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By Alexis Akwagyiram and Didi Akinyelure
bet9ja.com
LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology firms that are starting to make online companies more feasible.
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For years, mobile payments stopped working to take off in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have actually cultivated a culture of cashless payments.

Fear of electronic scams and slow web speeds have held Nigerian online consumers back but sports betting companies says the new, quick digital payment systems underpinning their sites are changing attitudes towards online transactions.

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

"The operators will opt for whoever is quicker, whoever can connect to their platform with less issues and glitches," he said, including 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 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 jumped 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, increasing smart phone usage and falling data costs, Nigeria has actually long been seen as an excellent chance for online businesses - once consumers feel comfortable with electronic payments.

Online sports betting firms state that is taking place, though reaching the 10s of countless Nigerians without access to banking services stays an obstacle for pure online retailers.

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

"There is a gradual 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 federal government as an enabler, has actually assisted the organization to thrive. These technological shifts encouraged Betway to begin running in Nigeria," he said.

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy whipped up by Nigeria's participation worldwide Cup say they are discovering the payment systems produced by regional start-ups such as Paystack are showing popular online.

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

"We added Paystack as one of our payment choices without any excitement, without announcing to our consumers, and within a month it shot up to the primary most pre-owned payment alternative on the website," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the nation's second biggest wagering firm, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment alternative because it was included in late 2017.

Paystack was established by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who got early stage funding in Silicon Valley's Y-Combinator program.

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 frenetic Ikeja district of Lagos, stated the variety of month-to-month deals 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," said Emmanuel Quartey, Paystack's head of growth.

He said an environment of designers had actually emerged around Paystack, producing software application to incorporate the platform into websites. "We have seen a growth because community and they have brought us along," said Quartey.

Paystack said it enables payments for a number of wagering companies but also a large range of businesses, from utility services to transport business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme along with 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 corresponded with the arrival of foreign financiers wanting to use sports betting wagering.

Industry specialists say the sector creates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business is more established.

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last two years while Italy's Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company launched in 2015.

NairaBET's Alabi said its sales were divided between stores and online but the ease of electronic payments, cost of running stores and ability for customers to avoid the stigma of gambling in public indicated online transactions would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was essential to have a shop network, not least since lots of consumers still remain reluctant to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting shops often act as social centers where clients can view soccer free of charge while positioning bets.

At a BetKing hall deep inside the market in Lagos, lots of soccer fans collected to view Nigeria's final warm up game before the World Cup.

Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a television screen inside. He stated he started gambling 3 months ago and bets up to 1,000 naira a day.

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