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By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is expanding in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown technology firms that are beginning to make online services more feasible.
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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 actually cultivated a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online consumers back however sports betting firms states the new, quick digital payment systems underpinning their websites are altering mindsets towards online transactions.

"We have seen substantial growth in the number of payment services that are available. All that is certainly changing the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

"The operators will opt for whoever is faster, whoever can link to their platform with less concerns and problems," he stated, adding 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 central bank and licensed 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, increasing mobile phone usage and falling data costs, Nigeria has actually long been seen as a great opportunity for online businesses - once consumers feel comfy with electronic payments.

Online sports betting firms say that is taking place, though reaching the tens of countless Nigerians without access to banking services stays an obstacle for pure online merchants.

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

"There is a progressive shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya stated.

"The development in the variety of fintechs, and the government as an enabler, has helped the company to prosper. These technological shifts encouraged Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy whipped up by Nigeria's participation in the World Cup state they are finding the payment systems created by regional startups such as Paystack are showing popular online.

and another local start-up Flutterwave, both founded in 2016, are providing competition for Nigeria's Interswitch which was established in 2002 and was the primary platform utilized by businesses running in Nigeria.

"We added Paystack as one of our payment options with no excitement, without revealing to our customers, and within a month it shot up to the number one most secondhand payment option on the site," stated Akin Alabi, founder of NairabBET.

He said NairaBET, the country's second biggest wagering firm, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option since it was added in late 2017.

Paystack was set up by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got early phase 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.
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Paystack, based in the mad Ikeja district of Lagos, said the variety of regular monthly deals it processed rose 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 month," said Emmanuel Quartey, Paystack's head of growth.

He said an ecosystem of designers had emerged around Paystack, creating software to incorporate the platform into websites. "We have actually seen a development because community and they have carried us along," said Quartey.

Paystack stated it makes it possible for payments for a number of sports betting firms but also a large variety of companies, from energy services to transfer companies to insurer Axa Mansard.

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

Industry experts say the sector produces about $1 billion a year and is most 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 2 years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET's Alabi stated its sales were split between shops and online but the ease of electronic payments, expense of running stores and capability for customers to prevent the stigma of sports betting 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 essential to have a shop network, not least since many consumers still stay hesitant to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting shops typically act as social hubs where consumers can view soccer totally free 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 see Nigeria's last warm up video game before the World Cup.
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Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a television screen inside. He said he began sports betting 3 months ago and bets approximately 1,000 naira a day.

"Since I have 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