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By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mainly thanks to payment systems established by homegrown innovation firms that are beginning to make online companies more practical.
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For years, mobile payments failed to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have promoted a culture of cashless payments.

Fear of electronic fraud and sluggish internet speeds have held Nigerian online consumers back however sports betting companies says the brand-new, quick digital payment systems underpinning their sites are altering mindsets towards online transactions.

"We have seen substantial growth in the number of payment options that are readily available. All that is certainly altering the video gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.

"The operators will go with whoever is faster, whoever can connect to their platform with less concerns and glitches," he stated, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has actually been matched by an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and certified banks.

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

With a young population of nearly 190 million, increasing mobile phone usage and falling data expenses, Nigeria has actually long been viewed as a terrific chance for online services - once consumers feel comfy with electronic payments.

Online gambling companies state that is occurring, though reaching the 10s of countless Nigerians without access to banking services stays a challenge for pure online merchants.

British online wagering company Betway opened its first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released in Nigeria in January.

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

"The growth in the variety of fintechs, and the government as an enabler, has assisted the company to flourish. These technological shifts motivated Betway to start running in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze whipped up by Nigeria's involvement on the planet Cup state they are finding the payment systems created by local startups such as Paystack are proving popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are providing competition for Nigeria's Interswitch which was set up in 2002 and was the primary platform used by businesses running in Nigeria.

"We included Paystack as one of our payment choices with no excitement, without announcing to our consumers, and within a month it shot up to the top most pre-owned payment option on the site," stated Akin Alabi, creator of NairabBET.

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

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase funding in Silicon Valley's Y-Combinator programme.

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 frenetic Ikeja district of Lagos, stated the number of monthly deals 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.
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He said an ecosystem of developers had actually emerged around Paystack, developing software application to incorporate the platform into sites. "We have actually seen a development in that neighborhood and they have actually carried us along," said Quartey.

Paystack said it enables payments for a number of sports betting firms but likewise a vast array of organizations, from energy services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program in addition to 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 actually accompanied the arrival of foreign financiers wanting to take advantage of sports betting wagering.

Industry experts state the sector generates 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 established in Nigeria in the last two years while Italy's Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi stated its sales were split between shops and online but the ease of electronic payments, cost of running shops and ability for consumers to prevent the stigma of sports betting in public suggested online deals 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 because lots of consumers still stay hesitant to invest online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian wagering stores often function as social centers where consumers can watch soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans collected to watch Nigeria's last heat up video game before the World Cup.

Richard Onuka, a factory employee who earns 25,000 naira a month, was focused on a television screen inside. He stated he began gambling 3 months earlier and bets as much as 1,000 naira a day.

"Since I have been playing I have actually not won anything however I think that one day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by and Didi Akinyelure in Lagos; modifying by David Clarke)