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 established by homegrown technology companies that are starting to make online companies more viable.

For several years, mobile payments failed to remove in Nigeria as they have in countries such as Kenya, where Safaricom’s M-Pesa cash transfers have actually fostered a culture of cashless payments.

Fear of electronic scams and sluggish web speeds have held Nigerian online customers back but wagering companies says the new, quick digital payment systems underpinning their sites are changing mindsets towards online deals.

“We have seen significant growth in the variety of payment services that are offered. All that is certainly altering the video gaming space,” said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s industrial capital.

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

That growth has actually been matched by an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve 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 of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, increasing cellphone usage and falling information expenses, Nigeria has long been seen as a fantastic opportunity for online organizations - once customers 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 a difficulty for pure online sellers.

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

“There is a progressive shift to online now, that is where the market is going,” Betway’s Nigeria supervisor Lere Awokoya stated.

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

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze worked up by Nigeria’s participation 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 regional start-up Flutterwave, both established in 2016, are supplying competition for Nigeria’s Interswitch which was set up in 2002 and was the main platform utilized by companies running in Nigeria.

“We added Paystack as one of our payment choices without any fanfare, without announcing to our clients, and within a month it soared to the number one most pre-owned payment choice on the site,” said Akin Alabi, founder of NairabBET.

He said NairaBET, the nation’s 2nd biggest wagering firm, now had 2 million routine customers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option because it was included in 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 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 frenetic Ikeja district of Lagos, stated the number of monthly deals 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 each and every single month,” stated Emmanuel Quartey, Paystack’s head of development.

He stated a community of designers had emerged around Paystack, developing software to incorporate the platform into websites. “We have seen a growth in that neighborhood and they have carried us along,” said Quartey.

Paystack said it allows payments for a variety of wagering companies but likewise a large range of services, from energy services to carry companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as venture capitalists 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 accompanied the arrival of foreign financiers hoping to take advantage of sports betting wagering.

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

Russia’s 1XBet and Slovakia’s DOXXbet have actually both established in Nigeria in the last two years while Italy’s Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.

NairaBET’s Alabi stated its sales were split in between stores and online however the ease of electronic payments, expense of running stores and ability for customers to prevent the stigma of sports betting in public implied online transactions would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least since lots of consumers still stay reluctant to spend online.

He stated the company, with about 60 percent of Nigeria’s sports betting wagering market, had an extensive network. Nigerian wagering shops frequently act as social hubs where clients can see soccer complimentary of charge while placing bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to view Nigeria’s last heat up 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 stated he began gambling three months ago and bets up to 1,000 naira a day.

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