PayPal’s return to Nigeria through a partnership with Paga has sparked mixed reactions among Nigerians. While some are celebrating the return of the $55 billion global fintech, others have expressed disdain over what they describe as unfair treatment of Nigerians over the past 20 years — locking them out of a financial service essential to their livelihoods.
From articles to social media posts, many, especially freelancers, decried their sudden inability to access thousands of dollars of their hard-earned money stuck on PayPal after the fintech stopped serving Nigerians and several other African countries.
PayPal’s reasons for restricting Nigerians from using its service ranged from high fraud rates to compliance risks.
The company said its fraud monitoring systems detected cases of stolen credit cards used by individuals from blacklisted countries. According to PayPal, these countries lacked robust national identification systems and strict banking regulations, making credit card fraud easier to perpetrate.
However, many believe PayPal’s exit had more to do with discrimination. The pain of being locked out of earnings and a source of livelihood has led some Nigerians to insist that PayPal should be boycotted.
Fraud in Nigeria over the years
There has been a dearth of publicly available data on fraud in Nigeria since the early 2000s; however, academic research points to significant fraud activity in the country as early as 2002.
For instance, a 2009 paper titled Nigeria Tackles Advance Fee Fraud, published in the Journal of Information, Law & Technology at the University of Warwick, UK, found that the Federal Bureau of Investigation (FBI) and the National White Collar Crime Centre ranked Nigeria as the third-highest perpetrator of cybercrime globally in 2007.
This is notable when considering that fewer than 10% of Nigeria’s population at the time had access to the Internet.
Other data points on cybercrime in Nigeria from that period include:
Victoria Fakiya – Senior Writer
Techpoint Digest
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- 6% of global Internet spam in 2004
- The highest median loss of all FBI Internet fraud cases, at $5,575
- VeriSign, Inc. ranked Nigeria third in the total number of Internet fraud transactions, accounting for 4.81 per cent of global Internet fraud
- The American National Fraud Information Centre reports Nigerian money offers as the fastest-growing online scam, rising by 900% in 2004
Interestingly, the United States, where PayPal was founded, accounted for the largest share of cybercrime perpetrators at over 63%, while the UK, which ranked second, accounted for just 9.9%. Other top countries included Canada and Romania.
While these rankings have shifted over the years, the changes have not been dramatic. The World Cybercrime Index 2024 ranks Nigeria fifth globally for cybercrime, notably as a leading hub for business email compromise. China, Russia, Ukraine, Romania, the United States, and North Korea also rank among the top countries.
Based on these figures, the high fraud rate cited as one of the reasons PayPal exited Nigeria appears less straightforward than it is often portrayed. However, experts argue that there are important nuances to consider.
Making a case for PayPal
While it can be argued that some of the conditions that led to Nigeria’s exclusion from PayPal’s services still exist, Adedeji Olowe, founder of Lendsqr and Paystack’s board chairman, argues that there is a fundamental differentiator.
“When you look at fraud versus total transactions, it starts to make sense. In one country, total transactions could be $10 million, and fraud accounts for $3 million. In another country, total transactions could be $10 billion, while fraud accounts for $100 million.”
While $3 million in fraud losses is significantly lower than $100 million, it is easy to determine which market is ultimately worth the risk.
When PayPal exited Nigeria, the regulatory and technical foundations that global payments platforms rely on to manage fraud at scale were not in place. Nigeria had no centralised digital identity system, limited real-time transaction monitoring, and fragmented regulatory oversight of electronic payments.
Today, Nigeria operates a far more structured regulatory and compliance framework. The introduction of the Bank Verification Number (BVN) system created a biometric identity layer linking individuals to bank accounts, while the National Identification Number (NIN) expanded identity coverage beyond the financial system. Together, these tools significantly reduce anonymity, a core enabler of digital fraud.
Banks and fintechs are now required to implement stricter Know Your Customer (KYC) and Anti-Money Laundering (AML) controls, while regulators have expanded licensing and supervisory frameworks for payment service providers.
Data from the Nigeria Inter-Bank Settlement System (NIBSS) also reveal that between 2020 and 2023, reported fraud cases in Nigeria’s financial system fell steadily from about 124,000 incidents in 2021 to fewer than 96,000 in 2023, even as digital transaction volumes surged.
While fraud losses rose in nominal terms, the ratio of fraud to total transaction value declined, suggesting that fraud was growing more slowly than the broader digital payments ecosystem.
PayPal’s decision to return through a local partner rather than as a standalone operator reflects this shift. Instead of building compliance infrastructure from scratch, PayPal can now rely on local institutions that already operate within Nigeria’s regulatory perimeter and understand its risk landscape.
While PayPal’s return to Nigeria may appear driven by fear of missing out, it is worth noting that Nigeria became the company’s second-largest market in Africa after it previously allowed only payouts from the country.
Will Nigerians trust PayPal?
For some Nigerians, the memory of losing money to PayPal still stings. But Adedeji Olowe argues that this sentiment is not as widespread as it may seem. According to him, most Nigerians have never used PayPal at all, and while alternatives exist, they still fall short of the real thing, even two decades on.
“No one is operating at that level of ease PayPal allows. If the service works, Nigerians will forget that they came and they left. MasterCard dominates cross-border card payments in Nigeria today; they also exited at some point, but they returned through Guaranty Trust Bank and UBA.”
Unyime Tommy, Managing Partner at Assurdly, shares a similar view. She believes adoption will be driven less by sentiment and more by performance.
“Users always gravitate towards good service and good rates. If PayPal delivers on these, coupled with the fact that people still get paid globally via PayPal, returning shouldn’t be hard. The alternatives Nigerians use today are simply not as convenient.”
That said, early signs suggest PayPal still has work to do. Some users have already complained about friction. Two X users who tested the platform reported that their accounts were permanently limited after their first transaction, raising fresh concerns about usability and risk controls.
It is also worth noting that this is not PayPal’s first attempt to re-enter Nigeria through a local partner. In 2021, the company partnered with Flutterwave to enable African merchants to receive payments from PayPal users globally. That partnership eventually fizzled out.
Whether this latest return marks a long-term commitment or another false start will depend less on nostalgia and more on execution.
