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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 mostly thanks to payment systems established by homegrown technology firms that are beginning to make online companies more feasible.
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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 money transfers have actually fostered a culture of cashless payments.

Fear of electronic fraud and slow web speeds have actually held Nigerian online consumers back however sports betting companies states the brand-new, quick digital payment systems underpinning their sites are altering attitudes towards online transactions.

"We have actually seen considerable growth in the variety of payment options that are readily available. All that is certainly changing the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's commercial capital.

"The operators will opt for whoever is faster, whoever can connect 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 actually been matched by an increase in web payments, according to information 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 first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of almost 190 million, increasing cellphone use and falling data costs, Nigeria has actually long been viewed as an excellent opportunity for online services - once customers feel comfy with electronic payments.

Online sports betting firms state that is happening, though reaching the tens of millions of Nigerians without access to banking services stays a difficulty for pure online retailers.

British online wagering firm Betway opened its very first African service 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 industry is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the number of fintechs, and the federal government as an enabler, has helped business to flourish. These technological shifts motivated Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze whipped up by Nigeria's participation in the World Cup say they are discovering the payment systems developed by local startups such as Paystack are proving popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was established in 2002 and was the main platform used by businesses operating in Nigeria.

"We included Paystack as one of our payment alternatives with no fanfare, without revealing to our clients, and within a month it shot up to the primary most used payment alternative on the site," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's second most significant sports betting company, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative considering that it was included 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 financiers consisting of China's Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, stated the number of month-to-month transactions it processed increased 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 single month," stated Emmanuel Quartey, Paystack's head of development.

He said a community of designers had actually emerged around Paystack, producing software to integrate the platform into sites. "We have seen a growth in that community and they have actually carried us along," said Quartey.

Paystack stated it enables payments for a number of sports betting companies but likewise a wide variety of services, from utility services to carry companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme in addition to endeavor capitalists 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 coincided with the arrival of foreign financiers intending to tap into sports betting.

Industry specialists state the sector produces about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the service is more developed.

Russia's 1XBet and Slovakia's DOXXbet have both established in Nigeria in the last 2 years while Italy's Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian company launched in 2015.

NairaBET's Alabi said its sales were divided between shops and online however the ease of electronic payments, expense of running stores and capability for clients to avoid the stigma of sports betting in public meant online transactions would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a shop network, not least because lots of clients still stay hesitant to invest online.

He said the business, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian sports betting shops often serve as social hubs where customers can see soccer free of charge while putting bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans collected to enjoy Nigeria's last heat up video game before the World Cup.
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Richard Onuka, a factory employee who earns 25,000 naira a month, was fixated on a TV screen inside. He stated he began gambling three months ago and bets up to 1,000 naira a day.

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