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By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology companies that are beginning to make online services more viable.

For many years, mobile payments stopped working to take off in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have actually fostered a culture of cashless payments.

Fear of electronic scams and sluggish web speeds have held Nigerian online customers back but wagering companies says the brand-new, quick digital payment systems underpinning their websites are altering attitudes towards online deals.

"We have actually seen considerable growth in the number of payment solutions that are readily available. All that is certainly changing the gaming area," 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 connect to their platform with less problems and problems," he said, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development has 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 first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, increasing mobile phone usage and falling information expenses, Nigeria has actually long been viewed as a great opportunity for online organizations - once customers feel comfy with electronic payments.

Online sports betting firms state that is happening, though reaching the tens of millions of Nigerians without access to banking services stays a challenge for pure online sellers.

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

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

FINTECH COMPETITION

sports betting firms cashing in on the soccer craze whipped up by Nigeria's involvement in the World Cup state they are finding the payment systems produced by local start-ups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are supplying competition for Nigeria's Interswitch which was set up in 2002 and was the main platform used by businesses operating in Nigeria.

"We included Paystack as one of our payment alternatives without any excitement, without revealing to our consumers, and within a month it shot up to the number one most used payment alternative on the website," stated Akin Alabi, founder of NairabBET.

He said NairaBET, the nation's second most significant wagering company, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice given that it was added in late 2017.

Paystack was set up by two Nigerian computer technology 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 financiers including China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, said the variety of month-to-month transactions it processed rose 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," said Emmanuel Quartey, Paystack's head of growth.

He said an environment of designers had actually emerged around Paystack, developing software to incorporate the platform into sites. "We have seen a growth in that neighborhood and they have brought us along," said Quartey.

Paystack stated it makes it possible for payments for a number of sports betting firms however also a vast array of businesses, from utility services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also 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 accompanied the arrival of foreign investors wishing to take advantage of sports betting wagering.

Industry experts say the sector generates about $1 billion a year and is most likely to grow faster than in and Kenya where business is more developed.

Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last 2 years while Italy's Goldbet was ahead of the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi stated its sales were divided between stores and online but the ease of electronic payments, expense of running stores and capability for clients to avoid the stigma of gaming in public implied online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least because many customers still stay reluctant to invest online.

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting stores often act as social hubs where consumers can view soccer free 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 game before the World Cup.

Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a television screen inside. He stated he started sports betting three months back and bets as much as 1,000 naira a day.

"Since I have been playing I have 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)
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