By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology companies that are starting to make online companies more viable.
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For many years, mobile payments failed to remove 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 fraud and sluggish internet speeds have held Nigerian online customers back however sports betting companies says the brand-new, quick digital payment systems underpinning their websites are altering mindsets towards online transactions.

"We have actually seen considerable development in the number of payment services that are available. All that is definitely altering the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

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

That development has actually been matched by a rise in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central 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 first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, rising smart phone use and falling data costs, Nigeria has long been viewed as an excellent chance for online services - once customers feel comfy with electronic payments.

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

British online sports betting firm Betway opened its first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released in Nigeria in January.
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"There is a steady shift to online now, that is where the market is going," Betway's Nigeria supervisor Lere Awokoya stated.

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

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy worked up by Nigeria's involvement on the planet Cup say they are finding the payment systems produced by local start-ups such as Paystack are proving popular online.
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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 main platform utilized by companies running in Nigeria.

"We added Paystack as one of our payment choices with no fanfare, without revealing to our consumers, and within a month it shot up to the number one most pre-owned payment choice on the website," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the nation's second most significant sports betting firm, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option considering that it was included late 2017.

Paystack was set up by 2 Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who got early stage funding in Silicon Valley's Y-Combinator programme.

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

Paystack, based in the frenetic Ikeja district of Lagos, said the number of monthly transactions it processed increased 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," said Emmanuel Quartey, Paystack's head of growth.

He said an environment of developers had emerged around Paystack, creating software to incorporate the platform into websites. "We have seen a growth because neighborhood and they have actually carried us along," stated Quartey.

Paystack said it makes it possible for payments for a number of sports betting companies however also a wide variety of organizations, from energy services to carry business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as investor 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 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 the service is more developed.

Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last 2 years while Italy's Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.

NairaBET's Alabi said its sales were divided in between stores and online but the ease of electronic payments, expense of running shops and ability for consumers to avoid the preconception of gambling in public implied online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a store network, not least because lots of customers still stay hesitant to spend online.

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

At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans gathered to watch Nigeria's last warm up game before the World Cup.
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Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a TV screen inside. He said he began sports betting 3 months earlier and bets as much as 1,000 naira a day.

"Since I have actually been playing I have 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