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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mostly thanks to payment systems established by homegrown technology firms that are starting to make online organizations more viable.
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For many years, mobile payments stopped working to remove 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 internet speeds have held Nigerian online customers back but sports betting companies says the brand-new, fast digital payment systems underpinning their sites are altering attitudes towards online transactions.

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

"The operators will choose whoever is faster, whoever can link to their platform with less problems and glitches," he stated, including 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 data 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 first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, rising mobile phone use and falling data costs, Nigeria has actually long been viewed as a great chance for online companies - once customers feel comfy with electronic payments.

Online gaming firms say that is occurring, though reaching the 10s of millions of Nigerians without access to banking services stays a difficulty for pure online sellers.

British online sports betting company Betway opened its very first African business 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 manager Lere Awokoya said.

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

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's participation worldwide Cup say they are discovering the payment systems created by regional startups such as Paystack are proving popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the main platform utilized by services operating in Nigeria.

"We included Paystack as one of our payment choices without any excitement, without announcing to our consumers, and within a month it soared to the top most pre-owned payment option on the site," said Akin Alabi, founder of NairabBET.

He said NairaBET, the country's 2nd biggest sports betting company, now had 2 million routine consumers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative given that it was included late 2017.

Paystack was set up by 2 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 mad Ikeja district of Lagos, said the number of month-to-month deals it processed increased 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 single month," stated Emmanuel Quartey, Paystack's head of development.

He stated a community of developers had emerged around Paystack, developing software to integrate the platform into sites. "We have actually seen a growth in that neighborhood and they have carried us along," said Quartey.

Paystack said it makes it possible for payments for a variety of wagering firms but likewise a large range of companies, 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 program in addition to 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 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 business is more established.

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last 2 years while Italy's Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi said its sales were divided between shops and online but the ease of electronic payments, expense of running stores and capability for consumers to avoid 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 lots of consumers still remain unwilling to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering stores typically function as social centers where customers can enjoy soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans collected to see Nigeria's last warm 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 said he started sports betting three months back and bets approximately 1,000 naira a day.

"Since I have been playing I have actually not won anything but I believe that one day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)
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