By Alexis Akwagyiram and Didi Akinyelure


LAGOS, June 25 (Reuters) - Online sports betting is expanding in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology firms that are starting to make online services more viable.


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


Fear of electronic fraud and sluggish internet speeds have held Nigerian online consumers back however wagering companies says the brand-new, fast digital payment systems underpinning their sites are changing attitudes towards online transactions.


"We have seen significant development in the variety of payment services that are readily available. All that is absolutely changing the 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 connect to their platform with less problems and glitches," he stated, adding that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.


That growth has actually 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 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 almost 10 million worth 61 billion.


With a young population of almost 190 million, rising cellphone usage and falling data costs, Nigeria has long been seen as an excellent chance for online services - once customers feel comfortable with electronic payments.


Online gambling firms state that is taking place, though reaching the tens of millions of Nigerians without access to banking services stays a difficulty for pure online retailers.


British online sports betting firm Betway opened its very first African service 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 stated.


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


FINTECH COMPETITION


sports betting firms cashing in on the soccer craze whipped up by Nigeria's participation on the planet Cup state they are finding the payment systems created by local startups such as Paystack are showing popular online.


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


"We included Paystack as one of our payment choices without any fanfare, without announcing to our clients, and within a month it shot up to the primary most secondhand payment option on the site," said Akin Alabi, creator of NairabBET.


He said NairaBET, the nation's second biggest wagering firm, now had 2 million routine customers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option because it was included late 2017.


Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator programme.


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


Paystack, based in the mad Ikeja district of Lagos, stated the variety 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 growth.




He said a community of designers had emerged around Paystack, developing software to integrate the platform into websites. "We have actually seen a development because community and they have actually brought us along," said Quartey.


Paystack stated it makes it possible for payments for a number of wagering firms but also a large variety of companies, from utility services to transport business to insurance provider Axa Mansard.


Flutterwave, co-founded by Nigerian business owner 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 last year.


FOREIGN INVESTMENT


Shifts in Nigeria's payment culture have accompanied the arrival of foreign financiers wishing to take advantage of sports betting.


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


Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last two 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 said its sales were split between stores and online however the ease of electronic payments, expense of running stores and ability for consumers to prevent the preconception of sports betting in public implied online deals would grow.


But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least since numerous clients still stay hesitant to spend online.


He said the company, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering stores often serve as social hubs where clients can view soccer complimentary of charge while putting bets.


At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to enjoy Nigeria's final heat up video game before the World Cup.


Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He stated he began sports betting 3 months earlier and bets as much as 1,000 naira a day.


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