By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting wagering is expanding in soccer-mad Nigeria mostly thanks to payment systems established by homegrown innovation firms that are beginning to make online services more feasible.
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For many years, mobile payments stopped working to remove in Nigeria as they have in countries such as Kenya, where Safaricom’s M-Pesa money transfers have promoted a culture of cashless payments.

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

“We have seen substantial development in the variety of payment solutions that are readily available. All that is definitely changing 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 faster, whoever can connect to their platform with less concerns and glitches,” he said, adding 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 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 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 nearly 10 million worth 61 billion.

With a young population of nearly 190 million, increasing cellphone use and falling data costs, Nigeria has long been seen as an excellent chance for online businesses - once customers feel comfortable with electronic payments.

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

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

“There is a steady shift to online now, that is where the industry is going,” Betway’s Nigeria manager Lere Awokoya said.

“The development in the variety of fintechs, and the government as an enabler, has helped the business to flourish. These technological shifts motivated Betway to begin running in Nigeria,” he said.

FINTECH COMPETITION

sports betting firms cashing in on the soccer craze worked up by Nigeria’s participation in the World Cup say they are discovering the payment systems developed by regional start-ups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both established in 2016, are offering competition for Nigeria’s Interswitch which was set up in 2002 and was the main platform utilized by businesses operating in Nigeria.

“We included Paystack as one of our payment options without any excitement, without revealing to our consumers, and within a month it soared to the number one most used payment choice on the website,” stated Akin Alabi, founder of NairabBET.

He said NairaBET, the country’s second biggest wagering company, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment choice since it was added in late 2017.

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage financing in Silicon Valley’s Y-Combinator program.

In December 2016, it raised $1.3 million from financiers including China’s Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, said the number of regular monthly deals it processed increased 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 every single month,” stated Emmanuel Quartey, Paystack’s head of growth.

He stated an environment of designers had actually emerged around Paystack, creating software application to integrate the platform into websites. “We have actually seen a development in that neighborhood and they have actually brought us along,” stated Quartey.

Paystack stated it makes it possible for payments for a number of wagering companies but also a wide variety of companies, from utility services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Iyinoluwa Aboyeji, is also backed by the Y-Combinator program along with endeavor 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 actually coincided with the arrival of foreign financiers wanting to take advantage of sports betting wagering.

Industry experts say the sector creates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business is more developed.

Russia’s 1XBet and Slovakia’s DOXXbet have both set up 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 company launched in 2015.

NairaBET’s Alabi stated its sales were divided in between shops and online however the ease of electronic payments, expense of running shops and capability for customers to avoid the preconception of gaming in public implied online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a shop network, not least due to the fact that many clients still remain reluctant to invest online.

He said the business, with about 60 percent of Nigeria’s sports betting market, had a comprehensive network. Nigerian wagering shops frequently serve as social hubs where customers can see soccer free of charge while positioning bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans collected to enjoy Nigeria’s last warm up game before the World Cup.

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a television screen inside. He stated he began sports betting 3 months ago and bets approximately 1,000 naira a day.

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