By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria largely thanks to payment systems developed by homegrown innovation companies that are beginning to make online companies more practical.

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 actually cultivated a culture of cashless payments.

Fear of electronic fraud and slow web speeds have actually held Nigerian online consumers back however sports betting companies says the brand-new, fast digital payment systems underpinning their websites are changing attitudes towards online deals.
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“We have actually seen considerable development in the variety 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, 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 problems,” he stated, including that taxes from sports betting 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 data 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 jumped 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 mobile phone use and falling data costs, Nigeria has long been viewed as a terrific opportunity for online companies - once customers feel comfy with electronic payments.

Online gaming companies state that is taking place, though reaching the tens of millions of Nigerians without access to banking services stays an obstacle for pure online merchants.

British online wagering company Betway opened its first African organization 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 industry is going,” Betway’s Nigeria supervisor Lere Awokoya stated.

“The growth in the number of fintechs, and the government as an enabler, has actually helped business to thrive. These technological shifts encouraged Betway to start running in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze whipped up by Nigeria’s involvement in the World Cup state they are finding the payment systems developed by regional start-ups such as Paystack are proving popular online.

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

“We included Paystack as one of our payment choices without any excitement, without announcing to our clients, and within a month it soared to the top most used payment alternative on the website,” stated Akin Alabi, founder of NairabBET.

He said NairaBET, the country’s second greatest sports betting firm, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was included in late 2017.

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

In December 2016, it raised $1.3 million from investors consisting of China’s Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, said the number of month-to-month 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 development.

He said an environment of developers had actually emerged around Paystack, creating software to incorporate the platform into sites. “We have actually seen a development because community and they have carried us along,” stated Quartey.
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Paystack said it allows payments for a number of wagering companies but also a wide variety of businesses, from energy services to transport companies to insurer Axa .
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Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme in addition to investor Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million in 2015.
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FOREIGN INVESTMENT

Shifts in Nigeria’s payment culture have actually accompanied the arrival of foreign financiers wanting to use sports betting wagering.

Industry professionals say the sector creates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where business 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 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET’s Alabi stated its sales were split between stores and online but the ease of electronic payments, cost of running shops and ability for customers to avoid the preconception of sports betting in public meant online deals would grow.
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But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was very important to have a store network, not least due to the fact that lots of consumers still remain hesitant to spend online.

He stated the company, with about 60 percent of Nigeria’s sports betting market, had a comprehensive network. Nigerian sports betting shops frequently act as social centers where consumers can enjoy soccer totally free of charge while placing bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans collected to see Nigeria’s last heat up video game before the World Cup.
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Richard Onuka, a factory employee who earns 25,000 naira a month, was focused on a TV screen inside. He said he started sports betting three months ago and bets approximately 1,000 naira a day.

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