By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mostly thanks to payment systems established by homegrown innovation firms that are starting to make online businesses more viable.
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For many years, mobile payments failed to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have actually promoted a culture of cashless payments.

Fear of electronic fraud and slow web speeds have actually held Nigerian online customers back however wagering firms states the new, fast digital payment systems underpinning their sites are altering mindsets towards online transactions.

"We have seen significant development in the number of payment options that are available. All that is certainly changing the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

"The operators will go with whoever is quicker, whoever can connect to their platform with less problems and glitches," he said, adding that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That development has been matched by an increase in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main bank and certified banks.

In 2016, there were 14 million web payments worth a total 132 billion naira ($420 million). to 29 million worth 185 billion in 2017 and in the very first quarter of 2018 there were almost 10 million worth 61 billion.
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With a young population of nearly 190 million, increasing smart phone use and falling data expenses, Nigeria has actually long been viewed as an excellent opportunity for online businesses - once customers feel comfy 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 challenge for pure online merchants.

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

"The development in the number of fintechs, and the government as an enabler, has helped the company to flourish. These technological shifts encouraged Betway to begin operating in Nigeria," he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's participation in the World Cup say they are finding the payment systems produced by regional startups such as Paystack are proving popular online.
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Paystack and another local startup Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was established in 2002 and was the primary platform used by businesses running in Nigeria.

"We added Paystack as one of our payment options without any fanfare, without announcing to our customers, and within a month it shot up to the primary most used payment option on the site," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the nation's 2nd most significant wagering firm, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment alternative because it was added in late 2017.

Paystack was set up by two Nigerian computer technology 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 investors including China's Tencent and Comcast Ventures in the United States.
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Paystack, based in the mad Ikeja district of Lagos, stated the variety of month-to-month 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 every month," said Emmanuel Quartey, Paystack's head of development.

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

Paystack said it enables payments for a variety of sports betting companies but also a wide variety of services, from energy services to transfer business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program in addition to venture capitalists 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 wanting to take advantage of sports betting.

Industry experts say the sector creates 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 actually both established in Nigeria in the last two years while Italy's Goldbet was ahead of the pattern, taking a half stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi said its sales were divided between shops and online but the ease of electronic payments, expense of running stores and capability for clients to avoid the preconception of gambling in public meant online deals 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 since numerous consumers 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 shops typically function as social hubs where consumers can enjoy soccer totally free of charge while positioning bets.

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a TV screen inside. He stated he started gambling three months back and bets as much as 1,000 naira a day.

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