By Alexis Akwagyiram and Didi Akinyelure

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

For years, mobile payments stopped working to take off in Nigeria as they have in nations such as Kenya, where Safaricom’s M-Pesa cash transfers have fostered a culture of cashless payments.

Fear of electronic fraud and slow internet speeds have held Nigerian online consumers back but wagering firms says the new, fast digital payment systems underpinning their sites are altering mindsets towards online deals.

“We have seen significant development in the variety of payment options that are readily available. All that is absolutely changing the gaming space,” stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria’s commercial capital.

“The operators will opt for whoever is much faster, whoever can link to their platform with less concerns and problems,” he stated, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth 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 main bank and certified banks.

In 2016, there were 14 million web payments worth a total 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 almost 10 million worth 61 billion.

With a young population of nearly 190 million, rising cellphone usage and falling information expenses, Nigeria has long been viewed as a fantastic opportunity for online businesses - once consumers feel comfortable with electronic payments.

Online gaming companies say that is happening, though reaching the 10s of countless Nigerians without access to banking services remains a challenge for pure online sellers.

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

“There is a steady shift to online now, that is where the market is going,” Betway’s Nigeria manager Lere Awokoya said.

“The development in the number of fintechs, and the federal government as an enabler, has actually assisted business to prosper. These technological shifts encouraged Betway to start operating in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze whipped up by Nigeria’s participation on the planet Cup say they are discovering the payment systems developed by local startups such as Paystack are proving popular online.

Paystack and another regional startup 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 added Paystack as one of our payment alternatives with no fanfare, without revealing to our consumers, and within a month it shot up to the number one most secondhand payment option on the website,” stated Akin Alabi, of NairabBET.
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He said NairaBET, the nation’s second biggest sports betting company, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice since it was included late 2017.

Paystack was set up by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early stage financing 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 variety of month-to-month transactions it processed rose from about 8,000 in early 2016 to more than 900,000 since June 2018.
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“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 stated a community of designers had emerged around Paystack, developing software to integrate the platform into sites. “We have seen a growth in that neighborhood and they have carried us along,” said Quartey.

Paystack stated it allows payments for a number of sports betting firms but likewise a wide variety of businesses, from utility services to transfer business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program 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 corresponded with the arrival of foreign investors wanting to tap into sports betting.

Industry specialists state the sector creates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the business is more developed.
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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 trend, taking a half stake in market leader Bet9ja when the Nigerian company launched in 2015.

NairaBET’s Alabi stated its sales were split in between shops and online however the ease of electronic payments, cost of running shops and capability for clients to prevent the stigma of sports betting in public indicated online deals would grow.
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But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was essential to have a shop network, not least due to the fact that lots of clients 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 wagering stores typically function as social hubs where consumers can view soccer complimentary of charge while positioning bets.
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At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans collected to enjoy Nigeria’s last warm up video game before the World Cup.

Richard Onuka, a factory employee who earns 25,000 naira a month, was fixated on a TV screen inside. He stated he began sports betting three 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 a person day I will win,” stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos