By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is expanding in soccer-mad Nigeria largely thanks to payment systems developed by homegrown technology firms that are starting to make online companies more viable.

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

Fear of electronic fraud and sluggish web speeds have actually held Nigerian online customers back however sports betting firms says the new, fast digital payment systems underpinning their websites are altering mindsets towards online deals.

“We have seen significant growth in the number of payment services that are readily available. All that is definitely changing the gaming space,” said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s commercial capital.

“The operators will opt for whoever is quicker, whoever can connect to their platform with less problems 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 growth has been matched by a rise in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central 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 almost 190 million, increasing cellphone usage and falling information costs, Nigeria has actually long been viewed as an excellent chance for online organizations - once customers feel comfortable with electronic payments.

Online gaming firms say that is happening, though reaching the 10s of countless Nigerians without access to banking services remains an obstacle for pure online merchants.
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British online sports betting firm Betway opened its very first African service 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 market is going,” Betway’s Nigeria supervisor Lere Awokoya stated.

“The development in the number of fintechs, and the federal government as an enabler, has actually assisted the company to grow. These technological shifts motivated Betway to start running in Nigeria,” he said.

FINTECH COMPETITION

sports betting firms cashing in on the soccer craze worked up by Nigeria’s involvement in the World Cup say they are finding the payment systems created by local startups such as Paystack are showing popular online.
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Paystack and another regional start-up Flutterwave, both established in 2016, are supplying competition for Nigeria’s Interswitch which was set up in 2002 and was the main platform utilized by businesses running in Nigeria.

“We added Paystack as one of our payment alternatives with no fanfare, without announcing to our customers, and within a month it soared to the top most pre-owned payment alternative on the website,” stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the country’s 2nd most significant sports betting company, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice given that it was included late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase funding in Silicon Valley’s Y-Combinator programme.

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 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 every single month,” stated Emmanuel Quartey, Paystack’s head of growth.

He stated a community of developers had actually emerged around Paystack, developing software application to integrate the platform into websites. “We have seen a development because neighborhood and they have brought us along,” stated Quartey.

Paystack said it enables payments for a number of wagering companies but also a vast array of organizations, from utility services to carry business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme along with investor 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 accompanied the arrival of foreign financiers wanting to use sports betting.

Industry specialists state the sector generates about $1 billion a year and is most 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 led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

Alabi said its sales were split in between stores and online however the ease of electronic payments, cost of running shops and ability for clients to prevent the preconception of gambling in public implied online deals would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a store network, not least because numerous customers still stay reluctant to spend online.

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

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, lots 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 earns 25,000 naira a month, was focused on a TV screen inside. He said he started sports betting 3 months ago and bets up to 1,000 naira a day.

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