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By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology firms that are beginning to make online businesses more viable.
For many years, mobile payments failed to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have promoted a culture of cashless payments.
Fear of electronic fraud and sluggish internet speeds have actually held Nigerian online consumers back but sports betting firms states the brand-new, quick digital payment systems underpinning their websites are altering mindsets towards online transactions.
"We have actually seen significant development in the number of payment services that are available. All that is certainly changing the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.
"The operators will choose whoever is faster, whoever can connect to their platform with less issues and glitches," he stated, including that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.
That growth 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 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 first quarter of 2018 there were nearly 10 million worth 61 billion.
With a young population of nearly 190 million, increasing cellphone usage and falling data expenses, Nigeria has long been seen as an excellent opportunity for online businesses - once consumers feel comfy with electronic payments.
Online gaming firms state that is taking place, though reaching the 10s of countless Nigerians without access to banking services remains a challenge for pure online merchants.
British online sports betting firm Betway opened its 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 industry is going," Betway's Nigeria manager Lere Awokoya stated.
"The growth in the number of fintechs, and the federal government as an enabler, has actually assisted the service to flourish. These technological shifts encouraged Betway to start operating in Nigeria," he stated.
FINTECH COMPETITION
sports betting firms cashing in on the soccer craze worked up by Nigeria's involvement on the planet Cup say they are discovering the payment systems developed by local start-ups such as Paystack are showing popular online.
Paystack and another regional startup Flutterwave, both established in 2016, are offering competitors for Nigeria's Interswitch which was established in 2002 and was the main platform used by companies operating in Nigeria.
"We added Paystack as one of our payment alternatives with no fanfare, without announcing to our clients, and within a month it shot up to the primary most used payment choice on the site," stated Akin Alabi, creator of NairabBET.
He said NairaBET, the nation's 2nd greatest wagering company, 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 set up by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got early stage financing in Silicon Valley's Y-Combinator program.
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 mad Ikeja district of Lagos, stated the number of month-to-month transactions it processed increased from about 8,000 in early 2016 to more than 900,000 since June 2018.
"In early 2016 we were processing about $3,000 a month. Today we process well over $11 million every month," stated Emmanuel Quartey, Paystack's head of growth.
He stated a community of designers had actually emerged around Paystack, creating software to integrate the platform into websites. "We have seen a growth in that neighborhood and they have actually carried us along," said Quartey.
Paystack stated it enables payments for a variety of wagering companies but also a wide variety of businesses, from energy services to carry business to insurance company Axa Mansard.
Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program in addition to endeavor 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 accompanied the arrival of foreign financiers intending to tap into sports betting.
Industry specialists state the sector produces about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the company is more developed.
Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last 2 years while Italy's Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.
NairaBET's Alabi said its sales were split between stores and online but the ease of electronic payments, cost of running shops and ability for customers to avoid the stigma of gaming in public implied online transactions would grow.
But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least due to the fact that lots of customers still stay unwilling to spend online.
He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian wagering shops typically serve as social hubs where clients can view soccer free of charge while placing bets.
At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans gathered to watch Nigeria's last heat up game before the World Cup.
Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a TV screen inside. He said he began gambling 3 months ago 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," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke) |
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