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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting wagering is booming in soccer-mad Nigeria mainly thanks to payment systems established by homegrown technology firms that are starting to make online services more viable.
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For years, mobile payments failed to take off in Nigeria as they have in countries such as Kenya, where Safaricom’s M-Pesa cash transfers have actually fostered a culture of cashless payments.

Fear of electronic scams and slow web speeds have actually held Nigerian online customers back but wagering firms says the new, fast digital payment systems underpinning their sites are changing mindsets towards online deals.

"We have actually seen substantial growth in the variety of payment solutions that are readily available. All that is definitely changing the gaming space,” said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria’s business capital.

"The operators will go with whoever is much faster, whoever can link to their platform with less issues and problems,” he said, including that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth has been by a rise in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and licensed banks.

In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions leapt to 29 million worth 185 billion in 2017 and in the very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, rising mobile phone use and falling data costs, Nigeria has long been seen as an excellent opportunity for online companies - once customers feel comfortable with electronic payments.

Online gambling companies say that is occurring, though reaching the tens of countless Nigerians without access to banking services stays an obstacle for pure online merchants.

British online sports betting firm Betway opened its very first African organization in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.

"There is a progressive shift to online now, that is where the industry is going,” Betway’s Nigeria supervisor Lere Awokoya stated.

"The growth in the variety of fintechs, and the government as an enabler, has actually helped business to prosper. These technological shifts encouraged Betway to begin operating in Nigeria,” he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy worked up by Nigeria’s participation on the planet Cup say they are discovering the payment systems created by regional startups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are supplying competitors for Nigeria’s Interswitch which was established in 2002 and was the primary platform utilized by companies running in Nigeria.

"We included Paystack as one of our payment alternatives without any fanfare, without revealing to our customers, and within a month it shot up to the top most secondhand payment option on the website,” stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the nation’s 2nd most significant wagering firm, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice given that it was included late 2017.

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase funding in Silicon Valley’s Y-Combinator programme.

In December 2016, it raised $1.3 million from financiers including China’s Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, said the number of month-to-month transactions it processed rose from about 8,000 in early 2016 to more than 900,000 as of June 2018.

"In early 2016 we were processing about $3,000 a month. Today we process well over $11 million every single month,” stated Emmanuel Quartey, Paystack’s head of development.

He stated a community of developers had actually emerged around Paystack, creating software application to integrate the platform into sites. “We have seen a development because community and they have actually brought us along,” stated Quartey.

Paystack stated it enables payments for a number of wagering companies but likewise a large range of services, from energy services to carry companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program as well as venture capitalists Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million in 2015.

FOREIGN INVESTMENT

Shifts in Nigeria’s payment culture have accompanied the arrival of foreign investors hoping to use sports betting.

Industry professionals say the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where business is more developed.

Russia’s 1XBet and Slovakia’s DOXXbet have actually both established in Nigeria in the last two years while Italy’s Goldbet led the pattern, taking a half stake in market leader Bet9ja when the Nigerian company launched in 2015.

NairaBET’s Alabi stated its sales were divided in between stores and online but the ease of electronic payments, expense of running stores and ability for consumers to avoid the stigma of gaming in public indicated online transactions would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least due to the fact that numerous consumers still stay unwilling to invest online.

He said the company, with about 60 percent of Nigeria’s sports betting market, had an extensive network. Nigerian wagering shops often function as social hubs where clients can view soccer free of charge while placing bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans gathered to view Nigeria’s last heat up video game before the World Cup.
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Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a TV screen inside. He stated he started gambling three months ago and bets up to 1,000 naira a day.

"Since I have actually been playing I have actually not won anything but I think that a person day I will win,” stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos