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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is booming in soccer-mad Nigeria mainly thanks to payment systems established by homegrown innovation companies that are starting to make online organizations more feasible.

For many years, mobile payments failed to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa money transfers have actually cultivated a culture of cashless payments.

Fear of electronic fraud and sluggish internet speeds have held Nigerian online customers back but sports betting firms states the new, quick digital payment systems underpinning their sites are changing attitudes towards online deals.

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

"The operators will opt for whoever is quicker, whoever can connect to their platform with less issues and glitches," he stated, including that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

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

In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions leapt to 29 million worth 185 billion in 2017 and in the very first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of almost 190 million, rising smart phone usage and falling information costs, Nigeria has long been seen as an excellent opportunity for online organizations - once customers feel comfortable with electronic payments.

Online sports betting firms say that is occurring, though reaching the 10s of millions of Nigerians without access to banking services stays a challenge for pure online merchants.

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

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

"The growth in the variety of fintechs, and the government as an enabler, has assisted business to flourish. These technological shifts encouraged Betway to begin running in Nigeria," he said.
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FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy whipped up by Nigeria's involvement in the World Cup state they are finding the payment systems developed by local startups such as Paystack are showing popular online.

Paystack and another local start-up Flutterwave, both established in 2016, are providing competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform utilized by services operating in Nigeria.

"We added Paystack as one of our payment choices with no fanfare, without announcing to our clients, and within a month it soared to the top most pre-owned payment option on the website," said Akin Alabi, founder of NairabBET.

He said NairaBET, the country's second most significant sports betting company, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option since it was included 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 programme.
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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 number of regular monthly transactions 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," said Emmanuel Quartey, Paystack's head of development.

He said an ecosystem of designers had emerged around Paystack, producing software to integrate the platform into websites. "We have actually seen a development in that neighborhood and they have actually carried us along," said Quartey.

Paystack said it makes it possible for payments for a number of sports betting firms but also a vast array of services, from energy services to carry companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme in addition to endeavor 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 accompanied the arrival of foreign financiers intending to use sports betting wagering.

Industry professionals say the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the company 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 led the pattern, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi stated its sales were divided in between shops and online but the ease of electronic payments, cost of running shops and ability for clients to prevent the stigma of gambling in public implied online deals would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least because many clients still stay hesitant to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting stores often function as social centers where customers can watch soccer totally free of charge while placing bets.

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

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

"Since I have been playing I have 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; editing by David Clarke)
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