By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting wagering is expanding in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation companies that are starting to make online companies more feasible.
For 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 cultivated a culture of cashless payments.
Fear of electronic scams and sluggish internet speeds have held Nigerian online consumers back however wagering firms states the brand-new, fast digital payment systems underpinning their websites are changing attitudes towards online transactions.
"We have seen considerable development in the variety of payment services that are offered. All that is certainly changing the video gaming space," 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 problems and glitches," he stated, including that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.
That growth 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 certified 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 very first quarter of 2018 there were almost 10 million worth 61 billion.
With a young population of nearly 190 million, increasing cellphone usage and falling information expenses, Nigeria has long been seen as an excellent chance for online services - once customers feel comfortable with electronic payments.
Online gambling firms say that is occurring, though reaching the 10s of millions of Nigerians without access to banking services stays a difficulty for pure online merchants.
British online wagering firm Betway opened its first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.
"There is a progressive shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya said.
"The growth in the variety of fintechs, and the federal government as an enabler, has actually helped business to flourish. These technological shifts motivated Betway to start running in Nigeria," he stated.
FINTECH COMPETITION
sports betting companies cashing in on the soccer frenzy worked up by Nigeria's participation worldwide Cup state they are finding the payment systems created by local start-ups such as Paystack are proving popular online.
Paystack and another regional start-up Flutterwave, both founded in 2016, are supplying competition for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by services running in Nigeria.
"We included Paystack as one of our payment choices with no excitement, without revealing to our customers, and within a month it shot up to the number one most secondhand payment option on the site," said Akin Alabi, founder of NairabBET.
He stated NairaBET, the nation's 2nd most significant sports betting company, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice given that it was included late 2017.
Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase financing 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 mad Ikeja district of Lagos, stated the number of regular 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 month," said Emmanuel Quartey, Paystack's head of development.
He said an environment of designers had actually emerged around Paystack, developing software application to integrate the platform into websites. "We have seen a growth in that neighborhood and they have carried us along," stated Quartey.
Paystack said it makes it possible for payments for a variety of sports betting companies however also a wide variety of businesses, from utility services to transport business to insurer Axa Mansard.
Flutterwave, co-founded by Nigerian entrepreneur 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 accompanied the arrival of foreign investors wishing to take advantage of sports betting wagering.
Industry specialists 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 was ahead of the pattern, taking a half stake in market leader Bet9ja when the Nigerian firm released in 2015.
NairaBET's Alabi stated its sales were split in between shops and online but the ease of electronic payments, cost of running stores and ability for clients to prevent the preconception of sports betting in public indicated online transactions would grow.
But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was essential to have a store network, not least because lots of consumers still stay unwilling to spend online.
He said the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering shops frequently act as social hubs where consumers can see soccer totally free of charge while placing bets.
At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans gathered to see Nigeria's last heat up video game before the World Cup.
Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a TV screen inside. He stated he started gambling 3 months back and bets up to 1,000 naira a day.
"Since I have actually been playing I have not won anything but I believe 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)