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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is expanding in soccer-mad Nigeria largely thanks to payment systems developed by homegrown innovation firms that are beginning to make online companies more viable.

For many 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 cultivated a culture of cashless payments.

Fear of electronic scams and slow internet speeds have actually held Nigerian online customers back however wagering firms states the new, fast digital payment systems underpinning their sites are changing mindsets towards online transactions.

"We have actually seen significant development in the number of payment options that are available. All that is definitely changing the video gaming area," said 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 link to their platform with less problems and glitches," he stated, 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 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 very first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of almost 190 million, rising mobile phone usage and falling information expenses, Nigeria has actually long been seen as an excellent opportunity for online services - once customers feel comfy with electronic payments.

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

British online wagering firm Betway opened its first African business 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 manager Lere Awokoya stated.

"The growth in the number of fintechs, and the federal government as an enabler, has helped the business to grow. These technological shifts encouraged Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy worked up by Nigeria's involvement in the World Cup say they are finding the payment systems produced by local startups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both established in 2016, are providing competitors for Nigeria's Interswitch which was established in 2002 and was the main platform utilized by services running in Nigeria.

"We included Paystack as one of our payment options with no excitement, without announcing to our consumers, and within a month it shot up to the number one most used payment option on the website," said Akin Alabi, creator of NairabBET.
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He said NairaBET, the country's 2nd biggest sports betting company, now had 2 million routine customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment alternative given that it was included late 2017.

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

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 month-to-month transactions 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 each and every single month," said Emmanuel Quartey, Paystack's head of development.

He stated a community of designers had emerged around Paystack, developing software application to incorporate the platform into sites. "We have actually seen a growth because neighborhood and they have actually brought us along," stated Quartey.

Paystack stated it makes it possible for payments for a variety of sports betting firms but also a vast array of organizations, from utility services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme in addition to venture 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 accompanied the arrival of foreign investors intending to take advantage of sports betting.
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Industry specialists say the sector creates 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 was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.

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

But despite in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a shop network, not least because many customers still remain hesitant to invest online.

He stated the company, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian sports betting shops often function as social hubs where consumers can view soccer complimentary of charge while placing bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a TV screen inside. He stated he started gambling 3 months earlier and bets approximately 1,000 naira a day.

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