By Alexis Akwagyiram and Didi Akinyelure

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

For years, mobile payments stopped working to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa money transfers have actually fostered a culture of cashless payments.

Fear of electronic scams and slow web speeds have actually held Nigerian online customers back but sports betting companies states the brand-new, fast digital payment systems underpinning their websites are altering mindsets towards online transactions.
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"We have seen substantial development in the variety of payment options that are available. All that is certainly altering the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will choose whoever is much faster, whoever can link to their platform with less issues and glitches," he said, including that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has actually been matched by a rise in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central 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 nearly 10 million worth 61 billion.

With a young population of almost 190 million, increasing cellphone usage and falling information costs, Nigeria has long been viewed as a great chance for online services - once customers feel comfortable with electronic payments.

Online gambling companies say that is happening, though reaching the 10s of countless Nigerians without access to banking services stays a challenge for pure online retailers.

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

"There is a progressive shift to online now, that is where the industry is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the variety of fintechs, and the government as an enabler, has assisted the organization to flourish. These technological shifts encouraged Betway to begin operating in Nigeria," he stated.

COMPETITION

sports betting firms cashing in on the soccer craze worked up by Nigeria's participation worldwide Cup state they are discovering the payment systems created by local startups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both established in 2016, are providing competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform used by services running in Nigeria.
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"We included Paystack as one of our payment alternatives without any fanfare, without announcing to our consumers, and within a month it soared to the top most used payment alternative on the site," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's 2nd biggest sports betting company, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was included in late 2017.

Paystack was set up by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early stage 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 frenetic Ikeja district of Lagos, stated the variety of month-to-month 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 each and every single month," stated Emmanuel Quartey, Paystack's head of development.

He stated an environment of designers had actually emerged around Paystack, developing software to integrate 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 variety of sports betting firms however also a vast array of organizations, from utility services to carry companies to insurer 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 in 2015.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have actually accompanied the arrival of foreign investors wishing to use sports betting.

Industry experts state the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the business is more developed.
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Russia's 1XBet and Slovakia's DOXXbet have both established 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 released in 2015.

NairaBET's Alabi stated its sales were split between stores and online but the ease of electronic payments, expense of running shops and capability 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 very important to have a store network, not least due to the fact that lots of customers still remain hesitant to spend online.

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering stores often serve as social centers where consumers can enjoy soccer complimentary of charge while placing bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans gathered to view Nigeria's final heat up video game before the World Cup.
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Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a television screen inside. He said he started gambling 3 months earlier and bets up to 1,000 naira a day.

"Since I have actually been playing I have not won anything but I believe that a person day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos