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By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting wagering is flourishing in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology companies that are starting to make online companies more feasible.
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For many years, mobile payments stopped working to remove 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 scams and slow web speeds have held Nigerian online consumers back but sports betting companies states the new, fast digital payment systems underpinning their sites are changing mindsets towards online transactions.

“We have actually seen substantial development in the number of payment solutions that are readily available. All that is definitely altering the video gaming area,” said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria’s commercial capital.

“The operators will opt for whoever is much faster, whoever can connect to their platform with less problems and glitches,” he stated, 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 main 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 nearly 10 million worth 61 billion.

With a young population of nearly 190 million, rising cellphone usage and falling information costs, Nigeria has long been seen as a fantastic chance for online companies - once customers feel comfortable 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 sports betting firm Betway opened its 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 growth in the number of fintechs, and the government as an enabler, has actually helped business to thrive. These technological shifts encouraged Betway to start running in Nigeria,” he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer craze worked up by Nigeria’s participation in the World Cup say they are finding the payment systems developed by regional startups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are supplying competitors for Nigeria’s Interswitch which was set up in 2002 and was the primary platform used by businesses operating in Nigeria.

“We included Paystack as one of our payment choices without any excitement, without revealing to our clients, and within a month it shot up to the top most used payment choice on the site,” said Akin Alabi, creator of NairabBET.

He stated NairaBET, the country’s second most significant wagering firm, now had 2 million routine customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option given that it was added in late 2017.

Paystack was set up by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early stage financing 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, said the number of regular monthly transactions it processed increased 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 said an ecosystem of designers had emerged around Paystack, creating software to integrate the platform into sites. “We have seen a growth in that community and they have brought us along,” stated Quartey.

Paystack stated it enables payments for a number of wagering firms however likewise a wide variety of services, from utility services to carry companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme in addition to endeavor capitalists 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 wanting to take advantage of sports betting.

Industry specialists say 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 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.
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NairaBET’s Alabi said its sales were split between shops and online but the ease of electronic payments, expense of running shops and ability for customers to prevent the preconception of gambling in online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least due to the fact that numerous clients still stay hesitant to spend online.

He stated the company, with about 60 percent of Nigeria’s sports betting market, had an extensive network. Nigerian wagering stores frequently serve as social centers where clients can see soccer complimentary of charge while placing bets.
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At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to see Nigeria’s last warm up game before the World Cup.

Richard Onuka, a factory employee who earns 25,000 naira a month, was focused on a TV screen inside. He said he began gambling three months ago and bets as much as 1,000 naira a day.

“Since I have actually been playing I have actually not won anything but I believe that a person day I will win,” stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos