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 technology companies that are starting to make online businesses more feasible.
For several years, mobile payments stopped working to take off in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa cash transfers have actually promoted a culture of cashless payments.
Fear of electronic scams and slow web speeds have held Nigerian online customers back but sports betting companies states the brand-new, quick digital payment systems underpinning their sites are altering mindsets towards online deals.
"We have seen substantial growth in the variety of payment services that are offered. All that is certainly altering the gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.
"The operators will go with whoever is much faster, whoever can connect to their platform with less problems and glitches," he said, 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 main 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 first quarter of 2018 there were nearly 10 million worth 61 billion.
With a young population of almost 190 million, rising cellphone use and falling information expenses, Nigeria has long been seen as an excellent opportunity for online organizations - once customers feel comfortable with electronic payments.
Online gambling companies state that is happening, though reaching the tens of millions of Nigerians without access to banking services stays a challenge for pure online merchants.
British online wagering firm Betway opened its first African organization 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 manager Lere Awokoya said.
"The development in the number of fintechs, and the federal government as an enabler, has actually helped business to prosper. These technological shifts motivated Betway to start running in Nigeria," he stated.
FINTECH COMPETITION
sports betting firms capitalizing the soccer craze worked up by Nigeria's involvement in the World Cup say they are finding the payment systems produced by regional startups such as Paystack are showing popular online.
Paystack and another local 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 operating in Nigeria.
"We included Paystack as one of our payment choices without any excitement, without revealing to our customers, and within a month it soared to the primary most pre-owned payment choice on the website," stated Akin Alabi, founder of NairabBET.
He said NairaBET, the country's 2nd biggest wagering company, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option considering that it was included late 2017.
Paystack was set up by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early phase financing 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, said the variety of monthly transactions 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 single month," stated Emmanuel Quartey, Paystack's head of development.
He stated an ecosystem of developers had emerged around Paystack, creating software to incorporate the platform into websites. "We have seen a development in that community and they have actually carried us along," said Quartey.
Paystack stated it allows payments for a variety of sports betting companies however also a large range of businesses, from energy services to transfer business 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 in 2015.
FOREIGN INVESTMENT
Shifts in Nigeria's payment culture have actually accompanied the arrival of foreign financiers wanting to take advantage of sports betting.
Industry specialists state the sector produces about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where business is more established.
Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last two years while Italy's Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian company introduced in 2015.
NairaBET's Alabi said its sales were divided between stores and online however the ease of electronic payments, expense of running stores and ability for customers to avoid the stigma of sports betting in public suggested online transactions would grow.
But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least since many consumers still stay reluctant to invest online.
He stated the company, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting shops frequently act as social centers where consumers can see soccer free of charge while putting bets.
At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans gathered to see Nigeria's final warm 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 said he began gambling 3 months ago and bets up to 1,000 naira a day.
"Since I have actually been playing I have not won anything however I believe 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)
