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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting wagering is flourishing in soccer-mad Nigeria mostly thanks to payment systems established by homegrown technology companies that are beginning to make online businesses more viable.

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

Fear of electronic fraud and sluggish web speeds have held Nigerian online customers back but wagering firms says the new, fast digital payment systems underpinning their websites are changing attitudes towards online transactions.

"We have actually seen significant growth in the variety of payment services that are available. All that is absolutely changing the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.

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

That growth 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 jumped to 29 million worth 185 billion in 2017 and in the first quarter of 2018 there were almost 10 million worth 61 billion.
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With a young population of almost 190 million, increasing cellphone usage and falling information costs, Nigeria has long been viewed as an excellent chance for online companies - once consumers feel comfy with electronic payments.

Online gambling firms say that is occurring, though reaching the 10s of countless Nigerians without access to banking services remains a challenge for pure online merchants.

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

"There is a steady shift to online now, that is where the market is going," Betway's Nigeria supervisor Lere Awokoya said.
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"The growth in the variety of fintechs, and the government as an enabler, has actually helped business to flourish. These technological shifts encouraged Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

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

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

"We added Paystack as one of our payment alternatives with no fanfare, without revealing to our customers, and within a month it soared to the primary most secondhand payment alternative on the website," stated Akin Alabi, founder of NairabBET.

He said NairaBET, the country's second most significant wagering company, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative since it was included in late 2017.

Paystack was established by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early phase financing 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, said the number of monthly transactions 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 every month," said Emmanuel Quartey, Paystack's head of growth.

He said a community of developers had actually emerged around Paystack, developing software to incorporate the platform into websites. "We have seen a growth in that community and they have brought us along," stated Quartey.
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Paystack stated it allows payments for a variety of wagering firms but likewise a large variety of organizations, from energy 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 tap into sports betting wagering.

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

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

NairaBET's Alabi said its sales were split in between shops and online however the ease of electronic payments, cost of running stores and ability for clients to prevent the preconception of gambling in public suggested online deals would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least due to the fact that many customers still remain hesitant to spend online.

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

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, lots of soccer fans collected to last heat up video game before the World Cup.

Richard Onuka, a factory employee who earns 25,000 naira a month, was focused on a television screen inside. He said he began gambling 3 months earlier and bets approximately 1,000 naira a day.

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