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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is flourishing in mainly thanks to payment systems established by homegrown technology firms that are starting to make online businesses more feasible.

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

Fear of electronic scams and slow internet speeds have actually held Nigerian online consumers back however sports betting companies says the new, fast digital payment systems underpinning their sites are altering mindsets towards online transactions.

"We have seen substantial growth in the number of payment solutions that are offered. All that is definitely altering the video gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will opt for whoever is quicker, whoever can connect to their platform with less issues and problems," he stated, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by an increase 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 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 almost 190 million, rising smart phone use and falling data expenses, Nigeria has actually long been viewed as an excellent opportunity for online services - once customers feel comfy with electronic payments.

Online gambling companies state that is taking place, though reaching the tens of millions of Nigerians without access to banking services remains a difficulty for pure online retailers.

British online wagering company Betway opened its 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 market is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the variety of fintechs, and the government as an enabler, has actually helped business to flourish. These technological shifts motivated Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze whipped up by Nigeria's involvement on the planet Cup state they are discovering the payment systems developed by local startups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the primary platform used by businesses running in Nigeria.
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"We included Paystack as one of our payment alternatives without any excitement, without revealing to our clients, and within a month it shot up to the top most secondhand payment option on the site," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's 2nd most significant wagering firm, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option considering that it was included late 2017.

Paystack was set up by 2 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 month-to-month deals 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 every single month," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack said it enables payments for a number of sports betting firms however also a large variety of services, from utility services to transfer companies to insurance provider Axa Mansard.
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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 accompanied the arrival of foreign financiers intending to take advantage of sports betting.

Industry professionals state the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the organization is more developed.

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last two years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian company launched in 2015.
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NairaBET's Alabi said its sales were divided between stores and online however the ease of electronic payments, cost of running shops and capability for consumers to avoid the stigma of gambling in public meant online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a shop network, not least since lots of consumers still remain reluctant to spend online.

He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian wagering stores often serve as social hubs where customers can view soccer free of charge while positioning bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans gathered to enjoy Nigeria's final heat up video game before the World Cup.
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Richard Onuka, a factory employee 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 as much as 1,000 naira a day.

"Since I have been playing I have not won anything however I believe that a person day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)