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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is booming in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology companies that are starting to make online businesses more feasible.
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For 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 scams and sluggish internet speeds have held Nigerian online customers back however sports betting firms says the brand-new, fast digital payment systems underpinning their sites are changing attitudes towards online deals.

"We have actually seen considerable development in the number of payment solutions that are available. All that is definitely changing the gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.

"The operators will go with whoever is quicker, whoever can connect to their platform with less problems and glitches," he stated, including that taxes from sports betting in Lagos State rose 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 main bank and certified 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 very first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, rising smart phone usage and falling information expenses, Nigeria has actually long been seen as a terrific opportunity for online services - once customers feel comfortable with electronic payments.

Online gaming companies say that is happening, though reaching the tens of countless Nigerians without access to banking services remains a difficulty for pure online merchants.

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

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

"The development in the variety of fintechs, and the federal government as an enabler, has assisted business to flourish. These technological shifts motivated Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze worked up by Nigeria's participation in the World Cup say they are discovering the payment systems created by regional startups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are providing competitors for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by organizations running in .

"We included Paystack as one of our payment alternatives with no fanfare, without announcing to our customers, and within a month it shot up to the top most secondhand payment choice on the website," said Akin Alabi, creator of NairabBET.

He said NairaBET, the country's second most significant wagering company, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option since it was added in late 2017.

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage funding 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 frenetic Ikeja district of Lagos, said the variety of regular monthly transactions it processed increased 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 growth.

He stated an environment of developers had emerged around Paystack, developing software application to integrate the platform into websites. "We have seen a growth in that neighborhood and they have actually brought us along," said Quartey.

Paystack said it makes it possible for payments for a number of wagering firms but likewise a large range of organizations, from energy services to transfer companies to insurance provider Axa Mansard.

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

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 established.

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last 2 years while Italy's Goldbet was ahead of the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi said its sales were split between stores and online but the ease of electronic payments, expense of running stores and ability for consumers to prevent the stigma of gaming in public meant online deals 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 since lots of consumers still stay hesitant to invest online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian wagering stores frequently function as social centers where clients can see soccer totally free of charge while placing bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans collected to view Nigeria's last warm up game before the World Cup.
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Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a TV screen inside. He said he started sports betting three months back and bets approximately 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; modifying by David Clarke)