By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation firms that are beginning to make online organizations more practical.
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For 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 fostered a culture of cashless payments.

Fear of electronic fraud and sluggish web speeds have held Nigerian online consumers back however wagering firms states the brand-new, quick digital payment their sites are changing mindsets towards online transactions.

"We have seen considerable growth in the variety of payment solutions that are offered. All that is definitely changing the video gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will opt for whoever is much faster, whoever can connect to their platform with less issues and problems," he said, adding that taxes from sports betting in Lagos State increased 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 reserve bank and certified 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 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 data costs, Nigeria has actually long been viewed as an excellent chance for online services - once consumers feel comfortable with electronic payments.

Online gaming firms state that is taking place, though reaching the 10s of countless Nigerians without access to banking services remains a difficulty for pure online retailers.

British online sports betting 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 market is going," Betway's Nigeria manager Lere Awokoya said.

"The development in the variety of fintechs, and the federal government as an enabler, has actually assisted business to grow. These technological shifts motivated Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy whipped up by Nigeria's participation on the planet Cup state they are discovering the payment systems created by regional start-ups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the main platform used by services operating in Nigeria.

"We added Paystack as one of our payment choices without any excitement, without revealing to our clients, and within a month it shot up to the number one most used payment choice on the site," said Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's second biggest sports betting firm, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice given that it was added in late 2017.

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage financing 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 variety of month-to-month 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," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack stated it makes it possible for payments for a number of sports betting companies however also a vast array of services, from utility services to transport business to insurance provider 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 financiers wanting to use sports betting wagering.

Industry specialists state the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the organization is more developed.

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last 2 years while Italy's Goldbet led 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 gaming in public implied online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a store network, not least due to the fact that numerous clients still stay reluctant to invest online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering shops frequently act as social centers where consumers can watch soccer free of charge while placing bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to see Nigeria's last warm up game before the World Cup.
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Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a TV screen inside. He stated he started gambling 3 months earlier and bets up to 1,000 naira a day.

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