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By and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation firms that are beginning to make online services more practical.

For years, mobile payments stopped working to take off in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have cultivated a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online customers back however wagering companies states the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online transactions.

"We have actually seen significant development in the variety of payment services that are readily available. All that is definitely altering the video gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

"The operators will opt for whoever is much faster, whoever can link to their platform with less problems and problems," he said, adding that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth has actually been matched by a rise in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve 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 first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, rising mobile phone usage and falling information costs, Nigeria has actually long been viewed as a terrific opportunity for online services - once consumers feel comfy with electronic payments.

Online gambling companies say 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 wagering firm Betway opened its very first African business 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 said.

"The development in the number of fintechs, and the government as an enabler, has actually assisted the company to grow. These technological shifts encouraged Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy worked up by Nigeria's participation in the World Cup state they are finding the payment systems produced by regional startups such as Paystack are proving popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are offering competitors for Nigeria's Interswitch which was established in 2002 and was the main platform utilized by services operating in Nigeria.

"We included Paystack as one of our payment options without any fanfare, without revealing to our clients, and within a month it shot up to the top most used payment option on the site," said Akin Alabi, founder of NairabBET.
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He said NairaBET, the nation's 2nd greatest sports betting firm, now had 2 million routine consumers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option since it was included late 2017.
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Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase funding in Silicon Valley's Y-Combinator program.
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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 variety of 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," stated Emmanuel Quartey, Paystack's head of development.

He stated a community of designers had actually emerged around Paystack, developing software application to incorporate the platform into sites. "We have actually seen a development in that community and they have actually carried us along," stated Quartey.
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Paystack stated it enables payments for a number of wagering firms however likewise a large variety of companies, from energy services to carry business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as 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 investors hoping to use sports betting wagering.

Industry experts state the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the business is more developed.

Russia's 1XBet and Slovakia's DOXXbet have actually both set up 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 firm released in 2015.

NairaBET's Alabi said its sales were divided in between shops and online however the ease of electronic payments, expense of running stores and capability for clients to prevent the preconception 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 - said it was necessary to have a shop network, not least because many customers still stay hesitant to invest online.
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He said the business, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian sports betting stores frequently function as social hubs where customers can view soccer free of charge while putting bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans collected to enjoy Nigeria's final warm up game before the World Cup.

Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He said he began sports betting three months earlier and bets up to 1,000 naira a day.

"Since I have actually been playing I have not won anything however I think that one day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)