By Alexis Akwagyiram and Didi Akinyelure


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


For years, mobile payments stopped working to take off in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have cultivated a culture of cashless payments.


Fear of electronic fraud and slow web speeds have held Nigerian online customers back but wagering firms says the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online transactions.


"We have actually seen substantial growth in the number of payment options that are offered. All that is certainly altering the gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.


"The operators will opt for whoever is quicker, whoever can link 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 development has been matched by a rise in web payments, according to information 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 very first quarter of 2018 there were almost 10 million worth 61 billion.


With a young population of nearly 190 million, rising cellphone usage and falling information costs, Nigeria has long been viewed as a terrific chance for online services - once customers feel comfortable with electronic payments.


Online gambling firms say that is happening, though reaching the tens of countless Nigerians without access to banking services stays a difficulty for pure online retailers.


British online wagering firm Betway opened its 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 industry is going," Betway's Nigeria manager Lere Awokoya stated.


"The growth in the number of fintechs, and the federal government as an enabler, has actually helped the organization to prosper. These technological shifts encouraged Betway to start operating in Nigeria," he said.


FINTECH COMPETITION


sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's involvement worldwide Cup state they are discovering the payment systems produced by local start-ups such as Paystack are proving popular online.


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


"We included Paystack as one of our payment options with no fanfare, without revealing to our consumers, and within a month it shot up to the number one most secondhand payment option on the site," stated Akin Alabi, founder of NairabBET.


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


Paystack was set up by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase funding in Silicon Valley's Y-Combinator program.


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 variety of regular monthly 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 each and every single month," said Emmanuel Quartey, Paystack's head of development.




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


Paystack said it enables payments for a variety of sports betting companies but also a large range of businesses, from utility services to transport business to insurance provider Axa Mansard.


Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program as well as 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 actually corresponded with the arrival of foreign investors hoping to take advantage of sports betting.


Industry experts say the sector creates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the service is more established.


Russia's 1XBet and Slovakia's DOXXbet have 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 released in 2015.


NairaBET's Alabi stated its sales were divided between stores and online but the ease of electronic payments, expense of running stores and ability for customers to avoid the preconception of gaming in public suggested online transactions would grow.


But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least because lots of customers still remain unwilling to spend online.


He stated the business, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian wagering stores typically function as social hubs where clients can see soccer free of charge while positioning bets.


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


Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a television screen inside. He stated he began sports betting three months ago and bets up to 1,000 naira a day.


"Since I have been playing I have not won anything however 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)