By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown innovation firms that are beginning to make online organizations more practical.
For many years, mobile payments failed to take off in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have cultivated a culture of cashless payments.
Fear of electronic scams and slow web speeds have held Nigerian online consumers back however wagering companies states the new, fast digital payment systems underpinning their websites are changing attitudes towards online deals.
"We have actually seen considerable growth in the number of payment solutions that are available. All that is definitely changing the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.
"The operators will go with whoever is quicker, 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 a rise in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main 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 cellphone usage and falling information expenses, Nigeria has actually long been seen as a fantastic chance for online businesses - once consumers feel comfortable with electronic payments.
Online sports betting firms state that is taking place, though reaching the 10s of countless Nigerians without access to banking services remains a difficulty for pure online merchants.
British online wagering firm Betway opened its very first African service in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.
"There is a progressive shift to online now, that is where the market is going," Betway's Nigeria manager Lere Awokoya stated.
"The development in the variety of fintechs, and the federal government as an enabler, has assisted the business to flourish. These technological shifts encouraged Betway to begin operating in Nigeria," he stated.
FINTECH COMPETITION
sports betting firms cashing in on the soccer craze worked up by Nigeria's participation in the World Cup say they are finding the payment systems developed by local start-ups such as Paystack are proving popular online.
Paystack and another local start-up Flutterwave, both founded in 2016, are offering competitors for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by services operating in Nigeria.
"We included Paystack as one of our payment choices with no fanfare, without announcing to our customers, and within a month it soared to the number one most secondhand payment option on the website," stated Akin Alabi, creator of NairabBET.
He said NairaBET, the country's 2nd greatest wagering firm, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option since it was included late 2017.
Paystack was established by 2 Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who got early phase financing 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, said the number of monthly deals 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 development.
He stated an environment of designers had emerged around Paystack, producing software application to incorporate the platform into sites. "We have seen a development in that community and they have actually brought us along," said Quartey.
Paystack said it allows payments for a number of wagering companies however likewise a large range of services, from utility services to carry companies to insurance company Axa Mansard.
Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program as well as venture 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 hoping to tap into sports betting.
Industry specialists say the sector produces about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where business is more established.
Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last two years while Italy's Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.
NairaBET's Alabi said its sales were split in between stores and online however the ease of electronic payments, expense of running stores and ability for customers to avoid the stigma of gambling in public suggested online deals would grow.
But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was very important to have a shop network, not least since numerous consumers still stay hesitant to invest online.
He stated the company, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian sports betting shops often serve as social hubs where consumers can watch soccer complimentary of charge while placing bets.
At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans collected to watch Nigeria's final warm up video 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 stated he started gambling 3 months ago and bets as much as 1,000 naira a day.
"Since I have actually been playing I have not won anything however I think that a person day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)
