By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is booming in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown innovation firms that are starting to make online organizations more feasible.

For several years, mobile payments failed to remove in Nigeria as they have in countries such as Kenya, where Safaricom’s M-Pesa cash transfers have actually cultivated a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online customers back however wagering firms says the new, quick digital payment systems underpinning their websites are changing attitudes towards online deals.

"We have seen substantial growth in the variety of payment options that are readily available. All that is definitely changing the video gaming area,” stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria’s industrial capital.

"The operators will go with whoever is quicker, whoever can link to their platform with less problems and glitches,” he stated, adding that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

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

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

With a young population of almost 190 million, rising smart phone use and falling information costs, Nigeria has long been viewed as an excellent opportunity for online businesses - once customers feel comfortable with electronic payments.

Online sports betting companies say that is happening, though reaching the 10s of countless Nigerians without access to banking services stays a challenge for pure online merchants.

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

"There is a gradual shift to online now, that is where the market is going,” Betway’s Nigeria manager Lere Awokoya stated.

"The growth in the number of fintechs, and the federal government as an enabler, has actually helped the company to thrive. These technological shifts motivated Betway to start running in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze worked up by Nigeria’s participation in the World Cup state they are finding the payment systems developed by regional start-ups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are supplying competitors for Nigeria’s Interswitch which was established in 2002 and was the main platform used by services operating in Nigeria.

"We included Paystack as one of our payment choices with no excitement, without announcing to our clients, and within a month it shot up to the number one most secondhand payment option on the website,” said Akin Alabi, founder of NairabBET.

He stated NairaBET, the country’s second most significant sports betting firm, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was added in late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase financing in Silicon Valley’s Y-Combinator program.

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

Paystack, based in the mad Ikeja district of Lagos, said the variety of monthly transactions it processed rose from about 8,000 in early 2016 to more than 900,000 since June 2018.

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

He stated an ecosystem of developers had actually emerged around Paystack, producing software to integrate the platform into sites. “We have seen a growth because community and they have actually carried us along,” stated Quartey.

Paystack said it makes it possible for payments for a variety of wagering firms but likewise a wide variety of businesses, from energy services to transfer business to insurer Axa Mansard.

Flutterwave, by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program in addition to investor Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million last year.

FOREIGN INVESTMENT

Shifts in Nigeria’s payment culture have corresponded with the arrival of foreign investors wishing to tap into sports betting.
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Industry professionals state the sector creates about $1 billion a year and is 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 set up in Nigeria in the last two years while Italy’s Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company launched in 2015.
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NairaBET’s Alabi stated its sales were divided between shops and online however the ease of electronic payments, expense of running shops and capability for clients to avoid the preconception of gaming in public suggested online deals would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a shop network, not least because many clients still stay hesitant to spend online.

He stated the company, with about 60 percent of Nigeria’s sports betting market, had a substantial network. Nigerian wagering shops typically act as social hubs where customers can enjoy soccer free of charge while positioning bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans gathered to enjoy Nigeria’s last warm up game before the World Cup.

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a television screen inside. He said he began gambling 3 months ago and bets approximately 1,000 naira a day.

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