
By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation companies that are beginning to make online organizations more viable.
For several 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 consumers back but wagering companies says the new, fast digital payment systems underpinning their sites are changing mindsets towards online transactions.
"We have actually seen considerable development in the variety of payment options that are available. All that is certainly altering the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.
"The operators will opt for whoever is quicker, whoever can connect to their platform with less problems and problems," he stated, adding that taxes from sports betting 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 reserve bank and certified banks.
In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions jumped 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, increasing smart phone use and falling data costs, Nigeria has actually long been seen as a great chance for online services - once customers feel comfortable with electronic payments.
Online gambling companies say that is occurring, though reaching the tens of millions of Nigerians without access to banking services remains a difficulty for pure online sellers.
British online sports betting 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 gradual 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 actually helped the business to grow. These technological shifts encouraged Betway to begin operating in Nigeria," he said.
FINTECH COMPETITION
sports betting firms capitalizing the soccer craze worked up by Nigeria's participation on the planet Cup say they are finding the payment systems created by regional startups such as Paystack are proving popular online.
Paystack and another regional start-up Flutterwave, both founded in 2016, are offering competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform used by companies running in Nigeria.
"We added Paystack as one of our payment options without any fanfare, without revealing to our customers, and within a month it soared to the primary most secondhand payment choice on the site," said Akin Alabi, founder of NairabBET.
He said NairaBET, the nation's 2nd most significant wagering firm, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative since it was included late 2017.

Paystack was set up by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got early phase 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 frenetic Ikeja district of Lagos, said the number of regular 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 growth.
He said an environment of designers had actually emerged around Paystack, developing software to integrate the platform into sites. "We have seen a development in that neighborhood and they have brought us along," stated Quartey.
Paystack said it enables payments for a number of wagering firms but also a vast array of companies, from utility services to transfer companies to insurer Axa Mansard.
Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme along with 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 financiers wishing to tap into sports betting.
Industry specialists state the sector produces 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 both set up in Nigeria in the last two years while Italy's Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi stated its sales were divided between stores and online however the ease of electronic payments, expense of running stores and ability for customers to prevent the preconception of gambling in public implied 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 store network, not least due to the fact that numerous customers still remain unwilling to invest online.

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

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans collected to see Nigeria's final heat up game before the World Cup.
Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a TV screen inside. He said he began sports betting 3 months ago and bets approximately 1,000 naira a day.
"Since I have been playing I have 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; editing by David Clarke)
