By Alexis Akwagyiram and Didi Akinyelure


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


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


Fear of electronic scams and slow internet speeds have actually held Nigerian online consumers back however wagering firms says the brand-new, fast digital payment systems underpinning their websites are altering mindsets towards online transactions.


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


"The operators will opt for whoever is much faster, whoever can connect to their platform with less concerns and problems," he said, including that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.


That development 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 an overall 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 mobile phone usage and falling information costs, Nigeria has actually long been seen as a great opportunity for online businesses - once customers feel comfortable with electronic payments.


Online gambling companies say that is occurring, though reaching the 10s of millions of Nigerians without access to banking services remains a difficulty for pure online retailers.


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


"There is a gradual shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya said.


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


FINTECH COMPETITION


sports betting firms capitalizing the soccer frenzy worked up by Nigeria's involvement worldwide Cup say they are finding the payment systems developed by local start-ups such as Paystack are showing popular online.


Paystack and another regional start-up 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 businesses 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 soared to the number one most secondhand payment alternative on the site," said Akin Alabi, creator of NairabBET.


He said NairaBET, the country's 2nd greatest sports betting company, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice because it was added in late 2017.


Paystack was set up by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early phase financing 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 frenetic Ikeja district of Lagos, said the number of monthly transactions 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 month," said Emmanuel Quartey, Paystack's head of development.




He stated an ecosystem of developers had emerged around Paystack, developing software application to incorporate the platform into websites. "We have actually seen a growth because community and they have actually brought us along," said Quartey.


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


Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme 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 accompanied the arrival of foreign investors hoping to tap into 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 developed.


Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last 2 years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian firm launched in 2015.


NairaBET's Alabi stated its sales were split in between stores and online but the ease of electronic payments, expense of running shops and ability for clients to prevent the stigma of gambling in public suggested online transactions would grow.


But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was important to have a shop network, not least since lots of clients still remain unwilling to invest online.


He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian wagering shops often act as social hubs where consumers can watch soccer complimentary of charge while putting bets.


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


Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a television screen inside. He said 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 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)