – it’s the lifeblood of our burgeoning digital economies, enabling everything from e-commerce to remittances.

The ‘High-Risk’ Designation and Its Consequences

According to SEARXNG BING, Paystack labelled Fansted as ‘high-risk’, a designation that ultimately led to the termination of their payment processing. This highlights a significant challenge for early-stage African companies. Payments are fundamental; remove access, and survival becomes incredibly difficult. We’ve seen similar situations before, though often less publicly. The opaque nature of these risk assessments leaves startups vulnerable, struggling to understand – and address – the concerns of payment gateways.

Why Are African Startups Seen as Riskier?

The reasons behind these ‘high-risk’ labels are multifaceted. Often, it stems from perceived regulatory uncertainties, the relatively young age of many African fintechs, and concerns around fraud. While companies like Flutterwave have demonstrated the potential for global scale, the continent still faces challenges in building trust with international financial institutions. This contrasts sharply with markets like North America and Europe, where established regulatory frameworks and longer operating histories provide greater comfort.

The Impact on Funding and Growth

A terminated payment gateway can severely hamper a startup’s ability to attract further investment. Investors, like TLcom, Partech, and Norrsken, prioritize companies with stable and reliable payment infrastructure. Without it, scaling becomes nearly impossible. Founders are forced to spend valuable time and resources seeking alternative solutions, diverting focus from product development and market expansion. This creates a vicious cycle, hindering our continent’s growth potential.

Building a More Resilient Future for African Fintech

Despite these challenges, the future remains bright. We are witnessing a growing demand for localized payment solutions tailored to the unique needs of African markets. The success of M-Pesa in Kenya proves that innovative financial technologies can thrive even in challenging environments. Increased investment in robust KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures, coupled with greater regulatory clarity, will be crucial in building a more resilient and trustworthy fintech ecosystem.