Paystack Terminates Fansted Amid Compliance Concerns
Paystack, one of Africa’s leading payment service providers, has permanently terminated Fansted, classifying the startup as a “heightened risk profile.” The decision comes just a month after the platform launched, sending a ripple of concern across the African tech ecosystem.
While the news may initially read as a death sentence for Fansted, the reality is more nuanced. The termination is not about technical failures or broken infrastructure. Fansted, a startup in the creator and fan economy, functions as intended. The challenge lies in legal, risk, and compliance exposure, which Paystack is unwilling to bear.
Why Paystack Terminated Fansted
Payment service providers (PSPs) like Paystack operate conservatively, absorbing the first wave of disputes, chargebacks, fraud claims, and regulatory scrutiny. If a startup’s business model generates outsized risk in any of these areas, the PSP carries the financial and legal downside.
According to Fansted CEO Michael Asiedu, Paystack’s decision was actuarial, not personal. The PSP was effectively bearing all compliance risk, with no shared-risk framework for disputes or chargebacks. Within Paystack’s operational constraints, terminating high-risk clients is an economic decision, not a judgment on a company’s legitimacy.
This pattern is common across African fintech: startups innovate faster than compliance infrastructure can adapt, and PSPs optimise for predictability and risk mitigation.
Fansted’s Resilience: Provider-Agnostic Payments
Fansted anticipated challenges from day one. Its payments stack is provider-agnostic, meaning switching PSPs is designed to be seamless. The founder confirmed that integrating a new payment provider would take less than an hour, demonstrating preparedness for provider churn.
The startup now faces the task of finding a payment provider aligned with its business model, willing to manage compliance risk collaboratively. Such providers exist but operate quietly, often charging higher fees, asking tougher questions, and taking longer to onboard.
The Reputational Challenge
Being labelled a “high-risk” startup carries a reputational cost. Other PSPs may scrutinise the company more closely, and some may decline without explanation. Fansted must now navigate this shadow while proving its business model is robust and compliant.
Despite the setback, Fansted’s leadership remains calm and resolute. CEO Michael Asiedu quoted his wife: “God is the lifter of men, not Paystack.” This human perspective underscores the distinction between corporate decisions and startup resilience.
What This Means for African Startups
This incident highlights that payments are not a commodity; they are part of a risk-sharing relationship. Startups operating at the edges of innovation must plan for provider churn, compliance scrutiny, and reputational consequences.
For Fansted, the termination is a stress test, not a shutdown. Its next moves, securing a compatible payment provider and demonstrating operational resilience, will determine whether this moment becomes a footnote or a case study in startup endurance.
Key Takeaways
- Paystack terminated Fansted due to compliance and risk exposure, not technical failure.
- Payment service providers absorb disputes, fraud, and regulatory risk; startups must plan accordingly.
- Provider-agnostic payments can mitigate PSP dependency and facilitate rapid switches.
- High-risk labels carry reputational implications across the African tech ecosystem.
- Resilience, planning, and strategic partnerships define whether startups survive such setbacks.
