By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting wagering is booming in soccer-mad Nigeria largely thanks to payment systems established by homegrown innovation companies that are beginning to make online companies more viable.
For many years, mobile payments failed to remove in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa cash transfers have promoted a culture of cashless payments.
Fear of electronic fraud and sluggish internet speeds have actually held Nigerian online consumers back however sports betting companies states the brand-new, fast digital payment systems underpinning their sites are altering attitudes towards online transactions.
"We have seen substantial development in the number of payment options that are available. All that is absolutely altering the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.
"The operators will choose whoever is faster, whoever can link to their platform with less concerns and glitches," he said, including 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 licensed 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 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 data costs, Nigeria has long been viewed as an excellent opportunity for online businesses - once consumers feel comfy with electronic payments.
Online sports betting firms state that is happening, though reaching the 10s of millions of Nigerians without access to banking services remains an obstacle for pure online sellers.
British online wagering firm Betway opened its first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced 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 growth in the number of fintechs, and the government as an enabler, has assisted business to prosper. These technological shifts encouraged Betway to start operating in Nigeria," he said.
FINTECH COMPETITION
sports betting companies capitalizing the soccer craze whipped up by Nigeria's involvement on the planet Cup state they are finding the payment systems produced by local start-ups such as Paystack are showing popular online.
Paystack and another local start-up Flutterwave, both established in 2016, are supplying competitors for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by companies operating in Nigeria.
"We added Paystack as one of our payment alternatives with no excitement, without revealing to our consumers, and within a month it soared to the number one most used payment alternative on the site," said Akin Alabi, founder of NairabBET.
He said NairaBET, the nation's second biggest sports betting company, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option since it was included in late 2017.
Paystack was established by 2 Nigerian computer system science 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 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 month-to-month 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 month," said Emmanuel Quartey, Paystack's head of growth.
He stated an ecosystem of developers had actually emerged around Paystack, developing software to incorporate the platform into sites. "We have actually seen a development because community and they have brought us along," stated Quartey.
Paystack said it makes it possible for payments for a variety of wagering companies but also a wide variety of organizations, from utility services to carry companies to insurance provider Axa Mansard.
Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program in addition to 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 corresponded with the arrival of foreign investors intending to take advantage of sports betting wagering.
Industry experts say the sector produces 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 both set up in Nigeria in the last two years while Italy's Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm released in 2015.
NairaBET's Alabi said its sales were divided between shops and online however the ease of electronic payments, cost of running stores and ability for clients to avoid the stigma of gambling in public meant online transactions would grow.
But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a store network, not least due to the fact that many customers still stay unwilling to spend online.
He said the business, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian wagering stores frequently act as social centers where consumers can view soccer totally free of charge while putting bets.
At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans collected to watch Nigeria's final warm up game before the World Cup.
Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He stated he started sports betting 3 months ago and bets as much as 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; modifying by David Clarke)
