By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is expanding in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown innovation firms that are starting to make online services more practical.

For many years, mobile payments failed 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 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 considerable growth in the number of payment solutions that are offered. All that is certainly altering the gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.
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"The operators will opt for whoever is quicker, whoever can link to their platform with less concerns and glitches," he said, adding that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development has actually been matched by an increase in web payments, according to information 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of almost 190 million, rising smart phone use and falling information costs, Nigeria has long been seen as a terrific opportunity for online companies - once consumers feel comfortable with electronic payments.

Online gaming firms say that is taking place, though reaching the 10s of countless Nigerians without access to banking services stays a difficulty for pure online merchants.

British online wagering firm Betway opened its very first African company 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 market is going," Betway's Nigeria manager Lere Awokoya stated.

"The development in the number of fintechs, and the federal government as an enabler, has helped business to thrive. These technological shifts motivated Betway to start running in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy whipped up by Nigeria's participation on the planet Cup say they are finding the payment systems created by regional startups such as Paystack are showing popular online.
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Paystack and another local startup Flutterwave, both established in 2016, are supplying competition for Nigeria's Interswitch which was established in 2002 and was the main platform used by companies operating in Nigeria.

"We included Paystack as one of our payment choices with no excitement, without announcing to our customers, and within a month it shot up to the top most secondhand payment choice on the website," said Akin Alabi, creator of NairabBET.

He said NairaBET, the country's 2nd most significant sports betting firm, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment alternative given that it was included in late 2017.

Paystack was set up by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early phase funding 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 variety of month-to-month 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 growth.

He stated a community of designers had emerged around Paystack, producing software application to integrate the platform into websites. "We have actually seen a growth because community and they have actually brought us along," stated Quartey.

Paystack said it makes it possible for payments for a number of wagering companies but likewise a large range of organizations, from utility services to carry 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 coincided with the arrival of foreign investors hoping to tap into sports betting.

Industry specialists 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 established.

Russia's 1XBet and Slovakia's DOXXbet have both established in Nigeria in the last two years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET's Alabi said its sales were split in between stores and online however the ease of electronic payments, expense of running shops and ability for clients to prevent the preconception of gambling in public suggested online transactions would grow.

But despite advances in digital payments, Kunle Soname and co-founder of Bet9ja - said it was essential to have a store network, not least since many clients still stay reluctant to spend online.
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He stated the company, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian wagering stores often serve as social centers where clients can view soccer free of charge while placing bets.

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a television screen inside. He said he started sports betting three months earlier and bets up to 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," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos