By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting wagering is growing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology firms that are beginning to make online businesses more feasible.
For many years, mobile payments stopped working to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa money transfers have cultivated a culture of cashless payments.
Fear of electronic scams and sluggish web speeds have actually held Nigerian online customers back but wagering firms states the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online transactions.
"We have seen significant growth in the variety of payment options that are offered. All that is definitely changing the gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.
"The operators will choose whoever is faster, whoever can link to their platform with less problems and problems," he said, including that taxes from sports betting wagering 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 central bank and licensed banks.
In 2016, there were 14 million web payments worth a total 132 billion naira ($420 million). Transactions leapt to 29 million worth 185 billion in 2017 and in the first quarter of 2018 there were nearly 10 million worth 61 billion.
With a young population of almost 190 million, increasing cellphone use and falling information costs, Nigeria has long been viewed as a fantastic opportunity for online organizations - once consumers feel comfortable with electronic payments.
Online gaming companies state that is taking place, though reaching the 10s of millions of Nigerians without access to banking services remains an obstacle for pure online merchants.
British online sports betting firm Betway opened its very 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 industry is going," Betway's Nigeria supervisor Lere Awokoya stated.
"The development in the variety of fintechs, and the government as an enabler, has helped business to grow. These technological shifts encouraged Betway to begin running in Nigeria," he said.
FINTECH COMPETITION
sports betting firms cashing in on the soccer craze worked up by Nigeria's involvement in the World Cup state they are finding the payment systems created by regional start-ups such as Paystack are showing popular online.
Paystack and another regional start-up Flutterwave, both founded in 2016, are providing competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform utilized by businesses operating in Nigeria.
"We included Paystack as one of our payment choices without any excitement, without announcing to our clients, and within a month it shot up to the top most secondhand payment option on the website," stated Akin Alabi, creator of NairabBET.
He said NairaBET, the country's second most significant wagering company, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice given that it was added in late 2017.
Paystack was set up by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage funding in Silicon Valley's Y-Combinator programme.
In December 2016, it raised $1.3 million from investors including China's Tencent and Comcast Ventures in the United States.
Paystack, based in the frenetic Ikeja district of Lagos, said the number 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 each and every single month," stated Emmanuel Quartey, Paystack's head of growth.
He stated a community of developers had emerged around Paystack, producing software application to incorporate the platform into websites. "We have seen a development in that neighborhood and they have brought us along," stated Quartey.
Paystack said it allows payments for a variety of wagering firms however also a broad range of services, from energy services to transfer companies to insurance provider Axa Mansard.
Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme along with 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 accompanied the arrival of foreign investors wishing to take advantage of sports betting wagering.
Industry experts say 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 actually both established in Nigeria in the last two years while Italy's Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company launched in 2015.
NairaBET's Alabi stated its sales were split in between stores and online but the ease of electronic payments, expense of running shops and capability for customers to prevent the stigma of sports betting in public indicated online deals would grow.
But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a store network, not least because numerous clients still remain unwilling to spend online.
He said the business, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting shops frequently act as social hubs where clients can see soccer complimentary of charge while positioning bets.
At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans collected to enjoy Nigeria's final heat up game before the World Cup.
Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a television screen inside. He said he started sports betting 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; modifying by David Clarke)
