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By Alexis Akwagyiram and Didi Akinyelure

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

For several years, mobile payments stopped working to remove in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa cash transfers have cultivated a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have held Nigerian online consumers back but sports betting companies states the new, fast digital payment systems underpinning their sites are changing attitudes towards online transactions.

"We have actually seen considerable development in the variety of payment services that are offered. All that is definitely changing the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

"The operators will opt for whoever is faster, whoever can connect to their platform with less concerns and problems," he said, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.
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That growth has actually been matched by a rise 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 almost 10 million worth 61 billion.

With a young population of nearly 190 million, rising mobile phone use and falling data costs, Nigeria has long been viewed as a terrific opportunity for online organizations - once consumers feel comfortable with electronic payments.

Online sports betting companies say that is happening, though reaching the tens of millions of Nigerians without access to banking services stays a difficulty for pure online merchants.

British online wagering company Betway opened its very first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced in Nigeria in January.

"There is a gradual shift to online now, that is where the industry is going," Betway's Nigeria supervisor Lere Awokoya stated.
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"The growth in the variety of fintechs, and the government as an enabler, has assisted business to thrive. These technological shifts encouraged Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze worked up by Nigeria's involvement in the World Cup state they are finding the payment systems produced by regional start-ups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are supplying competition for Nigeria's Interswitch which was established in 2002 and was the main platform used by organizations running in Nigeria.

"We added 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 used payment choice on the website," stated Akin Alabi, founder of NairabBET.
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He stated NairaBET, the nation's second biggest sports betting firm, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment choice since it was included in late 2017.

Paystack was set up by two Nigerian computer 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 frenetic Ikeja district of Lagos, stated the of month-to-month 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 environment of designers had emerged around Paystack, producing software 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 enables payments for a number of wagering firms however also a large range of organizations, from utility services to transfer business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as 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 corresponded with the arrival of foreign investors wishing to take advantage of sports betting wagering.

Industry specialists state the sector creates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the business is more developed.

Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last two years while Italy's Goldbet was ahead of the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm introduced in 2015.
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NairaBET's Alabi said its sales were divided in between stores and online however the ease of electronic payments, cost of running stores and capability for consumers to avoid the preconception of gaming in public indicated 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 shop network, not least because many consumers still stay reluctant to spend online.

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian sports betting stores typically function as social centers where customers can see soccer totally free of charge while putting bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans collected to watch Nigeria's last heat up video game before the World Cup.

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a TV screen inside. He stated he started gambling 3 months back and bets up to 1,000 naira a day.

"Since I have 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; editing by David Clarke)