By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting is booming in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation firms that are beginning to make online organizations more viable.
For years, mobile payments stopped working 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 held Nigerian online customers back but sports betting firms states the new, quick digital payment systems underpinning their websites are altering attitudes towards online transactions.
"We have actually seen substantial growth in the variety of payment solutions that are offered. All that is absolutely altering the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.
"The operators will choose whoever is much faster, whoever can link to their platform with less issues 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 development 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 central 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 use and falling information expenses, Nigeria has actually long been seen as an excellent chance for online businesses - once consumers feel comfortable with electronic payments.
Online sports betting companies say that is occurring, though reaching the tens of countless Nigerians without access to banking services remains a difficulty for pure online merchants.
British online sports betting 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 said.
"The development in the number of fintechs, and the government as an enabler, has assisted the organization to thrive. These technological shifts encouraged Betway to begin running in Nigeria," he stated.
FINTECH COMPETITION
sports betting companies capitalizing the soccer craze whipped up by Nigeria's participation on the planet Cup say they are finding the payment systems developed by local startups such as Paystack are proving popular online.
Paystack and another local start-up Flutterwave, both established in 2016, are providing competitors for Nigeria's Interswitch which was established in 2002 and was the main platform used by organizations operating in Nigeria.
"We added Paystack as one of our payment options without any fanfare, without announcing to our customers, and within a month it soared to the number one most used payment alternative on the site," stated Akin Alabi, founder of NairabBET.
He said NairaBET, the country's 2nd biggest wagering firm, now had 2 million routine consumers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was included late 2017.
Paystack was established by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who got 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.
Paystack, based in the mad Ikeja district of Lagos, said the variety of month-to-month 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," stated Emmanuel Quartey, Paystack's head of growth.
He said an ecosystem of designers had emerged around Paystack, developing software application to integrate the platform into websites. "We have actually seen a growth in that neighborhood and they have brought us along," stated Quartey.
Paystack stated it makes it possible for payments for a variety of sports betting companies but also a large range of organizations, from utility services to carry companies to insurer Axa Mansard.
Flutterwave, co-founded by Nigerian entrepreneur 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 actually coincided with the arrival of foreign financiers hoping to use sports betting.
Industry professionals say 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 actually both established 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 company released in 2015.
NairaBET's Alabi stated its sales were split between stores and online but the ease of electronic payments, cost of running shops and ability for consumers to prevent the preconception of gaming in public meant online deals would grow.
But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was very important to have a store network, not least since numerous clients still stay hesitant to spend online.
He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian wagering stores frequently function as social hubs where clients can watch soccer free 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 last heat up game before the World Cup.
Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a television screen inside. He stated he started gambling 3 months ago and bets approximately 1,000 naira a day.
"Since I have actually been playing I have not won anything but I think that a person day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)