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By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology companies that are starting to make online services more viable.

For years, failed to take off in Nigeria as they have in countries such as Kenya, where Safaricom’s M-Pesa cash transfers have actually fostered a culture of cashless payments.

Fear of electronic fraud and slow web speeds have actually held Nigerian online consumers back but sports betting companies says the brand-new, quick digital payment systems underpinning their websites are changing attitudes towards online transactions.

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

“The operators will opt for whoever is faster, whoever can link to their platform with less issues and glitches,” he stated, adding that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main bank and licensed banks.

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

With a young population of nearly 190 million, rising cellphone use and falling information expenses, Nigeria has long been seen as an excellent opportunity for online businesses - once consumers feel comfortable with electronic payments.

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

British online sports betting company Betway opened its very first African organization 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 market is going,” Betway’s Nigeria manager Lere Awokoya said.
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“The development in the variety of fintechs, and the government as an enabler, has actually helped business to grow. These technological shifts encouraged Betway to begin operating in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy worked up by Nigeria’s involvement on the planet Cup say they are discovering the payment systems created by regional start-ups such as Paystack are proving 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 used by organizations operating in Nigeria.

“We included Paystack as one of our payment options with no fanfare, without revealing to our consumers, and within a month it shot up to the primary most used payment alternative on the site,” said Akin Alabi, founder of NairabBET.

He said NairaBET, the nation’s 2nd greatest wagering firm, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative considering that it was included late 2017.

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

In December 2016, it raised $1.3 million from financiers consisting of China’s Tencent and Comcast Ventures in the United States.
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Paystack, based in the frenetic Ikeja district of Lagos, said the number of month-to-month transactions it processed rose 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 month,” said Emmanuel Quartey, Paystack’s head of growth.

He said an ecosystem of developers had actually emerged around Paystack, creating software application to incorporate the platform into sites. “We have seen a growth in that neighborhood and they have actually brought us along,” said Quartey.

Paystack said it allows payments for a variety of wagering companies however also a vast array of organizations, from utility services to transfer companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme as well as 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 coincided with the arrival of foreign financiers wishing to take advantage of sports betting.

Industry experts state the sector creates 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 pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET’s Alabi stated its sales were split in between stores and online but the ease of electronic payments, cost of running shops and capability for clients to avoid the stigma of gambling in public implied online deals would grow.
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But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a shop network, not least because many customers still remain reluctant to invest online.

He stated the company, with about 60 percent of Nigeria’s sports betting market, had a comprehensive network. Nigerian sports betting shops often function as social hubs where consumers can see soccer free of charge while placing bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to watch 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 TV screen inside. He said he began sports betting 3 months earlier and bets approximately 1,000 naira a day.

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