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By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mainly thanks to payment systems established by homegrown innovation firms that are beginning to make online organizations more viable.
For years, mobile payments stopped working to remove in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have actually promoted a culture of cashless payments.
Fear of electronic scams and sluggish web speeds have actually held Nigerian online customers back but sports betting firms states the brand-new, fast digital payment systems underpinning their sites are changing attitudes towards online deals.
"We have actually seen substantial growth in the variety of payment services that are offered. All that is certainly altering the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.
"The operators will choose whoever is much faster, whoever can link to their platform with less concerns and glitches," he said, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.
That growth 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 central 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 cellphone use and falling data costs, Nigeria has long been seen as a great chance for online services - once customers feel comfortable with electronic payments.
Online gaming companies state that is occurring, though reaching the 10s of millions of Nigerians without access to banking services remains a difficulty for pure online retailers.
British online sports betting company Betway opened its very first African organization 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 industry is going," Betway's Nigeria supervisor Lere Awokoya said.
"The growth in the number of fintechs, and the federal government as an enabler, has helped business to grow. These technological shifts motivated Betway to begin operating in Nigeria," he stated.
FINTECH COMPETITION
sports betting firms capitalizing the soccer craze worked up by Nigeria's participation in the World Cup state they are discovering the payment systems developed by local start-ups such as Paystack are proving popular online.
Paystack and another local startup Flutterwave, both founded in 2016, are providing competition for Nigeria's Interswitch which was set up in 2002 and was the main platform utilized by businesses operating in Nigeria.
"We included Paystack as one of our payment alternatives with no excitement, without revealing to our customers, and within a month it shot up to the number one most secondhand payment choice on the site," said Akin Alabi, creator of NairabBET.
He said NairaBET, the nation's 2nd biggest sports betting firm, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option because it was included late 2017.
Paystack was established by 2 Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator programme.
In December 2016, it raised $1.3 million from investors 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 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 every month," said Emmanuel Quartey, Paystack's head of growth.
He stated an ecosystem of developers had emerged around Paystack, developing software to integrate the platform into websites. "We have seen a development in that neighborhood and they have carried us along," stated Quartey.
Paystack stated it makes it possible for payments for a number of sports betting firms but likewise a wide variety of businesses, from utility services to transfer companies to insurer Axa Mansard.
Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme in addition to venture capitalists Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million in 2015.
FOREIGN INVESTMENT
Shifts in Nigeria's payment culture have actually coincided with the arrival of foreign investors hoping to take advantage of sports betting wagering.
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 business is more developed.
Russia's 1XBet and Slovakia's DOXXbet have actually both set up 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.
NairaBET's Alabi stated its sales were split between stores and online however the ease of electronic payments, expense of running shops and capability for consumers to avoid the stigma of gaming in public implied online deals would grow.
But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least due to the fact that lots of customers still remain hesitant to invest online.
He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian wagering stores often function as social hubs where consumers can watch soccer free of charge while positioning bets.
At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans gathered to see Nigeria's final warm up game before the World Cup.
Richard Onuka, a factory employee who earns 25,000 naira a month, was fixated on a television screen inside. He stated he began betting 3 months ago and bets approximately 1,000 naira a day.
"Since I have been playing I have actually 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; modifying by David Clarke)
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