By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting wagering is booming in soccer-mad Nigeria largely thanks to payment systems developed by homegrown innovation firms that are starting to make online companies more viable.

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 promoted a culture of cashless payments.

Fear of electronic fraud and slow web speeds have held Nigerian online customers back but sports betting firms says the brand-new, fast digital payment systems underpinning their websites are altering mindsets towards online deals.

"We have seen significant growth in the number of payment solutions that are available. All that is absolutely altering the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video 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 problems," he said, including that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That development has been matched by an increase in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central bank and certified banks.
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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 almost 10 million worth 61 billion.

With a young population of nearly 190 million, rising cellphone usage and falling data costs, Nigeria has actually long been seen as a great chance for online services - once consumers feel comfy with electronic payments.

Online gaming firms say that is occurring, though reaching the 10s of millions of Nigerians without access to banking services remains a challenge for pure online retailers.

British online sports betting firm Betway opened its first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.

"There is a gradual shift to online now, that is where the market is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the variety of fintechs, and the government as an enabler, has assisted the service to grow. These technological shifts encouraged Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy worked up by Nigeria's participation worldwide Cup state they are the payment systems created by regional start-ups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are offering competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform used by companies operating in Nigeria.

"We included Paystack as one of our payment choices without any excitement, without announcing to our consumers, and within a month it soared to the number one most used payment option on the site," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's 2nd most significant sports betting company, 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 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got early stage 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 frenetic Ikeja district of Lagos, stated the variety of regular 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 each and every single month," stated Emmanuel Quartey, Paystack's head of development.

He stated an ecosystem of designers had emerged around Paystack, creating software to integrate the platform into websites. "We have actually seen a development in that neighborhood and they have actually brought us along," said Quartey.

Paystack stated it allows payments for a variety of sports betting companies but likewise a vast array of services, from energy services to transport companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with 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 financiers wanting to use sports betting.

Industry specialists state the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the company is more established.
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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 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 but the ease of electronic payments, cost of running shops and capability for customers to avoid the stigma of gaming in public indicated online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least since lots of customers still remain unwilling to invest online.

He said the business, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian wagering stores often act as social hubs where consumers can see soccer free of charge while putting bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans gathered to watch Nigeria's final heat up game before the World Cup.
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Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a TV screen inside. He said he began sports betting three months earlier and bets approximately 1,000 naira a day.

"Since I have been playing I have 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; modifying by David Clarke)