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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 innovation firms that are starting to make online services more feasible.
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For several 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 promoted a culture of cashless payments.

Fear of electronic fraud and sluggish internet speeds have held Nigerian online customers back but sports betting companies says the new, fast digital payment systems underpinning their websites are changing mindsets towards online deals.

“We have seen significant development in the variety of payment solutions that are available. All that is certainly altering the video gaming area,” said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria’s business capital.

“The operators will opt for whoever is faster, whoever can link to their platform with less concerns and glitches,” he said, adding 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 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 leapt to 29 million worth 185 billion in 2017 and in the very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, increasing cellphone usage and falling data expenses, Nigeria has long been viewed as a great opportunity for online organizations - once consumers feel comfortable with electronic payments.

Online sports betting companies state that is taking place, though reaching the tens of countless Nigerians without access to banking services remains a difficulty for pure online retailers.

wagering firm Betway opened its first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced 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 stated.

“The growth in the variety of fintechs, and the federal government as an enabler, has assisted business to grow. These technological shifts motivated Betway to begin running in Nigeria,” he stated.

FINTECH COMPETITION
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sports betting firms capitalizing the soccer craze whipped up by Nigeria’s participation worldwide Cup state they are discovering the payment systems developed by regional start-ups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are providing competition for Nigeria’s Interswitch which was established in 2002 and was the main platform utilized by companies operating in Nigeria.

“We added Paystack as one of our payment alternatives without any excitement, without revealing to our consumers, and within a month it shot up to the primary most pre-owned payment option on the site,” stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country’s second most significant sports betting firm, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option considering that it was included in late 2017.

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage financing 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 mad Ikeja district of Lagos, stated the number of 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 developers had actually emerged around Paystack, developing software to integrate the platform into sites. “We have actually seen a growth in that community and they have carried us along,” said Quartey.

Paystack stated it enables payments for a variety of wagering firms but likewise a vast array of services, from energy services to transfer business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program in addition to venture 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 accompanied the arrival of foreign investors intending to take advantage of sports betting.

Industry professionals 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 led the pattern, taking a half stake in market leader Bet9ja when the Nigerian firm launched in 2015.
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NairaBET’s Alabi said its sales were split in between stores and online however the ease of electronic payments, expense of running shops and ability for customers to prevent the preconception of gaming in public implied online deals would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a shop network, not least due to the fact that lots of consumers still remain hesitant to invest online.

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

At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans collected to watch Nigeria’s final heat up game before the World Cup.
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Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a television screen inside. He stated he began gambling three months earlier and bets approximately 1,000 naira a day.

“Since I have been playing I have actually 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