By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting wagering is booming in soccer-mad Nigeria largely thanks to payment systems established by homegrown innovation firms that are starting to make online services more viable.
For years, mobile payments stopped working to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have actually cultivated a culture of cashless payments.
Fear of electronic fraud and slow web speeds have held Nigerian online consumers back however sports betting companies states the new, fast digital payment systems underpinning their websites are changing mindsets towards online deals.
"We have seen considerable development in the variety of payment options that are available. All that is absolutely altering the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.
"The operators will opt for whoever is faster, whoever can link to their platform with less problems and problems," he stated, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.
That growth has actually been matched by an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and licensed banks.
In 2016, there were 14 million web payments worth a total 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 almost 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 viewed as a great chance for online businesses - once customers feel comfortable with electronic payments.
Online gaming companies state that is happening, though reaching the tens of millions of Nigerians without access to banking services stays an obstacle 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 launched 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 said.
"The growth in the variety of fintechs, and the federal government as an enabler, has helped the business to grow. These technological shifts motivated Betway to start running in Nigeria," he stated.
FINTECH COMPETITION
sports betting companies capitalizing the soccer craze whipped up by Nigeria's involvement worldwide Cup say they are discovering the payment systems created by regional startups such as Paystack are proving popular online.
Paystack and another regional startup Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was established in 2002 and was the primary platform used by organizations running in Nigeria.
"We included Paystack as one of our payment options without any fanfare, without announcing to our consumers, and within a month it soared to the number one most pre-owned payment choice on the website," said Akin Alabi, founder of NairabBET.
He stated NairaBET, the country's second most significant sports betting company, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice considering that it was included in 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 including China's Tencent and Comcast Ventures in the United States.
Paystack, based in the mad Ikeja district of Lagos, stated the number of month-to-month deals 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 growth.
He stated an environment of designers had emerged around Paystack, producing software application to integrate the platform into websites. "We have actually seen a development in that community and they have brought us along," said Quartey.
Paystack stated it allows payments for a number of wagering companies however also a vast array of businesses, from energy services to transfer business to insurance company Axa Mansard.
Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program along with venture capitalists Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million in 2015.
FOREIGN INVESTMENT
Shifts in Nigeria's payment culture have actually accompanied the arrival of foreign investors hoping to take advantage of sports betting.
Industry experts state the sector generates 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 established in Nigeria in the last 2 years while Italy's Goldbet was ahead of the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.
NairaBET's Alabi said its sales were split in between shops and online however the ease of electronic payments, cost of running shops and ability for clients to avoid the stigma of sports betting in public meant online transactions would grow.
But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was crucial to have a store network, not least due to the fact that lots of clients still stay hesitant to invest online.
He said the business, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting shops often serve as social centers where customers can see soccer free of charge while positioning bets.
At a BetKing hall deep inside the dynamic Oshodi market in Lagos, lots of soccer fans gathered to see Nigeria's final heat up video 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 three months back and bets approximately 1,000 naira a day.
"Since I have been playing I have not won anything however 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)
