By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mainly thanks to payment systems established by homegrown innovation 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 cash transfers have actually promoted a culture of cashless payments.

Fear of electronic fraud and sluggish 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 significant growth in the variety of payment services that are available. All that is certainly altering the gaming space,” stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s industrial capital.

“The operators will go with whoever is quicker, whoever can connect to their platform with less issues and glitches,” he stated, 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 information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main 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 first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, rising cellphone use and falling information expenses, Nigeria has long been viewed as an excellent chance for online businesses - once consumers feel comfy with electronic payments.

Online sports betting firms state that is occurring, though reaching the tens of millions of Nigerians without access to banking services remains an obstacle for pure online sellers.

British online sports betting firm Betway opened its first African organization in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released in Nigeria in January.
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“There is a gradual shift to online now, that is where the industry is going,” Betway’s Nigeria supervisor Lere Awokoya said.

“The development in the number of fintechs, and the government as an enabler, has actually helped business to grow. These technological shifts encouraged Betway to begin operating in Nigeria,” he said.
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FINTECH COMPETITION

sports betting firms capitalizing the soccer craze worked up by Nigeria’s participation on the planet Cup state they are finding the payment systems created by regional startups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are supplying competitors for Nigeria’s Interswitch which was established in 2002 and was the primary platform utilized by organizations running in Nigeria.

“We included Paystack as one of our payment choices with no fanfare, without revealing to our clients, and within a month it shot up to the number one most used payment alternative on the website,” stated Akin Alabi, founder of NairabBET.

He said NairaBET, the country’s 2nd most significant wagering firm, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment alternative given that it was included in late 2017.

Paystack was set up by 2 Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early stage funding 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 frenetic Ikeja district of Lagos, said the number of month-to-month transactions it processed rose from about 8,000 in early 2016 to more than 900,000 as of 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 growth.

He said a community of developers had emerged around Paystack, producing software application to incorporate the platform into websites. “We have seen a development in that community and they have actually brought us along,” said Quartey.

Paystack stated it enables payments for a number of sports betting firms but also a wide variety of services, from utility services to transfer companies to insurer Axa Mansard.

Flutterwave, co-founded by 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 intending to use sports betting wagering.
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Industry professionals state the sector creates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the company is more established.
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Russia’s 1XBet and Slovakia’s DOXXbet have actually both set up 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 company introduced in 2015.
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NairaBET’s Alabi stated its sales were divided between shops and online but the ease of electronic payments, expense of running shops and ability for consumers to prevent the stigma of gaming in public meant online deals would grow.
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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 due to the fact that numerous consumers still stay unwilling to spend online.

He said the company, with about 60 percent of Nigeria’s sports betting wagering market, had an extensive network. Nigerian wagering stores typically act as social hubs where clients can see soccer totally free of charge while positioning bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans gathered to watch Nigeria’s final 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 started sports betting three 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