By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting is expanding in soccer-mad Nigeria mostly thanks to payment systems established by homegrown technology companies that are beginning to make online businesses more viable.
For several years, mobile payments failed to remove in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have promoted a culture of cashless payments.
Fear of electronic scams and sluggish internet speeds have held Nigerian online customers back however wagering companies says the brand-new, quick digital payment systems underpinning their websites are altering attitudes towards online transactions.
"We have seen considerable development in the variety of payment solutions that are offered. All that is certainly changing the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.
"The operators will opt for whoever is faster, whoever can connect to their platform with less concerns and problems," he stated, adding that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.
That growth has 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 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.
With a young population of almost 190 million, increasing mobile phone usage and falling information costs, Nigeria has actually long been viewed as an excellent opportunity for online companies - once customers feel comfy with electronic payments.
Online gambling companies state that is occurring, though reaching the tens of countless Nigerians without access to banking services remains a difficulty for pure online retailers.
British online wagering company Betway opened its first African service in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released in Nigeria in January.
"There is a progressive 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 government as an enabler, has actually assisted business to prosper. These technological shifts motivated Betway to begin running in Nigeria," he said.
FINTECH COMPETITION
sports betting companies cashing in on the soccer craze worked up by Nigeria's involvement 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 local start-up Flutterwave, both established in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform utilized by organizations running in Nigeria.
"We added Paystack as one of our payment alternatives without any excitement, without announcing to our consumers, and within a month it shot up to the primary most used payment option on the site," stated Akin Alabi, founder of NairabBET.
He said NairaBET, the country's 2nd biggest wagering company, now had 2 million regular clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option because it was included late 2017.
Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase funding in Silicon Valley's Y-Combinator programme.
In December 2016, it raised $1.3 million from investors consisting of China's Tencent and Comcast Ventures in the United States.
Paystack, based in the frenetic Ikeja district of Lagos, stated the variety of regular monthly deals 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 said a community of designers had emerged around Paystack, developing software application to incorporate the platform into sites. "We have seen a development in that neighborhood and they have actually brought us along," said Quartey.
Paystack stated it allows payments for a variety of sports betting companies however likewise a wide variety of organizations, from utility services to transfer business to insurer Axa Mansard.
Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme 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 actually coincided with the arrival of foreign financiers wishing to tap into sports betting.
Industry professionals say the sector produces 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 two years while Italy's Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.
NairaBET's 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 avoid the preconception of sports betting in public suggested online transactions would grow.
But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least since many clients still remain reluctant to spend online.
He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian wagering shops typically function as social centers where customers can enjoy soccer complimentary of charge while placing bets.
At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans collected to view Nigeria's final warm up video game before the World Cup.
Richard Onuka, a factory employee who earns 25,000 naira a month, was focused on a television 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 but I believe that one day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)