By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting wagering is flourishing in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown technology firms that are beginning to make online services more feasible.
For 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 fraud and sluggish web speeds have held Nigerian online consumers back however sports betting companies states the new, quick digital payment systems underpinning their sites are changing attitudes towards online deals.
"We have actually seen significant growth in the variety of payment services that are readily available. All that is absolutely changing the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.
"The operators will choose whoever is much faster, whoever can link to their platform with less issues and glitches," he said, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.
That development 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 licensed banks.
In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions jumped 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, increasing cellphone use and falling data expenses, Nigeria has actually long been viewed as a terrific opportunity for online businesses - once customers feel comfortable with electronic payments.
Online gaming companies say that is taking place, though reaching the tens of countless Nigerians without access to banking services remains an obstacle for pure online retailers.
British online wagering firm Betway opened its very first African organization 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 supervisor 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 encouraged Betway to begin operating in Nigeria," he said.
FINTECH COMPETITION
sports betting companies capitalizing the soccer craze worked up by Nigeria's participation in the World Cup state they are discovering the payment systems created by local startups such as Paystack are showing popular online.
Paystack and another local startup Flutterwave, both established in 2016, are providing competition for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by organizations operating in Nigeria.
"We included Paystack as one of our payment choices without any fanfare, without revealing to our consumers, and within a month it shot up to the top most pre-owned payment choice on the website," said Akin Alabi, creator of NairabBET.
He stated NairaBET, the nation's second greatest sports betting company, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was included late 2017.
Paystack was set up by two Nigerian computer 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 frenetic Ikeja district of Lagos, stated the variety of monthly deals 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 month," stated Emmanuel Quartey, Paystack's head of development.
He said an environment of designers had emerged around Paystack, developing software to integrate the platform into sites. "We have seen a development because community and they have actually brought us along," said Quartey.
Paystack stated it enables payments for a variety of wagering companies but likewise a wide variety of organizations, from utility services to transport companies to insurance provider Axa Mansard.
Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme 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 accompanied the arrival of foreign investors hoping to take advantage of sports betting wagering.
Industry experts state 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 developed.
Russia's 1XBet and Slovakia's DOXXbet have both established in Nigeria in the last two years while Italy's Goldbet led the trend, taking a 50 percent 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 but the ease of electronic payments, cost of running shops and ability for clients to avoid the preconception of sports betting in public indicated online deals would grow.
But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was crucial to have a store network, not least because lots of customers still remain reluctant to spend online.
He stated the company, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian wagering shops typically act as social centers where clients can enjoy soccer complimentary 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 last heat up video game before the World Cup.
Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a television screen inside. He stated he began gambling three months back and bets as much as 1,000 naira a day.
"Since I have actually been playing I have actually not won anything but 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)
