PayPal returns to Nigeria, but its reason for blacklisting the country for 20 years is still there

PayPal’s long-awaited return to Nigeria has sparked mixed reactions across the country, reopening old wounds for freelancers, digital entrepreneurs, and businesses who were locked out of the global payment platform for nearly two decades.

The $55 billion fintech has re-entered Nigeria through a partnership with local payment company Paga, allowing Nigerians to once again send and receive money via PayPal. While some have welcomed the move as a win for Nigeria’s digital economy, others remain sceptical, questioning whether the issues that led to PayPal’s exit in the first place have truly been resolved.

PayPal had restricted Nigerians from using its platform in the mid-2000s, citing high fraud rates, weak identity systems, and compliance risks. At the time, the company said its fraud monitoring systems detected repeated cases of stolen credit cards and financial abuse originating from countries with limited regulatory oversight.

Those concerns were not entirely unfounded. In 2007, Nigeria was ranked the third-highest perpetrator of cybercrime globally by the FBI and the National White Collar Crime Centre, according to academic research published by the University of Warwick. This ranking came at a time when fewer than 10% of Nigerians even had access to the Internet.

Other data from the early 2000s showed Nigeria accounting for 6% of global internet spam, ranking third in total internet fraud transactions worldwide, and recording the highest median loss per fraud case at $5,575. Nigerian-linked scams were also reported by the American National Fraud Information Centre as the fastest-growing online fraud type in 2004.

Despite this, critics argue that PayPal’s actions unfairly punished millions of legitimate Nigerians, many of whom lost access to hard-earned income when the platform shut them out. Over the years, calls to boycott PayPal have resurfaced each time the company hinted at a possible return.

However, experts say Nigeria today is fundamentally different from the Nigeria PayPal exited.

According to Adedeji Olowe, founder of Lendsqr and chairman of Paystack’s board, fraud must be viewed in proportion to transaction volume. While fraud losses may exist, markets with massive transaction volumes often remain viable despite higher absolute losses.

More importantly, Nigeria’s financial infrastructure has evolved significantly. The introduction of the Bank Verification Number (BVN) and National Identification Number (NIN) has reduced anonymity in financial transactions, while stricter KYC and AML regulations now govern banks and fintechs.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) shows that reported fraud cases declined from about 124,000 incidents in 2021 to under 96,000 in 2023, even as digital payments surged. Although total fraud losses increased in naira terms, the ratio of fraud to transaction value fell steadily.

PayPal’s decision to return through a local partner reflects this shift. Rather than build compliance systems from scratch, the company can now rely on Nigerian institutions already operating within the country’s regulatory framework.

Still, trust remains fragile. Some early users have complained of account limitations after their first transactions, raising fresh concerns about whether PayPal’s risk controls are still overly restrictive.

Industry experts believe sentiment will ultimately matter less than performance. If PayPal delivers seamless service, competitive rates, and reliable access, many Nigerians are likely to move on from past grievances — much like they did with other global payment companies that once exited and later returned.

Whether this comeback marks a permanent return or another false start will depend not on history, but on execution.